Industry in Crisis: The Mines: Remaining deep coal mines may close by 2000

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THE DECISION to close 31 pits with the loss of more than 30,000 jobs may well lead to the closure of all Britain's remaining deep coal mines by 2000.

This is one of the main conclusions reached by researchers who have been examining the impact of the 'dash for gas' in UK electricity generation.

They say that in the absence of swift intervention, the UK's deep- mine coal industry, which is still the most efficient in Europe, could face extinction.

They also recommend a halt to the issue of licences by the Government for further gas-fired power stations and call on the Office of Electricity Regulation, the industry's watchdog, to intervene.

A report entitled The End of Coal?, prepared by Professor Stephen Fothergill, professor in the school of urban and regional studies at Sheffield Hallam University, and Nigel Guy, the national research officer of the Coalfield Communities Campaign, deals with electricity generation, the market for coal and alternatives.

The report says that the irony is that the threat to the coal industry is developing despite evidence that the new gas-fired power stations will produce more expensive electricity than the coal fired stations they are replacing.

Many of the gas stations are only going ahead, the report says, because the regional electricity companies have bought an equity stake in the developments and want to protect their investments. They are, in effect, say the researchers, opting to take all the stations' output in preference to cheaper power from elsewhere.

As part of the privatisation programme, electricity generation in England and Wales was divided between two newly created companies, National Power and PowerGen. The rough 60-40 split between these two gave them a great deal of market power.

However, the newly privatised regional electricity companies, who mainly distribute electricity, were allowed to generate up to 15 per cent of the electricity they sell in order to help introduce a greater element of competition. It was clearly in the regional companies' interest to generate power themselves.

The report says that the 'dash for gas' also threatens to greatly accelerate the depletion of Britain's limited North Sea gas reserves, force increased dependence on gas imports and lead to higher prices, not only for electricity but also for the ordinary gas consumer.

Professor Fothergill said yesterday that the impact of the planned generation projects would be to displace nearly 60 million tons a year of coal from the power station market by the end of the 1990s. If there is slow growth in overall electricity demand and continuing competition from nuclear power and heavy fuel oil, the UK market for power station coal would plunge by two thirds.

Professor Fothergill says that pessimistic forecasts about the future of British industry are not uncommon. But, he says, it is rare that forecasters predict the total extinction of an industry.

'This is precisely the conclusion of this report. The present trajectory on which the coal industry is set could lead to the closure of all Britain's remaining coal mines by 2000.' He adds: 'It should be stressed at the outset that we do not in fact regard the complete closure of Britain's deep-mine coal industry as the most likely scenario for the late 1990s. Rather we regard the industry's complete demise as, for the first time, a realistic possibility.'

Professor Fothergill says in the report that some political pundits may not find their conclusion surprising. Since the end of the miners' strike in 1985 the industry has, he says, shed more than two-thirds of its pits and its workforce while output has fallen by less than a fifth.

He says that the key factor in the rundown of the coal industry is the so called 'dash for gas' and the numerous plans to build gas- fired power stations. 'When they started doing this there was a lot of optimism about the cost of gas- fired power. A lot of people thought it was going to be cheaper than coal,' he said.

'That is not now the case if you compare the full cost of the gas stations with the cost of running the existing coal ones, including allowing for cleaning up the coal operations in terms of emissions. But the invididual electricity companies are now locked into this.'

The report says that when the gas stations are complete the official regulator should require them to compete to supply electricity on the same terms as existing coal stations. Such a stipulation would, says the report, quickly flush out the gas projects that could not be regarded as genuinely economic.

The End of Coal? The Impact of the Dash for Gas in UK Electricity Generation; Stephen Fothergill and Nigel Guy.