A green future for coal...

Coal, the old-fashioned arch-polluter, is about to go green and become the fuel of the future. Andrew Vine reports on a pioneering project in South Yorkshire

The pithead gear is working again at Hatfield Colliery, and the sight of it always raises Richard Budge's spirits.

"I love to see those wheels going round," he says. "I hate to see them stopped, and I'll like it even better when they're hauling coal out."

That's due to happen in about a year's time, and when it does it won't just mark the rebirth of a pit that had – like so many others across Yorkshire – seemed condemned to history; it will mark a new beginning for British coal.

Here, in the heartland of the Yorkshire coalfield that has played such a vital role in keeping Britain's lights on for more than a century, a pioneering project is under way. Its aim is to turn coal green, to transform a fuel vilified as the worst-polluting villain of the global warming crisis into a source of energy that is unimpeachably clean, and by doing so to secure a future for an industry virtually written off by successive governments.

If all goes according to plan, Hatfield, near Doncaster, will be the site of an innovative power station that does not burn coal, but superheats it to break it down into its chemical components to produce gas to generate electricity.

Instead of releasing the carbon dioxide that causes global warming, the gas will be captured, to prolong the life of the North Sea oil industry. Steam generated by the process will be used to produce green diesel fuel from fermented wheat and to heat an industrial estate next to the pit.

The emissions will be zero. There will not even be any lorries to belch diesel fumes into the air, as the coal will go straight into the power station by conveyor.

And just to underline further the plan's green credentials, there will be no smoke and no ash left at the end of the process, just a hard aggregate suitable for road-building, which means less quarrying in places like the Yorkshire Dales and the Derbyshire Peaks.

The power station, planned to open in 2010, isn't the only innovation at Hatfield. Hundreds of feet below ground, something else new is being done – for the first time in the domestic coal industry, new shafts are being driven downwards from an existing seam towards massive reserves. It amounts to the creation of an entirely new mine.

This is cutting-edge stuff that goes far beyond keeping a pit open and working, or throwing a lifeline to coalfield communities which have endured 20 years of economic kickings. This is a way forward for Britain as it teeters on the brink of an energy crisis.

The dash for gas that helped to condemn the pits has proved treacherous, and left the country relying on some very volatile foreign suppliers, among them Iran, which could name their own price to keep the power stations working.

Wind power is failing to deliver anything like enough electricity, and now the Government is being forced to consider the nuclear option, with all the safety concerns that the storage of radioactive waste brings, plus the added worry of terrorist attack.

And yet far below the feet of the people of

Yorkshire lie millions of tonnes of coal which, thanks

to the technology being pioneered at Hatfield, can offer clean, affordable power.

The man behind the plan is an indefatigable supporter of coal. For well over a decade now, Richard Budge has argued its case and poured hundreds of millions into keeping pits alive, not out of sentiment but out of hard economics and a profound understanding of Britain's energy needs.

Mr Budge, 59, bought the rump of Britain's coal industry after the savage pit closure programme of 1992. He re-opened 11 pits and has flown the flag for an industry often regarded as part of a bygone age by politicians of all parties.

And yet coal remains vital to Britain. Some 40 per cent of our power still comes from it, and the homes of the environmental protesters who besieged Drax power station over emissions in August would be dark without it.

Britain is burning more coal than ever before to keep the lights on and industry working, except these days it comes from Russia, China, Indonesia and Colombia, where the pits have appalling safety records, instead of South and West Yorkshire, where the welfare of miners is paramount.

Mr Budge is passionate about the case for coal, and the realities of generating power are on his side. So is the science at work in Hatfield.

"Coal's never gone away," he says. "That's the laugh. It's never gone away. In 1994, when I acquired the bulk of the coal industry for 815m, I said the coal burn would be 45 to 50m tonnes at the turn of the century, and I was laughed at by everybody, particularly the generators, and this year the coal burn will be 56m tonnes, which is four million tonnes up on last year's coal burn.

"It's never been lower than 50, and it's been as high as 57. Even I underestimated it, but you have to look at the vested interests who wanted me to fail. There were competitors who wanted me to fail on the financing, the generators who didn't want a strong coal company, but wanted three or four coal companies so they could beat them to death."

Despite setbacks, nobody has beaten down Mr Budge. This Lincolnshire-born son of a master builder who raced cars before moving into coal and winning the admiration of mining unions by going underground and working night shifts, is still resolutely hands-on. He regularly goes down Hatfield to check on progress.

"People say of me, 'Well, he's a coal man, he's got coal in his blood,' but no, I say, 'I like money in the bank', and that what drives me in coal because we're always going to need coal, and anyone who doesn't think so is being very nave.

