Study of the impact on jobs of a European clean coal industry for energy purposes.

1. Study of the impact on jobs of a European clean coal industry for energy purposes. Presentation of employment scenarios by Alain Mestre /SYNDEX and Andrzej Jakubowki / S.PARTNERS ETUC Conference, London 6 october

2. About 27% of the overall power generation in the EU is provided by coal-fired power plants.

3. The European stakes of the clean coal technologies and industries (1) To help secure the EU's power supply, coal will continue to play a key role in the energy sources used at the horizon 2030. However, CO2 emissions from coal-based electricity generation accounts for 70% of total CO2 emissions related to electricity generation in the EU, and it accounts for 24% of CO2 emissions from all economic sectors taken together ( 2006 EC) and for 40% at the worldwide level. Technologies for the sustainable use of coal must be based on an optimum combination of 'clean coal' technologies (Advanced IGCC, ultra critical cycle, Coal CHP) and CCS technologies.

4. The European stakes of the clean coal technologies and industries (2) Power & Heat from solids fuels : 1 billion tonnes CO2 emissions in EU-27 in 2007; Germany, Poland & UK representing together 58% of these emissions.

5. The European stakes of the clean coal technologies and industries (3) Continued development of these technologies and demonstrating their environmental, economic and social viability & reliability will lead to their large-scale use. The development of these technologies will make it possible to eliminate up to 90-100% of the carbon emissions from fossil-fuel power plants, i.e. an overall reduction of 30% in CO2 emissions of the 27 EU Member States by 2030 compared to 1990. To achieve this, a very substantial increase in funding for research is required for the development of technological demonstration projects at both national and European level.

6. The European stakes of the clean coal technologies and industries (4) Strong cooperation between the industrial sector and the public authorities is called for, via a coordination and support structure, based on the European Technology Platform « Zero Emission Fossil Fuel Power Plant » (ETP ZEP)  launched in October 2006. Recently in this process, equipment suppliers (Siemens, Alstom, Doosan Babcock,...) became affiliated to the professional association Eurelectric.

7. The targets of the ETP ZEP for the coal-fired power plants : avoiding 100 MtCO2/y in 2020 and 400 MtCO2/y in 2030 (1) The target of ETP (European Technology Platform) ZEP is the commercial deployment of ZEP plants which in turn is expected to have a further major impact in the reduction of greenhouse gas emissions. If the maximum potential is realised, ZEP plants could potentially avoid up to 400 Mt CO2/year in 2030 (100 Mt CO2/year in 2020), depending on the time of deployment of the technology. The corresponding maximum cumulative CO2 emissions that could be avoided for the period 2010 to 2030 would amount to up to 4.7 Gt CO2.

8. The targets of the ETP ZEP for the coal-fired power plants : avoiding 100 MtCO2/y in 2020 and 400 MtCO2/y in 2030 (2) The estimated potential for ZEP plants by EC in the EU-27 is up to 80 GWe by 2030 (20 GWe by 2020). Eurelectric assessed that the target of avoiding 1.2 Gigatonnes CO2/year at the horizon 2030 representing 1/3 emissions CO2 of coal-fired power capacities is reachable. According to Eurelectric, assuming a 300 MW ZEP power plant, the cost per tonne target should reach € 25/T at the horizon 2025 to be deemed efficient.

9. The targets of the ETP ZEP for the coal-fired power plants : avoiding 100 MtCO2/y in 2020 and 400 MtCO2/y in 2030 (3)

10. The targets of the ETP ZEP for the coal-fired power plants : avoiding 100 MtCO2/y in 2020 and 400 MtCO2/y in 2030 (4) If EU funding for a CCS demonstration programme is rapidly established, total installed capacity could reach 80-120 commercial-scale projects and could be operational in EU-27 by 2030 (30-40 in EU-27 by 2020). This programme represents a reduction in CO2 emissions of about 400 million tonnes per year. The range depends on several factors : the speed with which regulatory support is established, the speed with which public funding is allocated and permitting processes are obtained as well as the extent to which CCS is retrofitted to existing power plants and applied to other large industrial emitters. CCS is likely to develop via a series of CCS clusters around major industrial areas in Europe. The most efficient way to achieve such a roll-out is to group projects in a series of CCS clusters around major industrial areas: a focused pipeline infrastructure will lead to lower transport costs; while public support, permitting and local coordination of infrastructure will obviously be simpler where CCS is already taking place.

