Opinion of the European Economic and Social Committee on the Current situation and prospects for traditional energy sources — coal, oil and natural gas — in a future energy mix
Date: 2005-10-26
Institutions: European Economic and Social Committee
Subjects: coal, energy consumption, energy policy, energy supply, energy technology, environmental protection, natural gas, petroleum, sustainable development

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4.7
The testator should also be allowed, subject to certain
limits, to choose which law should be applicable to his estate,
for example that of his nationality (or one of his nationalities),
or that of his usual place of residence.

4.8
Finally, the EESC believes that the Commission's excel-
lent comparative work should be pursued and developed. It
should be regularly updated on the Community website and
translated into an adequate number of languages to ensure its
general usefulness for members of the legal profession, public
officials, administrators, and courts dealing with international
successions. It should also be structured to include a chapter-
by-chapter synthesis clarifying the general principles for Euro-
pean citizens wishing to draft a will with international scope or
for their heirs.

Brussels, 26 October 2005.

it hopes that a general

4.9
The EESC awaits with interest the results of the consulta-
tions already carried out by the Commission or those still to
come;
line of approach and more
concrete legislative proposals can then be submitted to it for an
opinion, and proposes then to examine them in detail, since it
considers the issue of wills and successions to be one of major
interest for the citizens of Europe; their hopes for a simplifica-
tion of formalities, greater legal and fiscal certainty and a spee-
dier settlement of international successions, which they expect
from a Community initiative, must not be disappointed,
whether the circumstances be those of private individuals, busi-
nesses, farms or other economic activities where the entrepre-
neurs or owners wish to ensure continuity after their demise.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

Opinion of the European Economic and Social Committee on the Current situation and prospects
for traditional energy sources — coal, oil and natural gas — in a future energy mix

(2006/C 28/02)

On 10 February 2005, the European Economic and Social Committee, acting under Rule 29(2) of its Rules
of Procedure, decided to draw up an opinion on the Current situation and prospects for traditional energy
sources — coal, oil and natural gas — in a future energy mix.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion 1 September 2005. The rapporteur
was Mr Wolf.

At its 421st plenary session, held on 26-27 October (meeting of 26 October 2005), the European
Economic and Social Committee adopted the following opinion by 119 votes to 1, with 3 abstentions.

The EESC has recently adopted a number of opinions (1) on
energy issues. Since by far the largest share of energy supply
still comes from the fossil fuels: coal, oil and natural gas, and
the question of resources and the release of greenhouse gases
associated with their use has been the subject of political
discussion, the present opinion evaluates these ‘classic’ fuels.

This should be followed by an opinion on ‘The EU's Energy
Supply: Strategy for an Optimum Energy mix’ which builds on
and summarises the findings of the series.

The strategic aim of this series of opinions, which an opinion
on renewable energy sources and the present opinion bring to
a conclusion, is to provide a solid basis for establishing realistic
options for a future energy mix.

(1) See Promoting renewable energy: Means of action and financing
instruments (OJ C 108 of 30.4.2004); The issues involved in using
nuclear power in electricity generation (OJ C 112 of 30.4.2004);
Fusion energy (OJ C 302 of 7.12.2004) and The use of geothermal
energy (OJ C 110 of 30.4.2004).

Table of contents

1. Summary and recommendations

2. The energy issue

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3. Resources, reserves, coverage

4. Energy reserves within the EU — dependence on imports

5. Trajectory of energy consumption in the EU

6. Coal, oil and natural gas in a sustainable energy mix

7. Environmental and climate protection

8. Technological development

9. CO2 separation and storage

1. Summary and recommendations

1.1
Usable energy is the mainstay of our contemporary way
of life and culture. It is only its ready availability that has made
our present standard of living possible. If the Lisbon Strategy
and the Gothenburg and Barcelona Council conclusions are to
be implemented, a secure, cheap, environmentally-friendly and
sustainable supply of usable energy is absolutely essential.

At present, the fossil fuels coal (2), oil and natural gas
1.2
are the backbone of the European and global energy supply.
Moreover, as they will continue to be important over the next
few decades, they remain essential.

1.3
Their extraction and use, however, involves all kinds of
harm to the environment, most notably the emission of green-
house gases — especially CO2 and methane. We are talking
about the depletion of finite resources.

The use of these vital raw materials has led to Europe
1.4
being heavily dependent on high-grade imports of them, and
this is set to increase in future, particularly as regards oil and,
increasingly, natural gas.

1.5
The expected lifetime of world-wide resources and
reserves (3) of coal, oil and gas is dependent on several factors
(economic growth, exploration and technological advances). It
still extends over many decades (perhaps even centuries in the
case of coal), although in the case of oil, in particular, there
could be a drop in reserves and shortage of supply before the
middle of the present century. The way the oil markets are
going at the moment, there could be virtually unpredictable
price hikes, even in the very short term, which could have a
considerable impact on national economies (4).

1.6
The EU's energy policy must do everything to reduce
this dependency over the long term, particularly by taking

(2) Lignite and hard coal.
(3) See Chapter 3.
(4) According to a study published in April 2005 by the Goldman
Sachs investment bank, the price of oil could be in the early stages
of a ‘super spike’ which could push prices as high as $105 a barrel.
A price of $50 a barrel was anticipated for 2005 and $55 for 2006.
However, at 29.8.2005 the price was already over $70.

energy-saving measures, using all fuels more efficiently and
making greater use of alternative energy systems, such as
renewable and nuclear energies. Continued development of
alternative energy systems is particularly important on this
front.

1.7
On the other hand, the EU's energy policy must be fully
geared to securing the supply and supply routes of fossil fuels,
a particular problem here being the political stability of some
of the main suppliers. Cooperation with the Russian Federation,
the CIS states, countries in the Middle East and regions neigh-
bouring the EU (such as Algeria and Libya)
is particularly
important in this regard.

