The Scottish Government commissioned an "independent and evidenced examination of the issues…surrounding UCG "...in order to "help…formulate future policies or actions".
A review of the literature was undertaken from February 2016 and a series of interviews was conducted with stakeholders between May and August. A great deal of material was considered relating to the Underground Coal Gasification ( UCG ) industry and the various demonstration, pilot and operational sites principally in Australia, Belgium, Canada, China, France, South Africa, Spain, the USA and Uzbekistan. Information on technology, operations, performance and impacts was, as noted by previous researchers, sketchy. Where appropriate, and especially given some clear data gaps, connections were sought with other Unconventional Gas Extraction ( UGE ) materials to explore and identify useful comparisons and learning. Given the lack of published material as well as commercial and legal sensitivities, it was not possible to assemble or analyse sufficiently detailed information for all aspects of UCG , especially industry performance in relation to environment, health and safety issues. This is surprising and disappointing given the century and more over which the technologies developed have been in use.
As to the potential for the industry to be allowed to operate in Scotland, there is a wealth of coal resource in Scotland, particularly in the Forth Estuary area and initial licences have been issued. There are deployable technologies to access the resource and bring it to a syngas processing plant and thereafter on to potential users of the gases for electricity generation, gas use or distribution and chemical industry uses.
However, against the backdrop of Scotland's regulatory and public policy systems and the reasonable expectations of the Scottish public in relation to engagement, operator performance and management of the whole life-cycle of the technology's use, it is extremely difficult to conceive of UCG progressing into use at this time. Of particular concern is how the deployment of UCG would fit with:
- Scotland's ambitious climate change, energy and decarbonisation targets
- Reasonable expectations of public engagement and support
- Reasonable public expectations of both regulatory and operator performance
- Effective, adequately skilled, resourced and joined-up planning and regulatory systems
- Clear existing concerns over the apparent record of performance of the industry world wide thus far and the lack of data from effective demonstration of the technology in use
- Insufficient arrangements for management of the long-term, not least potential impacts and in the compact environment of central Scotland
Response to the Brief
In terms of results, set against the requirements and structure of the brief
(see Annex 1), they are as follows:
The potential magnitude of UCG reserves in Scotland, their commercial potential and relevance to wider energy and industrial opportunities.
The resource is substantial, with greatest potential in the Midland Valley coals in and around the Clackmannan Syncline, especially the Clackmannan coalfield and in the East Fife coalfield. Hitherto inaccessible unexploited coal of appropriate characteristics and at suitable depths appears abundant. Life-cycle assessments of costs and production for an UCG operation at scale do not exist. The commercial value depends upon gas market prices and competition, quality and volume of gas, consistency of throughput, local use versus transport costs and impacts, import substitution issues and costs of offsets/life-cycle etc. It appears the most practical scenarios involve use of the gas close to the syngas plant, combined with storage of CO 2 in robust long-term stores.
The key challenges, including environmental and public health, drawing on relevant international experiences.
No assessment of liabilities management is available in terms of remedying failures or covering long term monitoring, abandonment etc. Conditions worldwide have been diverse making general conclusions about challenges difficult to reach and substantiate. Very few studies exist addressing the issues objectively and thoroughly. There is no Health Impact Assessment ( HIA ) available. Environmental impacts from trials have been documented in part and environmental statements as well as prosecutors' accounts are available. There are few well-documented cases. Uncertainties, the nature of the anecdotal evidence and issues raised by regulators and local communities merit concern and further systematic data collection around water and waste management, gas releases and other local impacts, especially in near-surface cases. In addition to poor data, the lack of a directly comparable operational environment worldwide - in terms of depth, sub-estuarine context, adjacent urban populations, for example - adds to uncertainties.
The issues that are of most concern to communities and stakeholders.
Community views strongly suggest a lack of confidence in the regulatory system, operators' performance, management of risks and liabilities, their likely involvement in shaping or benefitting from the operations, and a clear belief that this is not the right direction to be going in at this time, or for the foreseeable future. A low carbon clean economy with low environmental/community damage is sought. Concerns include subsidence, earthquakes, air quality, waste and water issues, local blight and reputation, the likely nature and duration of employment opportunities and local transport impacts among others. Perceptions and industry history as reported have already impacted on the view of likely impacts and operator care etc. There is a general concern as to why exploiting UCG is necessary and over whether there is a favourable balance between costs and benefits to the public, especially if operations go wrong or facilities are abandoned.
Whether the current regulatory framework (Exploration, Planning, Environment, Marine, and Health and Safety) is adequate and sufficiently integrated, and any key gaps.