11. The targets of the ETP ZEP for the coal-fired power plants: commercial viability of CCS in 2030 (1)

12. The targets of the ETP ZEP for the coal-fired power plants: commercial viability of CCS in 2030 (2) In order to achieve the commercial and operational viability of the large scale CCS projects related to coal-fired power plants in EU-27 by 2030, a significant increase to 80 GW of the installed capacity is necessary. Basically additional investments, operating costs of CCS and CO2 pricing by ETS ought to reach similar levels. According to the European Commission, without CCS « the costs of meeting a reduction in the region of 30% GHG in 2030 in the EU could be up to 40% higher than with CCS.» In the IEA’s Blue Map scenario, which halves CO2 emissions between 2005 and 2050, the costs of doing so without CCS would be USD 1.3 trillion per year (71% more).

13. The targets of the ETP ZEP for the coal-fired power plants: 3 CCS Routes (1) 3 Carbon Capture technology routes : Pre-combustion, Post-Combustion, Oxy-combustion Source : ETP ZEP

14. The targets of the ETP ZEP for the coal-fired power plants : 3 CCS Routes (2) The 3 carbon capture routes need dedicated & different power plant definitions (IGCC, CFB, PC, Oxyfiring,…). Source : ETP ZEP

15. The funding plan of CCS projects in the EU: is it appropriated & reliable ? (1) On CCS, the EU's target is to have 10-12 demonstration plants up and running by 2015 with an additional cost of between € 7 and 12 billion (€ 9,3 billion according to Eurelectric). A shortlist of projects is to be published by mid-2010. The funding engineering planned by the European commission is the following : The revised ETS directive states that the 300 allowances from the New Entrants' Reserve (NER) will only be available until the end of 2015, but these will depend on CO2 price. On 29 June 2009 the European Commission estimated that up to € 7 billion could be made available to fund CCS technology from the EU's emissions trading scheme (EU ETS). Meanwhile, renewables projects would get around € 5 billion.

16. The funding plan of CCS projects in the EU : is it appropriated & reliable ? (2) Also an investment amounting to € 1 billion will be allocated in the framework of EERP (European Energy Recovery Program). A minor part of the funding (not defined to date) should be covered by power utilities (5 approved utilities companies according to Eurelectric), in the framework of a PPP (Public-Private-Partnership). However some uncertainty remains over the funding of these CCS demonstrations projects, especially given the NER ETS Funds being shared between CCS projects and RES projects. A voluntary and efficient European industrial policy dedicated to the deployment of CCS routes still remains to be designed and implemented.

17. The funding plan of CCS projects in the EU is based on the assessment of additional investment & operating costs by the ZEP (1) Also

18. The funding plan of CCS projects in the EU is based on the assessment of additional investment & operating costs by the ZEP (2) The assessment of the additional costs by the ZEP is based on a study (McKinsey) into the costs of CCS. It is expressed as the difference between the total lifetime costs (including investment and operating costs) of a power plant with CCS versus one without CCS. This study took into account the range of costs between fuel types and the 3 main capture technologies (pre-combustion, oxyfuel-combustion, post-combustion), as well as the CO2 price forecast for the period 2012-2015 (EUR 35/tonne CO2). Based on this, it is estimated that as a result of the additional CCS installations and reduced plant efficiency -and taking into account permit costs avoided for CO2 stored- an EU Demonstration Programme of 10-12 CCS projects requires 7-12 billion € in additional funding in order to close the economic gap. An EU Demonstration Programme of the 10-12 CCS projects requires € 7-12 billions in additional funding, This is strongly dependent on CO2 price expectations. And the implementation of this programme is also uncertain. A voluntary and efficient European industrial policy dedicated to the deployment of CCS routes is still to be designed and implemented.