1.8 Making greater use of Europe's
deposits could also help to mitigate this dependency.

considerable

coal

If the European internal market is working as it should
1.9
and appropriate climate-protection measures are in place, there
would be applications for fossil fuels in accordance with their
respective characteristics and price and cost levels. This auto-
matically ensures they will be used in a way that is particularly
energy-efficient and economical.

1.10
This has produced a situation in which coal predomi-
nates in the steel industry and in power plants, while oil and
gas are used primarily in producing heat and in non-energy
spheres. Oil-based products prevail in the transport sector.

1.11
Natural gas and oil are both more scarce and more
versatile and so should be used in the energy mix predomi-
nantly for applications — such as fuel for transport and as raw
material for the chemicals industry — where the use of coal
would involve extra costs, energy consumption and CO2 emis-
sions.

Progress in technology must be used to achieve a
1.12
sustained reduction in CO2 emissions per product unit (e.g., kg
CO2/kWh, t CO2/t steel and g CO2/passenger-kilometre). This
requires an improvement in energy efficiency in all areas of
energy conversion and application.

Energy and economic policy needs,

to
1.13
provide a reliable framework for investment which will lead to
improved technology in industry, trade and private consump-
tion.

therefore,

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1.14
In the coming decades, Europe will have to increase its
power plant capacity by around 400 GW (5). If CO2 emissions
and fuel consumption are to be stabilised or reduced, these
new plants must have the best available technology.

usable energy is at the heart of the Council conclusions from
Lisbon, Gothenburg and Barcelona.

1.15
In the transport field, every effort has to be made to
cut the specific use of fuel (consumption per passenger-kilo-
metre) and to prevent total consumption continuing to rise.
This requires technological progress in many areas of vehicle
and fuel development, measures to avoid traffic congestion
(building of roads and tunnels/routing systems) and a reduction
in traffic (6). Increased use of electric-powered vehicles, such as
electric trains, reduces reliance on oil by allowing diversifica-
tion in the use of primary energies (coal, gas, renewable ener-
gies, nuclear power).

1.16
Improved efficiency in the energy sphere requires
increased research and development, especially into power
stations which use fossil fuels, which involves both industry
and public support measures.

The Committee has noted on several occasions that
2.2
supplying and using energy puts a strain on the environment,
involves risks and depends on unforeseeable and external poli-
tical factors. None of the options and technologies which could
contribute to future energy supply is technologically perfect,
entirely free of adverse effects on the environment, suitable for
all needs, and offers predictable pricing and availability over
the long term. Added to this are the questions of diminishing
reserves and resources with all that this entails. This difficult
situation will be significantly exacerbated by the increase in the
world's population, the increasing thirst for energy of the devel-
oping countries and, above all, the rapidly increasing energy
needs of the big new industrial nations, such as China, India
and Brazil.

therefore,

The Committee welcomes,

1.17
‘Energy’
thematic area in the proposal for the 7th research and develop-
ment framework programme. This should be adequately funded
and cover all possible energy technologies. It should particu-
larly include those measures which increase the efficiency of
fossil fuel use, as the overall benefits to be had here are particu-
larly great.

the

significantly

In the case of electricity from fossil fuels, there is also a
1.18
chance of
reducing CO2
emissions when
converting energy, provided CO2 sequestration and storage
procedures (Clean Coal Technology) are used. Developing and
testing procedures of this kind is therefore particularly impor-
framework
tant
programme.

in the 7th research and development

A secure, long-term, environmentally sound and compe-
2.3
titive energy supply must therefore remain a major goal of a
forward-looking European energy policy. For the reasons given,
this cannot rely on a few energy sources alone. Instead, the
only way of countering energy shortages and other risks is
through an energy mix that is diverse in type and origin and in
which all available fuels and technologies are used and (further)
developed so that eventually they can compete among them-
selves under accepted environmental conditions and in chan-
ging circumstances.

2. The energy issue

3. Resources, reserves and coverage

Usable energy (7) is the mainstay of our contemporary
2.1
way of life and culture. Its ready availability opened the door to
our present-day standard of living. The need for a guaranteed,
economical, environmentally friendly and sustainable supply of

(5) Each block of a typical modern power station can produce up to 1
GW of electricity. One GW (gigawatt) equals 1 000 megawatts
(MW), 1 million kilowatts (KW) or 1 billion watts (W). One watt
second (Ws) equals 1 Joule (J), a kilowatt hour (kWh) therefore
equals 3.6 million joules (or 3.6 megajoules (MJ)). One megajoule
(M) is therefore around 0.28 kilowatt hour.

(6) On the importance of reducing traffic and avoiding unnecessary

transportation, see also CESE 93/2004.

(7) Energy is not actually consumed, but merely converted and, in the
process, used. This happens through conversion processes such as
coal combustion, the conversion of wind energy into electricity, and
nuclear fission (conservation of energy; E = mc2). However, the
terms ‘energy supply’, ‘energy production’ and ‘energy consumption’
are also used.

3.1
At the present time, around four-fifths of the world's
energy supply — and that of the EU of 25 — is based on the
use of the fossil fuels oil, natural gas and coal.

of

future

generally

Forecasts

development

differ
3.2
they
according to point of view and interests, given that
depend on assumptions
and
future demographic
about
economic developments, further advances in exploration and
development techniques and the wider political circumstances
in this or that country. This applies particularly to nuclear
energy and to backing given to renewable energies.

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According to the reference prognoses (8)
3.2.1
issued in
2004 by the International Energy Agency in Paris and the US
Department of Energy's Information Administration (EIA), even
25 years from now, these fossil fuels will still account for over
80 % of the world's energy consumption.