The regulatory framework is potentially adequate but is currently fragmented, insufficiently clear and does not fit well together for the ease of use by the operator, for the integrated protection of the environment or for the reassurance of the public. Given the nature of the industry, the absence thus far of any actual applications and little technology precedent, this is not necessarily surprising. Views vary widely about the adequacy and performance of the regulatory systems depending upon which stakeholders are asked. Regulation is potentially complex, burdensome and insufficiently clear or robust to be fit for purpose. The fit between the land-use planning and Environment Protection ( EP ) regimes as well as the number of parties involved raised concerns among regulators, community and other experts and stakeholders. The last remaining active operator currently interested in Scottish sites is simply seeking clarity on the likely licensing and operational rules. There is a strong case for simplification, integration and improved communication and, if UCG were to progress, appropriate funding and skills provision.
How the potential development of Underground Coal Gasification reserves in Scotland would sit with the Scottish Government's commitment to reduce greenhouse gases.
Greenhouse gas ( GHG ) budgets are not well understood nor are the contributions of different energy technologies. Production of methane as well as carbon dioxide and other GHG gases does not automatically or directly translate to gases released to the atmosphere. Conversion, combustion, fixing into materials, flaring, fugitive releases and storage all affect the final contribution. Some of that depends upon markets and on operators' regulated performance. There is a clear view from those expressing an opinion that UCG would not fit well with reducing GHG s and is potentially strongly contradictory. This is especially seen as the case without any removal/storage/offset or compensation method being combined with the gas production, such as Carbon Capture and Storage ( CCS ), as UCG could only increase carbon dioxide and methane levels in the atmosphere. Even conservative estimates of the resource and how much could be accessed and processed into syngas suggest that this would exceed a reasonable view of our remaining carbon budget. Measured/controlled releases of gases as well as fugitive ones are stated as concerns. These concerns seem reasonable. The case for methane from this source, as a net neutral substitute for imported gas, viewed against the UK 's and Scotland's targets, has not been made in detail and neither the UK Climate Change Committeee ( CCC ) nor work undertaken for Department for Energy and Climate Change ( DECC , now DBEIS ) more recently, appear to address this convincingly. The additional concern is whether this would be seen as undermining Scotland's perceived leadership in climate change management and representing and promoting the low carbon transition, damaging the moral and practical exemplar stance achieved so far.
Whether the technology exists to allow for safe extraction, with particular reference to relevant international experience and lessons.
There is a spectrum of performance worldwide but technologies clearly exist for locating and accessing the coal resource and initial gasification and extraction of product gases. Largely, in narrow technological terms, operation of exploration and gas extraction has been demonstrated. Production, especially over the longer term has only been undertaken in a few cases and, where there are any data at all, there appears to be evidence of performance failure. As no long term "at-scale" life cycle operation has been completed and recorded, and no detailed environmental performance or health records, it is extremely difficult to respond to this point. The performance of Linc Energy and other operators appears to provide evidence of significant environmental impacts and anecdotal exposures of workers to toxins resulting from operational failures. A number of these failures have resulted in prosecutions progressing and soil contamination having to be addressed, for example. Health and safety impacts are reported although the evidence is poor. Cougar and Carbon Energy in Australia appear to have closed off their operations successfully. Linc's Hopeland site has been taken into government hands in Queensland to ensure proper management and decontamination of the site at public expense. These three demonstration pilot sites were all operating at lesser depths than would likely be the case in Scotland. Suspended operations, in most cases, where there are any data, do not appear to have major ongoing impacts. But it must be stressed that long term monitoring regimes for the environment or health are largely absent. Angren (in Uzbekistan) and other longer operating sites have poor or inaccessible data to draw robust conclusions. A contingent "yes, possibly" to the simple question of existence of technology for extraction is possible to reach but would be based on taking absence of evidence as evidence of absence. Establishing credible baselines, firm planning and licensing conditions and subsequently enforcing robust regulatory, monitoring and liabilities management arrangements, would be paramount.
How to successfully and constructively engage with communities and environmental groups in a meaningful, constructive and objective basis on Underground Coal Gasification.
