Experts say the closure of two deep pits belonging to UK Coal leaves “no long-term future for the production of coal resources in the United Kingdom”.
The coal pits, two of the remaining three, are set to close in the next 18 months after the British government decided there was “no value for money case” to keep them open, in a move thought to cast doubts on the country’s coal industry.
British environmental website BusinessGreen reports the Conservative government announced it will give UK Coal a £10 million loan to fund the managed closure of the pits in North Yorkshire and Nottinghamshire
Both Hargreaves Services and Harworth Estates will invest a further £5m in the closures.
BusinessGreen reports UK Coal went into administration last year, struggling with rising costs, large pension liabilities, and competition from cheap imports.
Those imports come mainly from the United States where a shale gas boom has displaced coal as a power source.
At the same time its an acknowledgement that investment funds have also started to divest coal assets.
BusinessGreen reports the government support means the company can keep the deep operation mines open until the autumn of 2015 and look for a buyer for its surface mine businesses, UK Coal said in a statement.
In a written statement to Parliament, Energy Minister Michael Fallon said the taxpayer would face “significant losses and liabilities” if UK Coal collapsed into insolvency overnight.
“Deep coal mining remains an inherently risky business,” Mr Fallon added.
“There is no value for money case for a level of investment that would keep the deep mines open beyond this managed wind-down period to autumn 2015.”
The government wants to phase out coal power in favour of cleaner gas, renewable energy, and power plants with carbon capture and storage (CCS) technology.
That’s on top of existing European Union pollution legislation, which power generator RWE said was behind its planned closure of seven fossil fuel plants by 2023.
Government ministers have also brought in measures such as the carbon floor price and an emissions performance standard to expedite such a shift.
BusinessGreen reports their efforts have been criticised by green campaigners, who argue the most effective driver would be inserting a decarbonisation target into the Energy Bill.
Professor Fred Dahlmann, an expert in global energy at Warwick Business School, said the move sounded the death-knell for UK coal production.
“Given that most coal-fired power plants are due to be shut down because of environmental regulation and, for as long as the capture and storage of carbon dioxide from coal and gas fired power plants remains commercially unproven, there appears to be no long-term future for the production of coal resources in the UK,” he said.