3.5
The Estimated Ultimate Recovery (EUR) is the total reco-
verable amount of energy raw materials present in the earth's
crust before exploitation by man. Not all experts necessarily
agree on this estimate. The better we know the earth's crust,
however, and the more sophisticated the investigative techni-
ques, the more the prognoses converge.

3.2.2
The contribution of renewable energies will grow, but
not at a rate above that of energy consumption, according to
IEA and EIA estimates; their share will thus remain constant. If
present trends continue, nuclear energy is also expected to take
a slightly larger share in supply in absolute terms, but again,
assuming the broad policy conditions do not radically change
at EU level, the increase will be below the overall trend in
consumption. As a result, the IEA and EIA are now even antici-
pating a decline in nuclear energy's share in covering the
world's energy consumption.

3.6
Only the recoverable part of resources is included in the
Estimated Ultimate Recovery. This depends, however, on the
available technologies and their cost-effectiveness and could
therefore increase as these continue to be developed. The
remaining potential is obtained by subtracting from the EUR
the amounts already recovered.

The European Commission's baseline scenario (9) for
3.2.3
the EU-25, published in September 2004 and at variance with
the worldwide trend as seen by the IEA and EIA, envisages an
increase in the share of renewable energies in the EU-25's total
energy consumption from today's 6 % to 9 % in 2030.
However, as this estimate also sees a reduction in the share of
nuclear energy in the EU-25,
the Commission's baseline
scenario equally concludes that, in the EU-25 too, fossil fuels
will still account for over 80 % of the total energy consumption
in 2030.

3.3
Fossil fuels are non-renewable raw materials. The poten-
tial of fossil fuels needs to be examined in order to estimate
how long oil, natural gas and coal can retain their key role.

This requires definition of terms and units of measure-
3.4
ment. The terms used are reserves, resources and potentials. A
variety of measurements (10) are usually used for energy
sources, such as tons or barrels for oil, metric tons or tons of
coal equivalent for coal and cubic metres or cubic feet for
their energy
natural gas. They are compared in terms of
content, measured in joules or watt seconds.

(8) (IEA) World Energy Outlook 2004, p. 57: ‘Fossil fuels will continue
to dominate global energy use. Their share in total demand will
increase slightly, from 80 % in 2002 to 82 % in 2030’.
(EIA) International Energy Outlook, April 2004, [http://www.eia.-
doe.gov/oiaf/ieo/]: The IEO2004 reference case projects increased
consumption of all primary energy sources over the 24-year forecast
horizon (Figure 14 and Appendix A, Table A2).

(9) (EU-Commission), [http://europa.eu.int/comm/dgs/energy_transport/
figures/scenarios/doc/chapter_1.pdf], EU-25 energy and transport
reference case to 2030 (baseline): page 9, table 1-8.

(10) 1 kg oil = 42.7 MJ; 1 kg TCE = 29.3 MJ; 1 m2 gas Hu = 31,7 MJ

(for joules (J) und megajoules (MJ) see footnote 3).

The

comprises

remaining potential

reserves plus
3.7
resources. By reserves are meant those amounts of energy raw
materials which have been confirmed and can be economically
recovered with currently available technology. By resources are
meant both those amounts of an energy raw material which
either have been confirmed but cannot yet be economically
and/or technologically recovered and those which, although
they have not been proven, are anticipated on the basis of
geological indications.

3.8
It is reserves which are at the forefront of public debate,
because it is from these that the coverage of energy sources is
derived. By dividing reserves by current annual consumption,
we get the ‘static lifetime’. This gives us a static lifetime for
resources worldwide of around forty years for oil, around sixty
years for gas and around two hundred years for coal.

However, the reserves and their static lifetime are by no
3.9
means fixed amounts. In reality, a decline in the static lifetime
of reserves triggers more intense exploration, which results in
resources being converted, not least thanks to technological
progress, into reserves. (Thus, for example, in the 1970s the
static lifetime of oil was put at thirty years.)

3.10
The statistically proven resources of oil are around
twice the size of the reserves, of natural gas and coal as much
as tenfold the reserves.

A further indicator of future availability of fossil fuels
3.11
is the already recovered share of the EUR. If this exceeds 50 %,
and thus the Depletion Mid Point is reached, it will be difficult
to increase recovery or even to maintain it at the same level.

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3.12 Oil: More than a third of ‘conventional’ oil's EUR of
380 billion tons oil equivalent has been recovered so far. At
present recovery volumes, half of the conventional potential
would be used up in around ten years. Any increase in recovery
after that would mean turning increasingly to non-conventional
deposits (heavy oil, oil sand, oil shale). This would put back the
Depletion Mid Point. Otherwise,
there could be a drop in
reserves and a drastic fall in supply (11) even before the middle
of the present century.

are in North America and there are also large coal supplies in
China, India, Australia, South Africa and Europe.

3.17
The concentration of strategically important fossil fuel
sources — especially oil, though also natural gas — in geopoli-
is particularly
tically high-risk regions of
problematic for the security of the energy supply.

the Middle East

3.13
Natural gas and coal: the position is similar in the
case of natural gas, where non-conventional deposits such as
gas hydrates can also increase the remaining EUR. In the case
of coal, the estimated EUR of 3 400 billion tons of oil units,
only around 3 % has yet been recovered.

4. Energy reserves within the EU (12) — dependence on

imports

3.14
However, exploration for gas (methane) hydrates and
the technology for recovering them are still at the research
stage, so no reliable claims can be made about how much they
can contribute to the energy supply. On the one hand, there
are estimates that the potential supplies exceed all the known
supplies of fossil fuels, while on the other, nothing is certain
concerning their recovery (basically technology and costs).
Moreover, their release — whether due to climate change or
the actions of man — is seen to involve an element of uncer-
tainty, or even risk, as this could produce an accumulation of
the powerful greenhouse gas methane in the atmosphere,
which would be extremely damaging to the climate.