It is hard not to conclude that it is already too late. As to methods, there is a wealth of available expertise and some good examples of engagement techniques and approaches to involve local communities and much that could be learned from that. Public perceptions have, however, already been established and hardened by international as well as local experience. Aspects of this perception are potentially erroneous and based, for example, on UCG or Coal Seam Gas ( CSG ) from overseas or the Hydraulic Fracturing ( HF , shale "fracking") industry's earlier practices and experience in the USA , or other oil, gas and coal operations as well as often on rather selective, activist information and interpretations. Some of these materials are at least partly accurate however, as experience from Australia appears to confirm and some UCG operators, having been taken to court, fined, gone into liquidation, not having been held effectively to account for proven incidents etc., have caused widespread reputational damage and passed costs and impacts onto the public. Conventional sector oil and gas experts indicated off the record that they were concerned about working too closely with the unconventional sector for fear of reputational damage. Former miners expressed concerns about their experience of gas management and pollution issues as well as questioning if liabilities would be taken seriously. The arguable lack thus far of industry and government leadership here, or anything perceived as objective at an early point in development, has led not just to suspicion and scepticism but to full-blown activist opposition. Whilst the general public may know much less than activists, it seems that their views have already been shaped by media attracted to colourful, scare-mongering stories and a lack of differentiation between operators or technologies or geologies and locations. In the context of a precautionary approach to hazards and stringent approach to risk management as well as recognizing the relative paucity of information and a lack of directly comparable operating environments, engagement would start from a low point. Turning this around would be extremely difficult. Possible, but unlikely, in my view.
Summary Observations and Recommendations
There is a Scottish UCG resource. Technology exits to exploit it. There is related, but not analogous experience worldwide. There is public concern generally and locally. Operators, experts and the public share concerns about viability. Costs and time to market, earnings against the world gas price market, place in that market - substitution, etc. are evidently industry issues. In regulatory and policy terms, there is both a history of incidents of pollution and losses of containment, few longer term operations at scale and a serious issue to face of achieving Scotland's carbon/ GHG (Greenhouse Gas) trajectory without an operational storage method, where CCS would be able to play a significant role. Full life-cycle provisions have not yet been addressed anywhere.
These issues together suggest that, while the industry could be allowed to develop, it would be wise to consider an approach to this issue based upon a precautionary presumption whereby operation of UCG might be considered only were a series of tests applied and passed. These tests would be in relation to the practicality and safety of the full UCG life-cycle - the end to end planning, licensing, extraction, processing, use, closure and abandonment regime including provision for long term management, reinstatement and monitoring.
Analysis suggests five interconnecting tests:
Test 1 Global/Climate Fit - Is the exploitation of UCG consistent with current and foreseen climate change imperatives and commitments made internationally and to Scottish, UK and EU climate protection measures and the minimisation of further greenhouse gas ( GHG ) releases?
This would likely require the coupling of any extraction with CCS arrangements or some other robust and validated sequestration method at least commensurate with the gas production envisaged (carbon dioxide ( CO 2) and methane ( CH 4), plus other effective GHG s identified of concern at the time). The potential for hydrogen ( H 2) supply, and a "hydrogen economy" more generally is an avenue also worthy of consideration. The connections between energy policy and current and foreseeable mix and the GHG consequences - including addressing gas markets and actual releases to atmosphere - need careful further scoping. This is especially the case given the likely timetable to move from planning, regulatory and operator preparatory actions to start-up at demonstrator scale to full-blown operations and consideration of how this fits with the downward trajectory of emissions under existing targets. The timetable - and costs and energy impacts - to deliver CCS is equally significant.
Test 2 Public/Community Support - Is there sufficient public support to achieve constructive or even neutral local engagement?
The dimensions of engagement would include local and general understanding and sufficient support in terms of perceived confidence, understanding and acceptance of benefits versus costs/impacts and specifically approval - via elected representatives, or, via call-in methods, support of national government - of application to operate through the land use planning system. Engagement approach could be supplemented by benefit sharing approaches such as have been used by enlightened developers engaging around some wind farm and small hydro schemes where a community trust as well as forms of community ownership have been developed and applied. The public engagement needed to achieve local and general support would require significant effort and consequent transformation given evident current attitudes.
Test 3 Operability - Does the technological capability exist safely and consistently to extract gas by UCG , convey it to a syngas processing facility and on to distribution and/or use?
If UCG can be demonstrably safely operated (and life cycle completed), at the intended scale, as independently assessed other than by operators or advocates or at least adequately demonstrated to relevant regulators for licensing, principally Coal Authority ( CA ), Scottish Environment Protection Agency ( SEPA ) and HSE (the GB Health and Safety Executive) as well as to meet planning requirements, then it could be envisaged. This relates to both Tests 2 and 4. The specific geologies, coal/gas qualities, depths etc. of the Scottish operating conditions may well need to be tested further before demonstration and operation near or at scale could be licensed. Angren, Swan and Majuba (see Annex 3) are all different geological settings and Australian and South African examples are much shallower as well as generally being in less populated areas than the Forth margins. Demonstrating operability is an issue as is to whom it should be demonstrated. If data on health and environmental context and performance exist they should be shared. If they do not, they should be credibly and urgently sought, prepared and communicated.
