Independent Review of Underground Coal Gasification - Report

11. Observations and Recommendations

11.1 There is a Scottish UCG resource. Technology exits to exploit it. There is related but no analogous experience worldwide for the operational context to be contemplated for Scotland. There is public concern generally and locally. Operators, experts and public share concerns about viability and the need for further information to understand the performance and impacts of UCG better.

11.2 Costs and time to market, earnings against the world gas price market, place in that market - substitution, for example and other factors such as investor confidence and stable operating conditions, etc. are evidently industry issues.

11.3 In regulatory and policy terms, there is both a history of incidents of pollution and losses of containment, few longer term operations at scale, none under the marine environment, woefully inadequate publicly available information on licences and performance against these, including baseline and longitudinal monitoring, and a serious issue to face of achieving Scotland's carbon/ GHG trajectory without an operational storage method and with UCG in place. Full UCG life-cycle provisions have not yet been addressed anywhere.

11.4 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 contemplated only were a series of tests applied and passed. These tests would be in relation to the demonstrable and well-understood 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.

11.5 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 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 ( CO ₂ and CH ₄, plus other effective GHGs identified of concern at the time)(The potential for H ₂ supply is an economic avenue also worthy of consideration).

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 possibly specifically approval - via elected representatives, or, via call-in methods, support of national government - of application to operate through the land use planning system. The public engagement needed to achieve local and general support would require significant effort given 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 CA, SEPA and HSE as well as to meet planning requirements, then it could be envisaged. This relates to both 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 are all different geological, political, economic and cultural settings and Australian 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.

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 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.

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 to again provide confidence of their long term robustness.

11.6 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 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.

11.7 Overall in framing the approach to be taken, especially the regulatory context, do the various aspects of the project, the operator, performance data and expectations, the community's involvement and support and the governance model together suggest that a General Social Licence to operate exists? Are costs, benefits and impacts well aligned and fairly allocated?

11.8 Scotland's world leading climate and energy commitments, the need for renewable technology development and deployment as well as decarbonisation generally, suggests pursuit of UCG, which still appears to be a developing, rather than a mature, technology, is not the right approach.

11.9 Any decision to progress towards the sort of operational environment currently applying in NSW for CSG would require not only the industry to move to that level of maturity but the very substantial transformation in available data, confidence around impacts, mitigations and liabilities arrangements, confidence in operational performance, best practice regulation in place and functioning, as well as a massive step change in both public and stakeholder acceptance and in the model of energy policy, carbon sequestration and management in place.

11.10 Progressing with UCG is also not a choice we need to make, as the coal remains available for future use as and when better full-cycle technologies or better processes and market conditions exist. Also, this appears, especially without a carbon/ GHG offset method, to be a potentially expensive method - when infrastructure not currently in place is considered, for example - for obtaining a relatively dirty methane supply that 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.

11.11 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, not necessarily beyond all doubt but to acceptable degrees.

11.12 At this point, it does not appear, therefore that these tests could be met.

11.13 That being the case, it would appear logical, the current moratorium being justified, to maintain it, or, as in Queensland, and now in the context of other unconventional gas activities in Victoria in August 2016, to progress quickly towards a ban for the foreseeable future. As circumstances suggest, either arrangement could be revisited in due course were there to be a significant change in circumstances.