The costs of

fuels differ greatly.
recovering fossil
3.15
Depending on the deposit, those for oil currently stand at
between 2 and 20 USD a barrel. Although ever smaller deposits
have to be developed in increasingly difficult geological and
geographical conditions, these cost increases can be offset, or
even more than offset, by gains in productivity, mostly based
on technological innovation. In the case of natural gas, too,
there are corresponding differences in recovery costs. In the
case of coal, costs very much depend on the depth of the
deposit, seam thickness and also whether it can be recovered
by opencast or only deep mining. The cost range is consider-
able, from a few USD/t (e.g., in Powder River Basin in the USA)
to 200 USD/t in the case of mining in certain European coal-
fields.

The regional distribution of fossil reserves, particularly
3.16
those of oil, is also very uneven. 65 % of oil reserves are in the
Middle East. The distribution of natural gas is only slightly
better, with two key regions, the Middle East (34 %) and the
successor states of the USSR (39 %). Coal reserves, on the other
hand, are more evenly distributed. The largest coal reserves

4.1
Primary energy consumption in the EU of 25 in 2004
was around 2.5 billion tons of coal equivalent or around 75
exajoules (75 x 1018 joules). This corresponds to 16 % of the
world's energy consumption of 15.3 billion tons of coal equiva-
lent. At 5.5 tons of coal equivalent, the per capita consumption
of energy in the EU of 25 is more than double the world
average, albeit only half that in North America. In terms of the
economic performance it produces, energy consumption in
Europe is only around half the average in all non-European
regions, as energy is used here substantially more efficiently
than in many other parts of the world.

4.2
The most important energy sources in the EU of 25 in
2004 — measured in total primary energy consumption —
were mineral oil at 39 %, natural gas at 24 % and coal at 17 %.
Other important staples of the EU energy supply are nuclear
energy at 14 % and renewable and other energy sources at 6 %.
The shares of the various fossil energy sources differ widely
among the 25 Member States. They range in the case of natural
gas from 1 % in Sweden to almost 50 % in the Netherlands, in
the case of mineral oil from less than 30 % in Hungary to two-
thirds in Portugal, and in the case of coal from 5 % in France
to 60 % in Poland. The main reason for these differences is the
different size of fossil energy reserves in the individual Member
States.

4.3
The total energy reserves of the EU of 25 are compara-
tively tiny at around 38 billion tons of coal equivalent. This is
3 % of worldwide reserves, if non-conventional hydrocarbons
are included. Coal supplies (lignite and hard coal), at 31 billion
tons of coal equivalent, account for the bulk of this and are
roughly equally divided between lignite and hard coal. Natural
gas reserves stand at 4 billion tons of coal equivalent and oil
reserves at 2 billion tons of coal equivalent. For the foreseeable
future,
the EU will remain the world's largest net energy
importer. According to European Commission estimates, this
dependency will increase to more than two-thirds by 2030.

(11) Indeed, the current crisis in oil prices, which continues to deterio-

rate, suggests matters could come to a head much earlier.

(12) World Energy Council, Energie für Deutschland, Fakten, Perspek-
tiven und Positionen im globalen Kontext 2004 Schwerpunkt-
thema, ‘Zur Dynamik der Öl- und Erdgasmärkte’.

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4.4
The distribution of fossil energy reserves among the EU
of 25 is very uneven. Oil supplies are concentrated particularly
in the British and then the Danish North Sea. They are substan-
tially depleted, so recovery will fall. Gas reserves are mostly
concentrated in the Netherlands and Great Britain, while those
of coal are distributed above all among Germany, Poland, the
Czech Republic, Hungary, Greece and Great Britain. Norwegian
oil and gas reserves also play an important role because,
although not a member of the EU, Norway is a member of the
European Economic Area.

4.5
Given the low reserves of fossil fuels generally, the EU
of 25 already has to import half of its energy needs. According
to the European Commission's Green Paper, this will increase
to 70 % by 2030. Dependence on imports is particularly high
in the case of crude oil, with more than three-quarters of needs
covered by imports from non-EU countries. Imports of natural
gas stand at 55 %, and of coal at one-third.

4.6
This has led to Europe being heavily dependent on
imports of the vital raw material ‘energy’ (especially oil and,
increasingly, gas) and it is set to be even more dependent in the
the world's largest net energy
future. The EU is,
importer.

in fact,

This means that the EU's energy policy must be fully
4.7
geared to securing the supply and supply routes of fossil fuels,
a particular problem here being the political stability of some
of the main suppliers. Cooperation with the Russian Federation,
the CIS states, countries in the Middle East and regions neigh-
is particularly
bouring the EU (such as Algeria and Libya)
important in this regard.

But, equally, the EU's energy policy must also do every-
4.8
thing to reduce this dependency over the long term, particu-
larly by using all fuels more efficiently and making greater use
of alternative energy systems,
renewable energy
(including development and brining to market) and nuclear
energies. Continued development of alternative energy systems
is particularly important on this front.

such as

4.9
Against this background, making greater use of Europe's
considerable coal deposits could also help to mitigate this
dependency, particularly as far stricter environmental standards
already apply to coal mining here than in other parts of the
world.

5. Trajectory of energy consumption in the EU

‘European Energy and Transport Scenarios on Key Drivers’ (13)
which assumes the continuation of current trends and policies.
Its prognosis follows.

Primary energy consumption will rise by 2040 to 2.9
5.2
billion tons of coal equivalent — a mere 0.6 % p.a. However,
GDP is expected to rise by 2.4 % p.a. up to 2030. The reduc-
tion in energy intensity (ratio of energy consumption to GDP)
of more than 1.7 % p.a. (!) that this requires should be achieved
through structural changes, improved energy efficiency and the
introduction of advanced technologies.

