The Socio-Economic Impacts of Advanced Technology Coal-Fuelled Power Stations

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The Socio-Economic Impacts of Advanced Technology Coal-Fuelled Power Stations The Socio-economic Impacts of Advanced Technology Coal-Fuelled Power Stations Report by the Coal Industry Advisory Board The views expressed in this paper do not necessarily reflect the views or policy of the International Energy Agency (IEA) Secretariat or of its individual member countries. The paper does not constitute advice on any specific issue or situation. The IEA makes no representation or warranty, express or implied, in respect of the paper’s content (including its completeness or accuracy) and shall not be responsible for any use of, or reliance on, the paper. Comments are welcome, directed to [email protected]. The Socio-economic Impacts of Advanced Technology Coal-Fuelled Power Stations Page | 1 Coal Industry Advisory Board The Coal Industry Advisory Board (CIAB) is a group of high-level executives from coal-related industrial enterprises, established by the IEA in 1979 to provide advice to the Secretariat on a wide range of issues relating to coal. The CIAB currently has around 35 members from 16 countries, contributing valuable experience in the fields of coal production, trading and transportation, electricity generation and other aspects of coal use. For more information about the Coal Industry Advisory Board, please contact Maggi Rademacher, CIAB Executive Co-ordinator ([email protected]). The Socio-economic Impacts of Advanced Technology Coal-Fuelled Power Stations Acknowledgements This report represents the 2014 Work Programme of the Coal Industry Advisory Board (CIAB) and was prepared for the CIAB by Charles River Associates (CRA), The Lantau Group (TLG) and KPMG with direct support from Peabody Energy, RWE and Shenhua. Page | 2 Christopher Russo of CRA was the project leader and instrumental in the development of the report. The following individuals served as leaders and contributors to the report on behalf of their respective organisations: CRA Leader: Christopher Russo Other Contributors: Robert Kaineg TLG Leader: Mike Thomas Other Contributors: Xinmin Hu, Ning Wang KPMG Leader: Roy Hinkamper Other Contributors: Rajesh Ivaturi, , Gaurav Angira, Santosh Kamath, , Hiran Bhadra Peabody Energy Leader: Cartan Sumner Other Contributors: Amanda Boyce RWE Leader: Hans-Wilhelm Schiffer Other Contributors: Björn Seidel, Claudia Hillebrecht Shenhua Leader: Lu Bing Special thanks to members of the CIAB Editorial Panel, who provided valuable input to the development of this report. Chair: L. Cartan Sumner, Peabody Energy Rick Axthelm, Alpha Natural Resources Lu Bing, Shenhua Amanda Boyce, Peabody Energy Prach Chongkittisakul, Banpu Gina Downes, Eskom Nikki Fisher, AngloAmerican John Lowell, Arch Coal Itaru Nakamura, JPOWER Maggi Rademacher, E.ON Jarik Jansen van Rensburg, BHP Billiton The Socio-economic Impacts of Advanced Technology Coal-Fuelled Power Stations Hans-Wilhelm Schiffer, RWE Benjamin Sporton, World Coal Association Skip Stephens, Joy Global Alex Zapantis, Rio Tinto Page | 3 The Socio-economic Impacts of Advanced Technology Coal-Fuelled Power Stations Table of contents Acknowledgements ........................................................................................................................... 2 Page | 4 Executive summary ........................................................................................................................... 8 Case studies ............................................................................................................................... 8 Highlights of key findings ................................................................................................... 9 Introduction .................................................................................................................................... 13 Advanced coal technology today............................................................................................. 13 Implications for policy makers ......................................................................................... 14 Direct benefits ......................................................................................................................... 16 Plant construction ............................................................................................................ 16 Indirect benefits ...................................................................................................................... 16 Mining and extraction ...................................................................................................... 16 Coal transport .................................................................................................................. 17 Coal treatment ................................................................................................................. 17 Induced benefits ...................................................................................................................... 17 Lower electricity prices .................................................................................................... 17 Environmental improvement ........................................................................................... 18 Societal impacts ....................................................................................................................... 19 Taxes ................................................................................................................................ 19 Energy independence ...................................................................................................... 19 Case studies ..................................................................................................................................... 21 India ......................................................................................................................................... 21 Profile of the Reliance Power Plant ................................................................................. 21 Economic rationale for coal-fuelled power generation ................................................... 22 Price comparison of electricity generated from coal-based power plants, renewable sources and gas-fired power plants ................................................................................. 22 Socioeconomic conditions in the study area before Reliance Sasan power plant .......... 26 Literature review, study methodology and limitations ................................................... 30 Approaches for impact quantification ............................................................................. 32 Social impact assessment ................................................................................................ 33 Economic impact of Reliance Sasan power plant ............................................................ 35 Social impact of Reliance Sasan power plant .................................................................. 40 China ........................................................................................................................................ 46 Case study of power stations ........................................................................................... 47 Ninghai power station ..................................................................................................... 49 The role of coal in China’s power sector ......................................................................... 49 Summary .......................................................................................................................... 52 Indirect benefits and economic value multipliers ........................................................... 56 The Socio-economic Impacts of Advanced Technology Coal-Fuelled Power Stations Induced and broader socioeconomic benefits of coal ..................................................... 56 Induced benefits: Environmental improvement ............................................................. 63 Induced benefits: Enhancement of energy security ........................................................ 65 Summary .......................................................................................................................... 66 Germany .................................................................................................................................. 69 Page | 5 Kraftwerk Neurath profile ................................................................................................ 69 The German electricity market ........................................................................................ 71 German energy policy and the Energiewende ................................................................ 73 The need for flexible generation ..................................................................................... 74 Quantification of economic impacts ................................................................................ 75 Simplified production cost analysis of coal’s effect on the German electricity market .. 79 Appendix .................................................................................................................................. 81 SaskPower’s Boundary Dam ............................................................................................ 82 List of acronyms and abbreviations ................................................................................................ 84
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