Coal's comeback

The energy-rich economies of the Arabian Gulf are home to about 40 percent of the world's crude oil. So exactly why are they looking to coal as a source of power? Arabian Business reports on the unlikely return of an unfashionable fossil fuel.

The 1984 miners strike signalled the beginning of the end for the British coal industry. One by one the pits closed, ending the dominance of a fossil fuel that had powered the country's factories and heated its homes since the industrial revolution.

Two decades on from the miners' strike and the unfashionable fuel is making a comeback on the global stage - starting in the most unlikely region of all.

Oman last week detailed plans of a study on the viability of using coal to meet its spiralling energy needs, mainly fuelled by the large industrial projects springing up across the country.

Not to be outdone, the UAE emirate of Ajman announced its intention at the end of July to build the UAE's first coal-fired power plant, with another emirate, Ras Al Khaimah, also planning to move ahead with the building of its own station.

"Gas is the primary source of energy for power plants but for various reasons some of these Gulf countries are now facing potential shortages in gas so they're having to look at other options which include coal," says Dubai-based Raja Kiwan, an analyst at PFC Energy International.

Indeed, it may not be long before Dubai too turns to the black stuff to meet its energy needs. Dubai Electricity and Water Authority (DEWA) is understood to be considering the construction of a $1.6bn power station to generate electricity using hydrogen extracted from coal.

But the critical environmental question facing governments in the region weighing up the option of coal, is whether they are prepared to further worsen the GCC's already unenviable position of having one of the highest carbon emissions per capita in the world, by opting for a fuel which is a major contributor to climate change.

The formerly unfashionable fossil fuel is also keeping the world's fastest growing major economy on the move. Over the past three years, China has built each year new coal plants equivalent to the UK's entire electricity-generating capacity. India has given the go-ahead to eight plants which will nearly increase its current generating capacity by half. Gas price rises mean US utilities firms are building 28 coal-fired plants and in the UK, a new clean-coal power station is being built at Kingsnorth in Kent.

It may seem incongruous that Gulf states so abundant in oil and gas reserves are considering importing coal, but for a region expanding at a rapid rate, coal provides a cheap and quick-fix solution compared to other alternatives such as nuclear and renewable energy.

The price of coal is historically high at around $160 to $200 a tonne but in relative terms it is still a cheaper option than oil and gas.

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