5.3
The share of fossil fuels in covering primary energy
consumption will even increase by 2 percentage points, to
82 %, by 2030.

Coal: After an initial downturn, coal consumption is
5.4
expected to rise again around 2015 as the result of
its
improved competitiveness in electricity production. Rising gas
prices and the anticipated availability of advanced coal-to-elec-
tricity conversion technologies are the main reasons for this
development. On this assessment, coal consumption in 2030
will match that
for 2000. Coal's share in primary energy
consumption in the EU-25 will then be around 15 %, as it was
in 2005. As a downturn of 40 % in coal extraction in the EU is
expected in the period 2005 to 2030, together with an increase
in coal
imports of around 125 %, the share of imports in
covering the EU-25's coal consumption will rise from 1/3 in
2005 to almost 2/3 in 2030.

5.5 Oil: As growth rates are then expected to be sluggish —
at 0.2 % p.a. -, oil's share in primary energy consumption is
expected to fall in 2030 to 34 % — 5 percentage points lower
than today.

5.6
Gas: At 2.7 % p.a., growth in gas consumption will initi-
ally be buoyant up to 2015. This trend will then slacken, for
reasons which include reduced competitiveness in electricity
production compared with coal. However, gas is expected to
experience the strongest increase in consumption of all fossil
fuels for the entire period to 2030. The share of natural gas in
increase from
the EU-25's primary energy consumption will
26 % in 2005 to 32 % in 2030. Liquefied natural gas (LNG)
enables diversification of gas sources, as it can be transported
by sea. At the present time, LNG accounts for around 25 % of
world trade in oil.
Indonesia is the largest LNG exporter,
followed by Algeria, Malaysia and Qatar.

5.1
The trajectory of energy consumption in the EU of 25 is
set to follow the baseline scenario set out in the Commission's

(13) European Commission, Directorate-General for Energy and Trans-

port, September 2004.

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Recovery of fossil fuels in the EU of 25 will fall by
5.7
around 2 % p.a. up to 2030. This will
increase reliance on
imports of all fossil fuels by that year to more than two-thirds.
As already mentioned, in 2030 import levels for coal will be at
almost two-thirds, for gas more than 80 % and for oil almost
90 %. Particularly critical
is the growing dependence on gas
imports from a restricted number of suppliers.

5.8
Electricity consumption will grow to 2030 by an
average of 1.4 % p.a. This will increase the demand on power
station capacity from today's c. 700 GW (maximum electrical
capacity) to c. 1 100 GW in 2030. Old power stations will also
need to be replaced with new plants. The Commission's esti-
mate in its baseline scenario is that the expected increase in
capacity will come from an increase of around 300 GW in
fossil energies and around 130 GW in wind, hydro and solar
energies, while nuclear plant capacity is expected to decrease
by 30 GW between 2005 and 2030, failing any lasting change
in overall policy.

There will thus be great challenges and much work to
5.9
be done in supplying the EU's energy over the next 25 years,
though these could also bring economic opportunities. They
include ensuring supply (including reducing import depen-
dency), meeting growing environmental demands, guaranteeing
the competitive price of energy and making the needed invest-
ments.

6. Coal, oil and natural gas in a sustainable energy mix

6.1
Coal, oil and natural gas are natural hydrocarbons
produced over millions of years through a transformation from
biological substances — deposited biomass; in effect, then, it is
deposited solar energy. Different geological conditions in their
formation (e.g., pressure, temperature and age) have resulted in
different products. An important distinguishing feature is the
fuel's hydrogen content. Natural gas has the highest ratio of
hydrogen to carbon at 4: 1, while that of oil is 1.8: 1, and of
coal 0.7: 1. This in large part determines the various applica-
tions to which these fossil fuels are put.

others. Economic,
determine the choice of the hydrocarbon to be used.

technological and environmental criteria

the beginning of

Around 7 % of fossil fuels consumed in the EU are used
6.3
i.e., mainly the production of
for ‘non-energy’ consumption,
chemical products. At
the last century
reusable materials — initially ones derived from coal — were
the basis for the newly emerging branch of manufacturing.
Since then, hydrocarbon reusable materials have been almost
completely edged out by natural gas and oil products. Oil and
natural gas will continue to dominate in this segment of the
market in future for as long as supplies remain. The lifetime of
oil and gas reserves would be significantly longer if these fuels
could be used less for producing energy and heat.

6.4
The established process for the production of basic
oxygen steel is the carbon-based blast furnace/converter route.
The blast furnace process requires the use of coke as a reducing
agent for the production of pig iron, where it also serves as an
insulator and for the gas supply system. At 475 kg per ton,
the average consumption of reducing agent in modern Euro-
pean plants is close to the minimum that is technologically
possible.

sector accounts

The transport sector is still experiencing high growth
6.5
for around 25 % of energy
rates. This
consumption and road transport is almost entirely dependent
on oil products. Liquid fuels have a high energy content per
unit of volume or mass. This is the prerequisite for economical
and efficient application in the transport sector, which is why
liquid fuels and their infrastructure have established themselves
in road transport. Increased use of electric-powered vehicles,
such as trains, reduces reliance on oil by allowing a range of
primary energies to be used (coal, gas, renewable energies,
nuclear power).

Competing with oil-based liquid fuels are natural gas
6.6
and liquefied natural gas (LNG) used directly as a fuel.
It
remains to be seen whether these product lines will be able to
secure greater market share (14).

6.2
As yet there is no alternative to the use of coal, oil and
natural gas as fuels, as the raw material for making many
products (from medicines to common synthetics) and as a
carbonaceous reducing agent for iron and steel production.
However, their specific physical and chemical properties (state,
hydrogen content, carbon content, ash content, etc.) make
them particularly good for many applications and less so for

Households and small consumers require around 30 %
6.7
of energy. The choice of energy source is based on economic
criteria and is increasingly dictated by convenience and the
environment. In this sector heating oil, natural gas, electricity
— and in populated areas district heating from combined heat
and power plants — are in competition with one another.