"The coal burn is still over 40 per cent of electricity, and you don't see that in the newspapers very often. All you read about is the demise of the coal industry and the dash for gas.

"That was true in 1991. It isn't true in 2006. You've got gas in the North Sea depleting. I remember telling this government when it came in – and the previous government – that it had 13 to 15 years before we were a net importer and that's about 15 years ago.

"The noises were there if you wanted to hear them, but the gas companies were saying, 'Oh, don't worry, leave it to us, we'll get it from somewhere else'. Yes, but at what price? If there was only one supermarket in every town, and it was a Tesco, I don't think it would be very cheap. Logic sometimes in this country is a criminal offence."

Logic, and the hard facts of generating power, means Britain needs a mixed energy policy that is going to include nuclear as well as coal. Government targets of obtaining 20 per cent of our power from windfarms are nowhere near being achieved, and Mr Budge believes that only strengthens the case for coal. "You can never rely on a windmill.

"A windmill works 30 per cent of the time on average whether in the Mojave Desert, Holland, Germany, Ireland or wherever, so wherever you put one up you have to have 80 per cent backup from a conventional plant when it's not working,.

"You work that out. Would you buy a car that works one day in three? And then you're not sure which day it's going to work, so how can you rely on an energy source when you can't be sure when it's coming through?

"It won't work. In Ireland they have had to take them all off the grid because they can't guarantee security of supply. This idea we're going to get to 20 per cent from windpower is just bizarre. We have environmental policies which have no cognisance of economics, when what we need is to have economic policies with environmental frameworks. In other words, figure out what's the most effective thing to do economically for the country and then figure out what we have to do to balance out the environmental framework."

Clean power from coal ticks all the environmental boxes, and gasification like that being planned at Hatfield is the way forward. Centrica wants to build a similar plant on Teesside and there are plans for another on the Thames. It also ticks the economic boxes. The Hatfield plant will produce electricity at

40 per megawatt hour, as opposed to the 140 that windpower runs out at.

The energy industry is waking up to gasification, but Hatfield should be the first plant of its type, thanks to the deal Mr Budge has struck with the giant Russian coal producer Kuzbassrazrezugol (KRU), which has bought a 51 per cent stake in his company, Powerfuel. KRU is investing 74m in the mine and is ready to spend 800m on the power station.

For now, though, the pit is a business in its own

right, and will soon be helping to keep the lights on.

Mr Budge has contracts for its coal for the next seven years, and, once it starts producing next autumn, another 200 people will be added to the 151 already employed there. Getting Hatfield back to work has been a slow process. It is two years since it closed, when the High Hazel seam became exhausted. "A mine's working when you have got men working towards the objective of producing coal," he says.

"It isn't coaling, but it's open and it's been open

since two days after I got the money.

"This mine has long-term contracts now, for the first seven years' tonnage. This is very secure, touch wood, other than some catastrophic failure which I can't imagine."

Reopening the pit has been a complex job. "I don't believe anyone's re-opened a vertical shaft on a coal mine as deep as this before. A lot of people said it couldn't be done, but it's like life, really, all you can do is engineer out the risk of danger.

"There's been a list of things to do, and we've done them one at a time. It's like a champion potato peeler – you can only peel one at a time. We've prioritised things to keep people alive and safe, and then set about it to programme it."

Cameras have been lowered down the shaft to check the linings, air and water levels have been checked, and now men are working underground. They are driving two shafts 70m downwards at a one-in-four incline from the High Hazel seam towards the Barnsley Main seam, where there is a minimum of 100m tonnes of recoverable coal, enough to keep Hatfield in production for the next 40 years.

There is a back-to-the-future element in all this. The Barnsley Main seam was the first worked in the Yorkshire and Derbyshire coalfields because it was the thickest and most easily recoverable. And when it goes into the power plant, the gasification process is not dissimilar to that which once produced town gas before natural gas came on stream. Except that now, the gas will be hydrogen, and far from replicating the sooty legacy of town gas plants, five million tonnes of CO2 will not go into the atmosphere. It is intended for the North Sea, to force the remaining oil reserves out of the rocks, so capturing the gas far below the seabed.

Creating the future is heavy work. The 240-acre Hatfield site is a hive of activity. Earth mounds are being built to shield it from the nearby village of Stainforth and level the ground ready for the building of the power park – the industrial estate which will be fuelled by the green power station. The old pit buildings are being demolished to make way for new ones.

Above all, the wheels are turning. Coal is alive and well here, and about to step into the future.

And the man who has never given up on coal puts it simply: "I don't know owt else, as they say in Yorkshire."