黑料社

The whole article can be found in the February issue of聽. Subscribers can聽聽to view the full issue.

Canadian coal resources contribute a robust portion to the country黑料社檚 economy. According to Natural聽Resources Canada (NRC), a Government ministry, the country has 8.7聽billion聽t of proven coal reserves, 6.6聽billion聽t of which are recoverable. There are聽24聽active coal mines, most of which are located in western Canada. According to a recent PriceWaterhouseCooper report commissioned by the Coal聽Association聽of聽Canada (CAC), the industry contributes C$聽5.2聽billion to Canada黑料社檚 GDP, and over 42,000聽people are directly and indirectly employed by the聽coal industry.

Further, the sector is growing at a healthy rate: over the last 10聽years, capital investment rose by almost 20%/year, and revenues grew at an average rate of 15%/year during the same time frame. 黑料社淥ver the medium to longer term, the Canadian coal industry is聽very optimistic聽about its prospects, with strong forecasted demand for thermal and metallurgical coal in Asia one of the聽key reasons for its bullish outlook,黑料社� says Ann聽Marie聽Hann, president of the CAC.

But producers in Canada are not immune to the cyclical nature of the sector. 黑料社淐anadian coal production for 2012 is slightly lower than the previous year,黑料社� says Hann. 黑料社淭he short-term challenge has been from the slowing of China黑料社檚 growth in the last year. Producers seem now to be adopting a more cautious approach and placing more focus on expenditure control until markets and prices rebound once again.黑料社�

Although the short-term outlook is flat, the industry is investing several billion dollars in new projects in anticipation of longer-term export growth.

In anticipation of export expansion, the coal sector has been co-ordinating transportation infrastructure with various stake-holding partners, upgrading engines and tracks, removing bottlenecks and streamlining scheduling.

The three coal terminals on Canada黑料社檚 western coast 黑料社� Ridley聽Terminals in Prince聽Rupert, and Westshore and Neptune terminals near Vancouver 黑料社� handle about 80% of Canada黑料社檚 exports, and all are currently expanding. In all, west coast terminals expect to be handling around 70聽million聽tpa by 2015. In anticipation of expanded production, mining companies are renegotiating their existing contracts.

Problems galore

Environmental challenges

In spite of the positive long-term outlook, the sector faces several major challenges. One of the most serious is climate change, and the association made between the greenhouse gases (GHGs) emitted by coal-fired utilities and global warming. Global emissions total around 28聽billion聽tpa of CO₂, of which the burning of coal for electricity production accounts for about 11聽billion聽t, making it a prime target for reduction regulations.

After several years of consultation, the Canadian Government published coal-fired utilities regulations that will take effect starting 1聽July聽2015. The law requires new plants built after that date to be as clean as natural gas-fired generators, emitting no more than 420聽t of CO₂ per GWh of power produced. Existing coal facilities will have to meet the new performance standards when they reach end-of-life, at 50聽years. The regulations are expected to reduce cumulative emissions from the sector by 214聽million聽t over a 20聽year period.

Although environmental critics find the new regulations too lenient on many of the oldest facilities, coal-fired power plants will begin to be affected by 2018. In order to keep operating, the plants will have to adopt GHG emissions reduction technologies. One聽of the most promising is carbon capture and storage (CCS). But CCS is expensive to build and operate: retrofitting a facility can easily exceed C$聽1聽billion, and some estimates place operating costs at over C$聽100/t.

Rather than install costly technologies that are unproven at a commercial level, some jurisdictions and utilities are phasing coal-fired generation out. A聽decade ago, Ontario had 19聽coal-fired plants with over 6000聽MW of capacity. It聽has closed 10聽of these plants since 2003, and most remaining plants are scheduled to be closed by 2015.¹ Although the Canadian coal sector is not directly affected by the closures (most of Ontario黑料社檚 thermal coal comes from the US), utilities in other jurisdictions are taking advantage of low gas prices to switch to combined cycle gas turbines (CCGTs). These gas-to-power (GTP) plants give utilities the flexibility to meet both baseload and peakload needs efficiently and cheaply:

Falling prices

Another challenge to the sector is the uncertainty over the price of coal. Recent fluctuations in Asian imports have set off investor warnings. Teck Resources黑料社� Q3聽2012 profits fell 78% in comparison to Q2聽2012, primarily due to drops in coal prices.

Skills shortage

Labour shortages in the sector are also causing concern. 黑料社淐ompanies do everything they can to source workers locally because they have a strong commitment to the local communities,黑料社� says Hann. 黑料社淭he reality is there is a shortage of skilled labour in the sector, and if Canadians cannot be found, then immigration has to be considered.黑料社�

Some good news

Government and industry are working together to find a solution to GHG emissions and several new, high-tech coal-fired plants are being built by Canadian utilities. Progress has been made in the permitting and approval of coal and other natural resource projects. 黑料社淭he聽federal Government enacted the Canadian Environmental Assessment Act聽2012 to streamline environmental assessments and avoid duplication,黑料社� says Hann. 黑料社淚t聽also significantly reduces the number and types of project that require a full assessment. They have clearly articulated that it is being done for the sake of improving the process, and will not compromise environmental protection. There is also legislation under development to establish specific timelines for the process. The industry is very positive about this legislation.黑料社�

The Government of Alberta is also proceeding with similar legislation, and has tabled the Responsible Environmental Development Act that will consolidate former regulatory bodies and certain responsibilities of the Department聽of聽the聽Environment into a single regulator that will deal with upstream oil and gas, oilsands and coal. 黑料社淚t will reduce duplication, streamline the process and support and enhance competitiveness of the energy sector,黑料社� says Hann.

The CAC and Government are also working on ways of alleviating the skilled labour shortage. 黑料社淭here are a myriad of solutions as to how to meet that demand,黑料社� says Hann. 黑料社淲e need to work to bring in more women, more Aboriginals and more youth.黑料社�

While the sector can only wait to see how coal prices fluctuate in the short term, long-term prospects are much brighter as Asian countries use coal as a key energy source to help make their economies grow. China alone, which imports about 165聽million聽tpa to meet its steel and electricity demands, is expected to need 300聽million聽tpa by 2015.

黑料社淥ver the medium to longer term, the Canadian coal industry is very optimistic about its prospects, with strong forecasted demand for thermal and metallurgical coal in Asia one of the key reasons for its bullish outlook,黑料社� says Hann.

Written by Gordon Cope.

The whole article can be found in the February issue of聽. Subscribers can聽聽to view the full issue.

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