(14) The same is true for liquid fuel from biomass, which so far has

only been marketable thanks to high subsidies.

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6.8
40 % of the EU's energy consumption is converted in
power stations to electricity and heat. Technologically speaking,
coal, oil and natural gas — as well as nuclear energy — are all
equally suited for conversion into electricity. In technologically
highly efficient power stations, natural gas can provide an effi-
ciency (in converting primary energy into electrical energy) of
almost 60 %. For hard coal the figure in modern plants is
between 45 % and 50 %, and for lignite 43 %.

6.9
Around 40 % of the world's electricity needs and around
30 % in the EU are derived from coal. Around 63 % of the
world's coal production is used to provide electricity: coal is
more economical than oil or natural gas in providing electricity
and is reliably available all over the world from widely diversi-
fied areas of production.

6.10
The aim is to concentrate the use of coal on steel and
electricity production and so get a fossil fuel energy mix which
combines
protection,
security of supply and protection of resources. Worldwide
supplies of coal are substantially greater than those of oil and
natural gas.

environmental

economic

benefits,

The broad policy conditions should therefore provide
6.11
incentives to use natural gas and oil, which are both relatively
scarce and relatively versatile, predominantly for applications
— such as fuel for transport and as raw material for the chemi-
cals industry — where the use of coal (as well as of nuclear
power and, to some extent, renewable energy sources) would
involve extra costs, technology and energy consumption —
and hence more CO2 production! The depletion of
these
reserves could thus be postponed to the benefit of
future
generations.

This would also mean incentives for the use of coal
6.12
in power stations for
(and renewable and nuclear energies)
generating electricity, so that oil and natural gas would not be
needed (see also point 8.12). Europe has available, in central
and eastern Europe, considerable supplies of hard coal and
lignite. These reserves can be used to prevent the EU's depen-
dence on energy imports increasing further.

imported fuels,

of
beyond the EU's borders also need to be taken into account.

those environmental effects which arise

7.2
Different environmental effects need to be taken into
account in the recovery/production of coal, oil and natural gas.
In the case of coal mining, depletion of the landscape needs to
be limited, as do dust emissions. In the case of drilling and
recovery of oil the leakage of oil and natural gas, as well as by-
products, needs to be prevented; the same is true for recovering
natural gas and for the related pipeline or tanker transportation
of oil and natural gas. Special precautions are needed in the
case of offshore production. The methane produced in oil
recovery should not be burned off, but put to industrial use.
Something similar applies in the case of coal mining to the fire
damp produced, which can contain large amounts of methane.

7.3
The European Large Combustion Plant Directive sets
strict environmental standards for the building and running of
power stations with a performance of ≥ 50 MWth. Concentra-
tions of pollutants in discharge gas from gas, oil and coal-fired
power stations must be limited to the state of technology as
determined in this Directive. Older plants are to be modernised.
This should ensure that the emissions of dust (and fine dust,
see 7.6), sulphur dioxide, nitrogen oxides and, above all,
harmful heavy metals and toxic or carcinogenic organic
for nature and
substances are reduced to a tolerable level
people. Noise levels must also be pre-emptively reduced to a
level at which harm is avoided as much as possible.

7.4
Coal contains non-combustible substances which are
separated (in electric or fabric filters) as ash following the
combustion process in a power station. The ash content of
hard coal is normally up to 10 % (and occasionally as much as
15 %). Depending on the composition, ash is used as an
extender in the cement industry and road building or used for
mine and land filling.

Oil also has a proportion — albeit small — of ash.
7.5
When oil is processed in the refineries, the ash (which includes
parts of vanadium and nickel) remains in a solid state known
as petroleum coke. It is then used for its residue energy in
power stations and combustion plants which have the neces-
sary purification equipment for separating all the pollutants.

7. Environment and climate protection

7.1
Environmental analyses and comparisons of fossil fuels
must cover the entire production and application chain: extrac-
tion and recovery of raw materials, transport, energy conver-
sion and end use. All of these steps involve more or less major
effects on the environment, as well as energy losses. In the case

For a number of years now there has been intensified
7.6
fine dust emissions (15). These are respirable
discussion of
suspended dust particles which are smaller than 10 µm and
could be a trigger for respiratory diseases. Such particles are
also emitted by oil and coal combustion, as the filters are not

(15) Council Directive 96/62/EC of 27 September 1996 on ambient air

quality.

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able to completely separate finer ash particles. The most impor-
tant source of
fine dust emissions, however, are vehicles
running on diesel which are not fitted with particle filters. In
coal and oil power stations dust emission is restricted by the
European Large Combustion Plant Directive's ceiling of 20 mg/
m.
In large power stations fine dust emissions are further
reduced by wet flue gas desulphurisation. To reduce fine dust
emissions further and to maintain emission ceilings throughout
Europe, stricter conditions for diesel vehicles have been enacted
by the EU which make particle filters obligatory in cars from
2008.

The desulphurisation of flue gases from large power
7.7
stations and industrial combustion plants was made compul-
sory in some EU Member States as early as the 1980s. This put
an end to the acidification of land and lakes that was already
visible. The latest version of the European Large Combustion
Plant Regulation prescribes an SO2 flue gas ceiling of 200 mg/
m3 for plants >300 MW. The current state of
technology
allows separation of sulphur parts to a level of more than
90 %. New markets have been found for the products of
sulphur separation, notably plaster, and the consumption of
natural resources thereby reduced.

fuel (e.g., gas) and would thereby put in doubt economic effi-
ciency and the EU's supply security. Moreover, gas is too
important a raw material for the chemicals industry and the
transport sector to be used for producing electricity.

