The coal industry is suffering from a number of tensions, the resolution of which could have profound effects on the industry. One of these concerns where coal is used and in what quantities, and another, how it is used. Both are important.
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In a recent paper given at the Coaltrans World Coal Conference in Amsterdam, Ian Cronshaw, head of the energy diversification division at the IEA, drew a sharp contrast between OECD and non-OECD use of coal. The shale gas revolution occurring in North America and the general tightening of environmental regulations, particularly in the EU (not to mention its vast subsidies for renewable energy sources), means that coal use is likely to decline in the OECD, and particularly OECD Europe, to be replaced by natural gas and,given time, renewables.
But, as Cronshaw points out, the vast majority of new energy demand will come from non-OECD countries and here coal is still king. China and India are the obvious drivers of growth here and both rely heavily on coal to fire their power plants. This will not change, despite calls from environmentalists. After all, coal is still the cheapest and most abundant way to provide power for people who currently have none.
This brings us to the second tension: coal is needed if the world’s power demands are to be met, but burning coal is a major contributor to climate change. Finding a solution to this tension is vital. Despite declining use of coal, OECD countries should still play a major role in the development of clean coal solutions. The recent announcement that E.ON has cancelled its Kingsnorth CCS project was unwelcome news and, hopefully, not a sign of things to come.
Fear of the future is for those who have no place there. But this is not coal – whatever the environmentalists would have us believe. Rather, coal should be viewed as one of the foundations of future growth and prosperity.