Commentary: Dithering over coal must end

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The Independent Online
The Government's disastrous presentation of its initial plans for pit closures seem to have left it in a state of paralysis. It really must now stop dithering about the future of British Coal. It is four months since the devastatingly mismanaged announcement of 31 pit closures with the loss of 30,000 jobs. Yet ministers are still in a quandary as to how to solve the problem, which is simply that there is not a big enough market for coal to avoid shutting mines.

The Government clearly thought that by applying a half nelson to National Power and PowerGen, it could get the generators to buy enough extra coal to satisfy those backbenchers who rebelled against the pit closures. But that probably means the generators taking on at the very least 12 million extra tons of coal a year - much of which could end up being stockpiled.

National Power and PowerGen decline to comment on the demands being made by the Government (which still owns 40 per cent of the two companies). What is clear is that they will take extra coal, but - so far at least - not anywhere near as much as ministers want. National Power alone has some pounds 600m worth of coal stockpiles, the sort of total that would make the Common Agricultural Policy proud. Neither company wants to ask shareholders to foot the bill for maintaining ever higher stocks, even if the coal is bought from British Coal at a heavily subsidised price.

The reason for the apparent intransigence of the generators is that there is little room in the electricity market for more coal-fired power. The Government appears unwilling to shift someone else to make room for electricity from coal. In this, it takes comfort from the Trade and Industry Select Committee, which has also stopped short of proposing cutbacks on subsidised nuclear power or already- committed gas-fired plants. Despite the recent cross-Channel sniping over monetary matters, ministers also appear unwilling to upset the French by ending electricity imports, which displace six million tons of coal a year.

Some deep mines may be saved by cutting back opencast mines (and losing thousands of jobs in that sector instead) but that is little more than fiddling at the edges. Unless ministers bite the bullet to make room for coal by pushing others out of the market, the Government faces a clear-cut choice. Either it can bully the generators, maybe by changes in the law, into taking more coal, or it can brave the wrath of backbenchers and the public by closing most of the mines.

Whatever the way out, it will be embarrassing for the Government and painful for many, not least the mining communities under threat. But that is no excuse for continuing to dither. Buying time will not make this mess go away. The economics of coal and power generation have not changed since the closure announcement in October. More worrying for the pro-coal lobby is that on the evidence so far, neither has the political will.