Per energy unit,

the combustion of natural gas
7.11
produces only 50 % to 60 % of environmentally harmful CO2
compared with the burning of coal, because not only the
carbon in the gas is used (burned), but also the hydrogen.
However, methane itself — a main component of natural gas
— is a greenhouse gas far more harmful to the climate (c.
factor 30) than CO2. For this reason, everything must be done
in the production and use of fossil fuels to prevent methane
emissions. Methane released in the recovery of oil and coal
must be captured and put to some use. It is also vital to avoid
leakages of methane in transporting natural gas, as even the
slightest losses in transit by pipeline are enough to offset the
advantage natural gas has in this respect over coal.

7.12
Past experience shows that the best way to achieve
rapid success in protecting the climate and the environment
while using coal, oil and gas is to replace ageing plants and
power stations with ones that have more modern technology
and greater efficiency. For this reason, broad policy conditions
which promote investment in new technology are particularly
suited to achieving ambitious environmental protection objec-
tives.

7.8
At high temperatures in the process of burning fossil
fuels, nitrogen oxides are produced from the nitrogen in the
fuel itself or in the combustion air. At increased concentrations
these nitrogen oxides can cause respiratory diseases and are
also a precursor of environmentally damaging ozone. The
European Large Combustion Plant Regulation demands that
nitrogen oxide emissions from power stations >300 MW not
exceed 200 mg/m3.

7.13
In the last twenty years, European environmental legis-
lation has brought about harmonisation of environmental stan-
dards in the countries of the European Community. The Euro-
pean Large Combustion Plant Directive and the European Air
Quality Directive have made important contributions to this, as
have policies and measures to increase energy efficiency and
reduce greenhouse gas emissions.

Science goes on the basis of a causal

7.9
relationship
between the emission of man-made CO2 and other so-called
greenhouse gases and an increase in temperature of the earth's
surface (the greenhouse effect). The extent of the effect is still
uncertain. Every year 20 billion tons of CO2 emissions are
produced in the process of coal, oil and natural gas combus-
tion; this is the prime source of man-made CO2 emission.
Alongside increasing efficiency and energy-saving measures,
CO2 separation technologies (see below) have the most poten-
tial for producing a considerable alleviation in the long term
and therefore need to be developed.

Increasing efficiency in energy conversion and use is
7.10
for comprehensive success in climate protection. The
vital
measures needed for this should be seized upon. Fuel substitu-
tion strategies are, by contrast, less effective, as they only have
a one-sided effect on the consumption of certain forms of

8. Technological development (16)

8.1
In the EU of 25, coal, oil and gas power stations
account for more than 60 % of the total installed capacity of
power stations and thus form the backbone of electricity
supply in Europe. The need to replace decommissioned power
stations and to satisfy increasing demands made on power
station capacity (see point 5.8) means that a considerable
number of new power stations will have to be built within the
next twenty-five years. Even with more intense use of renew-
able energy and an expansion of nuclear energy, coal and gas
power stations will have to meet a substantial part of this
shortfall. The greater the efficiency and pollutant capture rate
of these power stations, the easier it will be to meet environ-
mental and climate protection requirements.

(16) See the Committee's Opinion: Research needs for a safe and

sustainable energy supply.

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8.2
For this reason, improved R&D efforts are also required
in the field of power station development. In the 1990s these
efforts were neglected and public funding for research fell dras-
tically in almost all the Member States.

that

The Committee welcomes the fact

its repeated
8.3
recommendation to create a special ‘Energy’ thematic area in
the 7th R&D framework programme has been taken up.
However, the relevant research programmes of the Member
States should be modified accordingly. This could usher in an
important change in the trend. This also concerns the further
development of power station technology for using fossil fuels,
which would also benefit the competitiveness of the European
plant construction industry in a globally expanding power
station market.

8.4 Modern coal-fired power stations achieve an efficiency
of more than 45 % using hard coal and more than 43 % using
lignite. The steps needed to achieve an efficiency level of 50 %
in coal power stations by 2020 are known. The long-term goal
is to raise pressure and temperature in the steam cycle of the
power stations to 700° C/350 bar, which will require the neces-
sary materials to be developed. Pre-treatment plants for drying
lignite coal should be tested for a new generation of lignite
power stations. Such ambitious development aims require the
kind of international cooperation that exists in the EU projects
AD 700 and Comtes 700 for the development of a 700° C
power station. The demonstration of a new power station
concept requires investments of up to EUR 1 bn. As individual
companies are hardly in a position to bear the costs and risks
alone, cooperation between European companies should be
sought.

for savings

the potential

time,
related to household and
commercial end-use is particularly large, because so far the cost
incentive (savings in consumption/costs for new building or
conversion) has often not been given.

8.8
The energy needs of the transport sector continue to
rise, due in part to increasing mobility following EU enlarge-
ment. The increase in emissions of pollutants and greenhouse
gases harmful to health must first be limited and then reduced
to a minimum through the development of more efficient and
less polluting motors and vehicles. Exhaust gas purification
technologies must be continually developed. It seems that this
goal can only be achieved through a successful development
and blanket introduction of a bundle of progressive technolo-
to internal combustion
gies. These include improvements
engines, diesel technology, hybrid propulsion, fuel and the effi-
ciency of vehicle fuels,
fuel cells and,
possibly, hydrogen technology.

the development of

8.9
Fuel cells are ideally suited to boosting the efficiency of
combined production of electricity and heat by perhaps around
20 % for both vehicles and stationary use in the household,
commerce and industry. This also requires a gaseous fuel —
natural gas, synthetic gas or pure hydrogen — which can be
extracted, for example, from methanol via a reformer upstream
of the fuel cell. However, although known about for 150 years,
the fuel cell has not yet achieved an economic/technological
breakthrough as a (competitive) vehicle fuel or decentralised
combined power and heating plant. Nevertheless, research and
development
including with public
support, to locate and — if possible — tap its potential.

should be advanced,

8.5
In recent decades the development of high-performance
gas turbines in gas-fired power stations has produced consider-
able improvements in efficiency. The efficiency of newer
natural gas power stations has reached almost 60 %. However,
there is uncertainty about the long-term competitiveness of
natural gas power stations, and hence the construction of new
gas-power plants, due to a drastic price hike on the gas market.

