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Coal is here to stay

World Coal,

At the launch of the International Energy Agency (IEA)’s medium-term coal market report, Maria van der Hoeven, executive director of the IEA, said that while there was no denying the controversial reality of coal, it nonetheless would be here to stay for “a long time to come.”

Van Der Hoeven said that coal dominated power generation worldwide, yet no other fuel few the same “ire, particularly for its polluting qualities both locally and in terms of greenhouse gas emissions. And yet no fuel is as responsible for powering the economic growth that has pulled billions out of poverty in the past decades.”

She said it was clear that there would be a role for coal in the future energy mix, but that without mitigating the polluting effects of the fuel, pursuing business as usual would have “enormous and tragic consequences.”

The long-term future of coal

In 2012, coal consumption in the two largest markets, the US and China, was abnormally weak, van der Hoeven said. In China, significant hydro-power output and slowing economic growth stabilised the demand for coal in the power sector, where most of it is destined. An extremely mild winter in North America, together with the steady increase of shale production, drove US gas prices below US$ 2/MBtu in April 2012 – and switching dramatically reduced coal’s share in power generation. Indeed, van der Hoeven said, 2012 saw the second largest annual decline of US coal since the IEA’s founding.

However, van der Hoeven reminded her audience that even in what may have been seen as a “bad” year in the US and China, coal continued to maintain its substantial share in the energy mix globally, and increased its worldwide share among fossil fuels. She also suggested that the “factors leading to the slowdown in China and the US are probably temporary – at least in such severity.”

Indeed, IEA projections, van der Hoeven said, were that coal demand would pick up in both the US and China, as gas prices recover in the US and China bears witness to renewed acceleration of energy demand and investment.

Over the next six years, additional coal production capacity of 500,000 tpa will be added world wide every day – “this will be necessary to meet a worldwide demand increase of 2.3%/year on average until 2018,” van der Hoeven said.

Electricity security

Van der Hoeven explained that there were a number of benefits to coal that made it an integral coal to future electricity and energy security:

  1. Coal is abundant and geopolitically secure.
  2. Coal-fired power plants are easily integrated into existing systems.
  3. Modern power plants are flexible, providing base-load power while backing up variable renewable generation.
  4. When well-designed and well-operated, emissions of local pollutants from coal-fired power plants can be minimised.

Although gas has substantially reduced coal generation in the US, coal demand still represents double the generation potential of shale-gas production. Meanwhile in China, the scale of coal in the economy “is simply incomparable to fuels elsewhere,” van der Hoeven said. “Replacing coal with gas in Chinese power generation would require twice the volume of all global LNG trade. Coal therefore continues to play an important role in economic growth and energy security worldwide.”

Coal must change

Van der Hoeven stressed during her conclusion that the most important point to take from the IEA’s report was that coal in its current form is “simply unsustainable.”

“Coal-fired heat and power generation is the biggest single source of CO2 emissions resulting from fuel combustion today. More than three-fifths of the rise in global CO2 emissions since 2000 is due to the burning of coal to produce electricity and heat. And we should not overlook the health problems tied to local pollution produced by coal combustion.”

To counter such downsides, van der Hoeven suggested that underground coal gasification, as well as the promotion of carbon capture and storage (CCS), were both viable ways to ensure that coal can reduce its “environmental impact.”

Van der Hoeven stressed the need for hard action, rather than simple posturing: “If nothing more than those emissions-reduction policy commitments and pledges announced to date are implemented, [the IEA] projects that the long-term increase in global temperatures will reach 4oC. This would exceed the globally agreed target of limiting the long-term rise in temperatures to 2oC and would lead to a devastating and costly change in climate, the first signs of which we are already seeing today.”

“Radical action is needed to curb greenhouse gas emissions, yet that radical action is disappointingly absent,” van der Hoeven said.

She noted that CCS development was stalled, and a “meaningful” carbon price was missing. She also shared her disappointment that despite knowing how to build efficient, super-critical coal-fired power plants since the 1960s, most of the coal-fired power plants since then are of the inefficient, sub-critical kind.

“When it comes to a sustainable energy profile, we are simply off-track – and coal in its current form is the prime culprit. Yet with coal set to remain an integral part of our energy mix for decades to come, the challenge is to make it cleaner,” van de Hoeven concluded.

Maria van der Hoeven, the executive director of the IEA, at the IEA’s World Energy Outlook 2013.

Adapted from press release by Sam Dodson

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