Test 4 Regulation - Does the regulatory regime exist to license and safely manage the operation of the UCG life-cycle so as to give confidence and reassurance to the public, workers, operators and regulators?
This requires the appropriate mapping (for public health, health and safety, land use planning and environment protection, including relevant subsets - marine etc.) of all of the relevant elements and their practical, effective and efficient integration so as to give operator, regulator(s) and public the confidence necessary. Achieving this will require not only operators to perform so as to meet the challenge, i.e. a good environmental statement is a necessary but not sufficient requirement, but regulation will require greater understanding and engagement, greater communication and coherence between the components, and integration and simplification of components into a compelling proportionate whole. If there were applications, how would these be handled and, as in other complex cases, what is the whole mission, are science and process clear, who has and needs which powers, and is this a set of series tasks or done in parallel? Untested without a real application, current demarcations and the edges between jurisdictions and resources appear challenging and suggest the need for enhancement to deliver the best dedicated expertise. Ultimately, to be effective and efficient, I would argue that some party and individual literally should be in charge overall. Not necessarily a single regulator, as the Smith Inquiry has suggested, but a primus inter pares lead operating in a panel or task force model with a collegiate approach would be beneficial. The New South Wales ( NSW ) CSG model, with the NSW EPA as lead, seems to be working well, for example. Ideally, although the planning, licensing and performance management elements need separation and separated authority, minimising complexity, sharing expertise and applying this together to the case in question seems to offer real benefits.
Test 5 Issues of the long-term - Does the liabilities management regime exist whereby there can be confidence that the life-cycle of the operations can be concluded with no unmanaged or unaffordable costs and impacts on and burdens to the community affected, to the environment or to the public purse?
Bonds, insurances, monitoring, compensations and remediation practices would need demonstrably to exist at the outset, or at a relevant and controllable early point in the development process, and be sufficiently protected again to provide confidence of their long term robustness. Operators, regulators, local and national government might sensibly consider pro-active openness, sound baselines established well in advance, up-front engagement around hazard and risk, with sound and shared understandings of aspirations, approach to management, approach to handling failures and consequences, explanation of similarities and differences with experience and practice elsewhere etc. This would all be necessary. Financial provisions have been considered by some specialists but this needs, on the basis of experience with the late stages of a number of industries, coal included, not to be considered as a theory not really affecting those responsible at the outset by the time the risk crystalises, but a fundamental part of the due diligence and commitment required to operate and an essential insurance against failures.
There are several connections between these tests. There are also several critical issues and gaps in the areas covered and, whilst potential actions to address them can be identified, it is clear that, at this time, full operation or even trialling of the technology at scale in the Scottish regulatory, planning and cultural environment, or anything of comparable standards elsewhere globally, has not been undertaken and would face serious challenges. Without addressing the issues and gaps, it is impossible realistically to assess hazards or their management fully and hence the risks presented and the concomitant requirements for adequate achievement of community and worker safety, the protection of the environment or public confidence generally.
There are large operational and gas budget uncertainties - partly circular, related to the market development needed for methane and hydrogen, as well as the challenges of controlled and fugitive emissions, no viable storage model and the final CO 2 and CH 4 GHG releases. But given these factors, and the lack of UCG industrial performance data, and all set against Scotland's world leading climate and energy commitments, the need for renewable technology development and deployment, as well as decarbonisation objectives generally, there is a persuasive case that pursuit of UCG is not the right approach.
It is also not a choice we need to make right now, as the coal remains available for future use as and when better full-cycle technologies or better processes, storage methods and market conditions exist. Also, this appears, especially without a carbon/ GHG offset method, to be a potentially expensive and demanding method - when infrastructure not currently in place is considered, for example, as well as issues of coal impurities and gas quality - for obtaining a gas requiring refining before use and where methane supply is both uncertain and would directly and indirectly further contribute to Scotland's carbon emissions. Research, development and demonstration effort on technology, regulation, monitoring and satisfactory engagement of the communities likely to be affected to secure their support and relevant benefits etc. is also needed and currently missing.
Consideration of the possible or ideal approach to permitting the operation of UCG would then require the positive response to all of these tests and gaps indicated above, not necessarily beyond all doubt but to acceptable degrees.
At this point, it does not appear, that the tests could be met. In which case, it would appear logical, the current moratorium being justified, to maintain it, or, as in Queensland, to progress towards a ban for the foreseeable future. As circumstances suggest, either arrangement could be revisited in due course.