19. The impact of the technology scenarios on employment at the horizon 2030 : with CCS it is positive on the whole according to scenario SNAT-Syndex (1) Impact of CCS investments on jobs :comparison between scenario SNAT and SNAT Syndex.

20. The impact of the technology scenarios on employment at the horizon 2030 : with CCS it is positive on the whole according to scenario SNAT-Syndex (2) Under the Syndex variant, CCS investments, in phase with the European technological Platform ZEP, reach 80 GW, against 24 GW under the NSAT scenario. So the share of jobs linked to investments in thermal power plants rises from 10% to 13,7% under the NSAT Syndex scenario. Under the NSAT Syndex scenario, the jobs generated by investments in CCS plants would average 79 000 FTE per year ( which corresponds to an average investments of 3,2 GW per year), compared to 28 000 FTE under the NSAT scenario (for an average annual investment of 1,1 GW).

21. The impact of the technology scenarios on employment at the horizon 2030 : with CCS it is positive on the whole according to scenario SNAT-Syndex (3) Impact of CCS Scenarios SNAT-Syndex on jobs in operation of the coal-fired power plants : 13 000 per year in 2020, 31 000 per year in 2030.

22. The impact of the technology scenarios on employment at the horizon 2030 : with CCS it is positive on the whole according to scenario SNAT-Syndex (4) Impact of CCS Scenarios SNAT Syndex on jobs in maintenance : + 6 000 in 2020, + 15 000 in 2030 / 2010.

23. The impact of the technology scenarios on employment at the horizon 2030 : with CCS it is positive on the whole according to scenario SNAT-Syndex (5) Impact of CCS Scenarios SNAT Syndex on jobs in mines : reduction of 10 000 jobs in 2020

24. The impact of the technology scenarios on employment at the horizon 2030 : with CCS it is positive on the whole according to scenario SNAT-Syndex (5) SNAT Scenario (EC) and SNAT-Syndex : by 2030, the potential of jobs linked to the deployment of CCS routes in the whole energy-related coal value chain is significant : In the equipment industry sector dedicated to CCS routes in the EU-27, about 79 000 (direct) and 9 000 (indirect) additional FTE jobs would be generated on average per year between 2006 & 2030; more than 834 000 FTE jobs would be generated through an investment program related to power generation capacities. (hypothesis : 3.2 GW/year on average, capacities investments in CCS coal-fired power plants to achieve 80 GW at the horizon 2030 as per SNAT-Syndex scenario). 24

25. The impact of the technology scenarios on employment at the horizon 2030 : with CCS it is positive on the whole according to scenario SNAT-Syndex (3) Detail of the 79 000 directs FTE jobs : 32 000 dedicated to manufacturing equipment, 15 900 to R&D & engineering, 12 700 to installations equipment , 18 200 to civil engineering infrastructure. Also, 13 000 additional jobs would be generated in the operating of the coal-fired power plants with CCS, but this would be offset by job reductions (10 000) in the coal mining sector impacted by CCS.

26. However, the deployment of CCS raises as well a certain number of social issues The deployment of CCS technologies raises two majors questions if it comes to social issues: 1- Where are going to be created the expected direct and indirect jobs? Indeed, as these technologies are very innovative and capital intensive only a few companies own this technology and are able to develop and widespread it. This situation engenders the risk of increasing the development gap between European countries and therefore undermine the objectives of the EC Treaty which are to ensure an equilibrate and sustainable development of the EU and to reduce the existing gap between the different Member States. 2- The deployment of a new technology engenders the creation of new jobs and therefore changes the needs in terms of qualifications.