No energy option has captured as much attention in
8.10
recent years as the ‘hydrogen’ option and there is often even
talk of the future hydrogen society. At the same time, there is
often a misunderstanding among the public that hydrogen is,
like oil or coal, a primary energy fuel. This is not the case:
hydrogen must be recovered either from fossil hydrocarbons or
water, in the latter case using electrical energy; just as CO2 is
combusted carbon, so water (H2O) is combusted hydrogen.

8.6
If the production of electricity from coal is to benefit
from progress in gas turbine technology, coal first needs to be
converted into gas. In the 1980s and 1990s the EU made an
enormous contribution, through research funds, to the develop-
ment of gasification technology and supported the building of
two demonstration power stations with integrated coal gasifica-
tion. These lines of development should be pursued not only in
view of the increase in efficiency for coal-fired power stations,
but should also be the technological basis for further develop-
ment of a so-called zero-CO2 coal-fired power station.

Furthermore,

8.11
the transport of hydrogen has a cost
disadvantage compared with that of electricity or liquid hydro-
carbons. This means that hydrogen should only be used where
it would not be reasonable or possible to use electricity. An
impartial analysis of this concept is needed to focus research
on realistic goals.

Efficiency improvement and reduction of CO2 need not
8.7
be limited to industry and electricity production. At the present

8.12
Given the crucial importance to the transport sector of
easily transportable hydrocarbons (fuels), reserves and resources
should be safeguarded as far as possible, which means that oil
should not be used where coal, nuclear or renewable energy
sources would seem promising.

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9. CO2 separation and storage

9.1
The target the EU has set itself — and which goes far
beyond ‘Kyoto’ — of a worldwide reduction in greenhouse gas
emissions by the middle of the century can only be achieved if,
within a few decades, power stations and other large industrial
plants can be, to a large extent, conceived, built and operated
as zero-CO2 or reduced CO2 forms of production. Even if
nuclear energy and renewable energy sources are radically
expanded, they will not be in a position to take on this role
alone and replace fossil fuels in a few decades.

9.2
Several procedures have been proposed for running
coal-fired power station on a zero-CO2 basis. With modifica-
tions, these can also be used for oil and gas combustion. In
principle, three methods are employed: (i) CO2 separation from
the combustion gas of conventional power stations, (ii) devel-
opment of oxygen combustion and (iii)
the gasification
combined power
separation from the
combustion gas; this last concept is the one furthest developed.

station with CO2

CO2 separation from the combustion gas of coal gasifi-
9.3
cation produces pure hydrogen, which can be used in hydrogen
turbines to produce electricity. Harmless steam remains as the
discharge gas. If this technology proves successful, a synergy
with hydrogen technology in other fields is on the horizon.

9.4
For more than twenty years the concept of power
stations with IGCC (Integrated Gasification Combined Cycle)
has been intensively researched and developed. The gas purifi-
cation procedures are in principle known, but need to be
adapted to coal technology. But the costs of producing electri-
city on the basis of this concept of the power station could be
almost double those of conventional power stations without
CO2 separation, and the consumption of resources will increase
by around a third. However,
in most places this technology
will be more economical than other zero-CO2 power producing
technologies, such as wind or solar energy or electricity from
biomass.

9.5
In the 1980s, various IGCC concepts — at that time, of
course, without CO2 separation — were developed in Europe,

Brussels, 26 October 2005.

in part supported by the EU. 300 MW demonstration plans for
hard coal were built and operated in Spain and the Netherlands.
A lignite demonstration plant was developed, built and oper-
ated — again with EU support — to produce synthetic gas for
subsequent methanol synthesis. Europe is thus excellently
equipped technologically for developing zero-CO2 coal-fired
power stations and for testing in demonstration plants.

Not only power stations, but other industrial process
9.6
which produce large quantities of CO2 emissions — such as H2
production, various chemical processes and mineral oil proces-
sing, as well as the production of cement and steel -, should be
examined with a view to their potential for CO2 separation. In
many of these processes CO2 separation could be carried out
more economically and technologically more simply than in
the case of power stations.

9.7
There is a great need for research into safe, environmen-
tally acceptable and economical CO2 storage. The possibilities
are being explored of depositing CO2 in depleted oil and gas
deposits, geological aquifer layers and coal deposits, as well as
in the ocean. While storage in depleted oil and gas deposits,
where available, would be the cheapest alternative, depositing
in geological aquifer layers is favoured for large quantities, not
least because such geological conditions are readily available
worldwide. The key question here is to provide reliable proof
that CO2 can be stored safely in such places for a long time
and without adverse effects on the environment. A series of
research experiments to achieve this is being supported by the
EU. The results available so far are encouraging,
though
concerns remain that a rise in sea temperature might trigger a
release of CO2 deposited in the ocean (see also point 3.14).

A comprehensive introduction of CO2 separation tech-
9.8
nology and storage will only be available after 2020 and even
then on the assumption that the necessary R&D studies are on
schedule and prove successful. Studies estimate costs of
between EUR 30 and EUR 60 for every ton of CO2 disposed
of
transport and storage), which is more
advantageous
renewable electricity
production.

than most methods of

(CO2 separation,

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND