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Ukraine coal mining impact on environment and energy dependence

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Ukraine remains among the top 20 CO2 emitters and is one of the most carbon-intensive economies in the world. Emissions per GDP unit are two times higher than in Poland and more than three times higher than in Turkey. At the same time, the carbon footprint of an average Ukrainian is smaller than those in coal-extracting countries inthe EU – carbon dioxide emissions per capita in Ukraine amount to 6.3 tons of CO2e (CO2-equivalents), while Germany’s and Poland’s come to 8.9 and 8.3 tons of CO2e per capita, respectively, according to World Bank data. The coal sector accounts for half of Ukraine’s greenhouse gas emissions (2013).

As a result of the conflict in eastern Ukraine, the government has lost control over the coal heartlands of the country. But regardless of the outcome of the conflict, there is no reason for Kiev to restore or maintain coal mining the way it has operated before, writes Oleg Savitsky of the National Ecological Centre of Ukraine in a new report. As the mines are only able to survive with subsidies, the government should develop a phase-out strategy to make a transition to a sustainable energy economy, argues Savitsky. This article is based on the full report, Towards the End of the Coal Age in Ukraine?, published in cooperation with the Heinrich Böll Stiftung.

In 2013, with a share of 35.8% in the energy mix, coal was Ukraine’s most important primary energy source, followed by natural gas with 34.1% and nuclear with 18.9%. Coal in Ukraine was mainly used for power generation, the metallurgical industry and heating utilities. Total consumption, according to different statistics, was between 61 and 74 million tons (2012). Net imports amounted to around nine million tons.

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Reserves and mining

Ukraine accounts for 3% of the world’s total coal reserves. Ukraine’s coal deposits are concentrated in the Donets and Lviv-Volyn hard coal basins and the Dnieper brown coal basin. Most of Ukraine’s hard coal deposits (up to 95%) are located in the Donets Basin (Donbass), which spreads over the regions of Donetsk, Lugansk and Dnipropetrovsk.

Brown coal is exploited only on a very small scale, mostly for briquette exports. In the western Ukrainian Lviv-Volyn basin,two million tons of relatively low quality coal is mined annually in 13 operational state-owned mines.In Donbass, around 65 million tons of coalwas extracted from an average depth of 700 meters in 2012. Some mines operate at depths of up to 1,400 meters, and coal seams are relatively thin (1 to 1.2 meters). On average, mines have already been in operation for 45 years.

Because of the war in eastern Ukraine, of the 82 mines in the Donbass region only 23 remain in territories controlled by Ukrainian authorities. All anthracite mines are located in areas controlled by separatists. Many mines either suffered direct damage from shelling or were flooded as a result of interruptions in electricity supply. Restoration of former production levels seems impossible. Coal extraction in Ukraine declined by 60%, and the need for imports and thus dependency on foreign supply increased significantly. In particular, there is a shortage of anthracite coal, which cannot be easily replaced by other types of coal.

Even before the military escalation of the conflict in the east, around 10% of Ukrainian coal was estimated to be produced in industrialized illegal mines that were part of large-scale corruption schemes organized in the Yanukovych era.

Electricity and heat sector

Power generation from coal and gas is managed by five utilities that operate 14 large-scale thermal power plants (TPPs). Only three of them (one utility company) are owned by the state, while nine belong directly to Rinat Akhmetov’s company DTEK and the remaining two are controlled by a businessman close to Akhmetov.

Total installed coal-fired power generation capacity is 21.9 GW (compared to around 5 GW of installed natural gas capacity and 13.8 GW of nuclear capacity). The average load factor is only 35%. A large share of the capacity is used only in peak demand situations, which is very inefficient. The technical equipment in most of the units is extremely old, and emission levels are very high.

Similarly, the grid infrastructure is very old and inefficient. Losses in transmission and distribution amount to more than 12% of total supply, twice as much as in Poland.

Around 30% of Ukrainian heat generation is coal based, though the share is lower in western Ukraine and higher in the east of the country. Utilities are mainly government owned, though privatization is being planned.