27. A strong need for financial incentives and appropriate training programs in order to ensure equity in job creation across Europe The complexity and capital intensity of CCS technologies provokes that only a few companies may develop it (Siemens, Hitachi, Alstom…). Therefore there is a high risk that a major part of the benefits in terms of capital and jobs will go to a reduced number of countries. Strong financial incentives from the EU are needed in order to develop local employment in this field. It could be done threw the creation of specific funds dedicated to the deployment of production sites across the whole Europe, in order to favor the development of local employment in all the sectors concerned. These financial schemes should include special provisions dedicated to develop the qualifications of workers: Professional training funds; Development of specific courses in universities as well as in professionnal schools; Financement of experience exchange programmes (for example by the creation of an Energy specific „Erasmus” programme).

28. A large scale deployment of CCS may contribute to modify the employment structure in power plants In most of cases, the construction of a CCS installation engenders: The building of a new power plant or The modernization of an old one (if CCS ready) The modernization of an existing power plant or the construction of a new one implicates a higher degree of process automatization and the use of new technologies. From a social point of view, it has 2 major consequences on the activity in power plants: A stronger need for highly qualified people; The necessity for workers to adapt to new installations threw trainings.

29. Social transition in the electricity production sector: the Polish example (1) As an example, the number of workers with an University degree in Elektrownia Bełchatów passed from 6,8% in 1995 to 15,2% in 2007. Workers qualification in Bełchatów power plant (2007)

30. Social transition in the electricity production sector: the Polish example (2) However, here as well, the situation may differ from country to country. In Member States where the productivity is at a lower level than the European average, workers might pay a much higher price as modernization and higher process automatization will lead to cuts in employment in electricity production sites. In Poland where the productivity level is very low (≈ 1worker per MW) if compared to countries such as France or Germany, ensuring a reliable and fair social transition appears to be much more difficult.

31. Social transition in the electricity production sector: the Polish example (3) In countries with a low productivity level, restructuring plans and the creation of shared services centers will have strong impact over employment, like shown in the example below. Social impact of the creation of a shared services center in a Polish electricity production company

32. From now on, the CCS deployment requires appropriated tools and schemes to succeed in realising social transition. The deployment of different CCS routes would generate a large volume of jobs. However it does give rise to the issues of new positions, new workplaces, new skills and new training needed. From now on, it is necessary to anticipate and meet the substantial needs of human resources and new professional skills in the CCS deployment phase: in the new engineering activities related to the introduction of CCS in the coal-fired power plants (retrofitting or replacing) and also in the new power plants activities - operation and maintenance as well as the activities related to the carbon transport and storage (especially, in the carbon capture process, new professional skills linked to introducing new chemicals process in the operation of coal-fired power plants). There is a need to design and implement tools and mechanisms like a « forecast management of jobs and professional skills » dedicated to CCS coal technologies value chain so as to facilitate the social-employment transition. There is also a need to build a governance system to design and implement appropriated tools and mechanisms, in particular to resolve the issues linked to the evolution of workplaces and professional skills dedicated to CCS routes, by means of a sectorial social dialogue and dedicated funds at the European level.

33. The social stakes of the European Technology Platform ZEP The ETP ZEP doesn‘t integrate social and employment issues. ETP ZEPaims at coordinating the establishment and implementation of a strategic research agenda and strategic deployment document. However its governance structure (Advisory Council, Government group, coordination group, Task-Forces) includes representatives of public authorities, professional associations, companies, NGOs, but no representatives of European Trade-Unions. This integration of the social-employment dimension requires not only a new governance of the ETP ZEP but also to set up a fund dedicated to the deployment of CCS projects. European Social Partners must be in favour of taking into account this factor, in particular in the framework of ETP ZEP. Furthermore it deems the aforementioned approach as necessary, i.e. « forecast management of jobs and professional skills » dedicated to CCS coal technologies value chain, in the framework of the EC initiative « new jobs, new skills.»

34. Alain Mestre / SYNDEX and Andrzej Jakubowki / S.PARTNERS Thank you for your attention !