Impacts of the sale of house coal and the most polluting manufactured solid fuels: report

Appendix 2 Transcript of interview with CPL Industries

• What is the profile of the solid fuel supply sector in Scotland?
  • For example, what is the number and size (Number of employees) of companies, and where are they located? Are there different types of businesses serving different areas/ communities- e.g. those that supply urban areas vs. more remote communities?
  • What types of fuels are sold by these suppliers?

Diverse sector, made of larger national suppliers and smaller local/regional businesses.

Main ways for consumers to buy: Some sell through local merchants (mostly must buy a whole pallet which cost ~£500), also major retailers (supermarkets/DIY stores) which are often supplied by CPL. This is a growing route to market as price per unit is cheaper and consumers can buy smaller quantities- Especially for occasional city users. Internet retailers- Delivered through pallet network or local merchant. CPL also does this e-commerce side. CPL has 2 depots in Scotland.

CPL sells all fuel types- smokeless, coal, and wood products

Most national suppliers/groups will have already phased out coal (UK level supply chain). Regional retailers this may not be the case.

CPL national supplier but does sell coal in Scotland still (depot-driven)

• Do you have information on the prices of different fuels in Scotland?

Pricing has converged between retailers, merchants and local suppliers

Volatile commodity costs at the moment.

In the past discount Scottish coal from remaining mines- fuel of choice for many local people.

Now no indigenous coal mining in Scotland, so all coal at international prices.

Pricing between coal and smokeless fuels has now converged as subject to global prices.

Coal actually now more expensive than smokeless fuels, including low sulphur.

People still use because of habit/tradition. Most of these users would not have a problem changing- actually smokeless fuels are cheaper £/kw. Consumers buy what they've always bought. Smokeless is less polluting and more cost effective- win win

High sulphur smokeless fuels- Scotland becomes the only place where allowed to be burned.

• England already sulphur limit
• Ireland from 1 Nov sulphur limit

High sulphur smokeless fuels if unchanged policy will be moved to Scotland as only market. CPL still sells some high sulphur fuels.

Petroleum coke and other raw materials for smokeless fuels imported, and manufactured in the UK. High sulphur pet coke is always cheaper.

3 producers of smokeless fuels in UK (CPL, Oxbow, M&G).

High sulphur would be typically 6% sulphur content

Low sulphur 2% i.e. at the limit

• What would be the impact of a ban of coal and higher sulphur manufactured fuels, and potential reduced sales of wet wood, in terms of:
  • Ability to sell alternative fuels- Are they already sold, and if not, will it be possible to switch?
  • What are the costs of shifting sales to these alternative fuels, e.g. impacts on profitability?
  • What would be the impacts on supply chains of the ban- Would some go out of business? Would there be lost employment? Would this affect suppliers in certain locations more?
  • Any other increased costs?

Would be surprised if any merchants that sell exclusively coal and not smokeless even in rural areas where not near smokeless zones.

CPL already focuses on dry wood.

More forestry in Scotland, wood moisture might be a more sensitive topic.

No difference in profit margins between coal and smokeless for suppliers. Fines raw material -> turning to briquettes similar cost to coal

Higher raw material costs for low sulphur gets passed on to consumers.

• What are the supply chains of these fuels, are any reliant on international imports?

Stated above.

• Any reports or data on the above you are aware of would be much appreciated

Other

Easier to control spend with solid fuels.

Energy security- Fuel just stored in home

Cost per kw hour competitive with heating oil for off grid users and gas for on grid. Easy to heat one room