Climate and environment

Ukraine remains among the top 20 CO2 emitters and is one of the most carbon-intensive economies in the world. Emissions per GDP unit are two times higher than in Poland and more than three times higher than in Turkey. At the same time, the carbon footprint of an average Ukrainian is smaller than those in coal-extracting countries inthe EU – carbon dioxide emissions per capita in Ukraine amount to 6.3 tons of CO2e (CO2-equivalents), while Germany’s and Poland’s come to 8.9 and 8.3 tons of CO2e per capita, respectively, according to World Bank data. The coal sector accounts for half of Ukraine’s greenhouse gas emissions (2013).

Environmental management and enforcement of environmental law are very poor throughout the sector. The coal industry is responsible for 80% of total sulfur dioxide emissions in Ukraine and 25% of nitrogen oxide emissions. Levels of hazardous emissions at Ukrainian thermal power plants exceed the EU standards by 5 to 30-fold and often exceed national emission restrictions.

At many power plants, dust emissions are up to 45 times higher than EU emission limits. Purification of sulfur and nitrogen oxide from flue gases is practically absent at Ukrainian thermal power plants. Particularly alarming is the environmental situation around many illegal mine sites. The consequences of the flooding of several mines caused by the military conflict are currently unpredictable.

Social and health aspects

The estimated number of jobs in coal mining, processing and thermal power utilities is 450,000 (2013). Relative to output, this number is very large – twice as high as in Poland, for example. Because of extremely old equipment and low industrial safety standards, work conditions are very bad, and accident rates are extremely high. In 2014 alone, 99 workers died.

Air pollution from TPPs and the steel and chemical industries is a serious risk for public health in the affected regions, with 22,000 deaths attributed to this air pollution annually.

National economy and governance

Ukraine has experienced a far-reaching energy policy takeover by private business interests in collaboration with corrupt networks in the government. After Viktor Yanukovych took office in 2010, the most important parts of the Ukrainian coal sector were privatized and monopolized by Rinat Akhmetov’s business group.

The sector is an enormous economic burden for the country. Direct subsidies to mines in 2012 amounted to 1.3 billon euros (3.8% of the state budget). Ukraine’s membership in the European Energy Community (EEC) since 2010 and the resulting policy requirements seem to have had no impact whatsoever on counteracting these developments.

The ratio of primary energy supply per GDP unit – the energy intensity –is higher than the IEA average by a factor of 2.76 (2012). For today’s reform agenda, the requirements of the EEC membership constitute a helpful referential policy framework facilitating necessary restructuring in the energy sector.During the recent crisis, governmental coal policy was limited mainly to ad hoc crisis interventions to ensure supply stability. Current drafts of the Energy Strategy until 2025, however, do not envisage significant decreases in coal-fired capacities.

Conclusions

In the course of the conflict in eastern Ukraine, the country has lost control over the heartlands of coal in Ukraine. Even if the Ukrainian government takes back power in the region soon, there are no reasons to keep alive or restore coal mining to the way it had operated previously. Even before the beginning of the crisis, mines were able to survive only thanks to huge direct subsidies and with devastating external costs for the environment and for the health of workers and local populations.

What is more, a reformed energy sector in the country will not need coal anymore in the longer term.  The potential for improving energy efficiency in the electricity and heat sectors and in industry is huge. Thus, the overall energy consumption levels will decrease. Further use of coal would increase the dependency of the country on imports.

In terms of technology, a large number of coal mines and coal-fired power plants are extremely old and inefficient, with high emission levels and poor industrial safety conditions. Significant modernization investments are not economically viable at all. In addition, the electricity system above all needs flexible reserve capacities to cover peak load situations and to balance fluctuating generation from wind and solar – coal-fired power plants can fulfill this task only with a very low efficiency. Existing gas-based reserve capacities can do this job much better.

What is to be done? It is well beyond the scope of this paper to offer an action plan addressing all related aspects. In the given framework of Ukraine’s membership in the EEC, the energy sector needs a fundamental reorganization based on the principles of transparency, de-centrality and fair competition between private companies/service providers with the politically controlled policy objectives of sustainability, supply security and cost efficiency. A central element here would be the establishment of an independent regulatory authority for the energy markets.

More specifically with regard to the coal sector, the government needs to provide a status analysis of the remaining mines and coal-fired power plants and develop a clear phase-out strategy, fitting into an overall strategy of a transition to a sustainable, low-carbon economy. Incentives should be put in place to shut down the most polluting sites first. Thus, investment security can be achieved for grid modernization, for installing filters at those power plants that cannot be closed in the very near future, and for substitution investments into new (renewable) capacities.

energypost.eu

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