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Can we really do without coal?

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Two-thirds of the world's already discovered reserves of oil, coal and natural gas must remain unburned if the rise in average global temperatures is to be limited to 2 degrees Celsius by 2050, according to the International Energy Agency.

But coal miners and oil and gas companies round the world allocated $674 billion to finding even more reserves and new ways of extracting them in 2012/13. Much of this investment risks being wasted, according to the Carbon Tracker Initiative, which is campaigning to get investors to think again. ("Unburnable carbon 2013: wasted assets and stranded capital")

"It is possible that much of this additional spending would prove fruitless. At worst, these assets might be 'stranded' forever," Martin Wolf, the celebrated chief economics commentator of the Financial Times, wrote in a sympathetic review recently. ("A climate fix would ruin investors" June 17)

Carbon Tracker Initiative is part of a broader divestment movement pressing universities, pension funds and other socially responsible investors to boycott shares and loans in fossil fuel companies to force them to leave the oil, gas and coal "down there". ("Stranded assets and the fossil fuel divestment campaign: what does divestment mean for the valuation of fossil fuel assets?" Oct 2013)

The divestment campaign has drawn a swift response. Major oil and gas companies such as Exxon and Shell reject the claim that their exploration and development spending is being wasted. "We do not believe that any of our proven reserves will become stranded," Shell wrote in a letter to investors on May 16.

"While the stranded asset notion may appear to be a strong and thought-through case, it does have some fundamental flaws, and there is a risk that some interest groups use it to trivialise the important societal issue of rising levels of carbon dioxide in the atmosphere," the company complained in a detailed response.

There is an obvious inconsistency between companies continuing to invest in developing more fossil fuels while governments maintain they are still committed to the 2 degree target.

According to Wolf: "Something will have to give: either the world will abandon its pledge to keep emissions below the level thought to produce a temperature rise of 2C, or the fossil fuel companies are holding stranded assets and investing in unusable ones. Investors are implicitly betting on the former possibility."

He concluded: "Major energy producers do not believe governments will do what they promise. They envisage a very different and quite unrevolutionary energy future in which the reserves they now possess and those they plan to develop will all be burnt."

Wolf is right about the contradiction between investment policies and climate targets. It is more likely the world will miss the 2 degree target than that fossil fuel reserves will be stranded.

Rather than oil or gas, the primary target of the divestment campaign is coal, which emits far more carbon dioxide when burned for electricity production.

"Coal companies appear far more vulnerable than oil and gas," according to researchers at Oxford University's Stranded Assets Program. "Coal not only contributes to climate change but also releases harmful pollutants with short-term and visible, health and environmental consequences."

In the first phase of the divestment process, concerned investors are likely to begin by liquidating their holdings in coal companies, the Oxford researchers explain, before moving on later to oil and gas producers.

Several prominent U.S. universities and European pension funds have already sold their shares in coal companies.

If the total amount of carbon that can be burned in the next few decades is constrained by an overall "carbon budget", and coal is the most polluting fossil fuel, it might seem to make sense to put coal reserves off limits first.

Some of the big oil and gas companies have quietly supported this idea, hoping to replace dirty coal with clean-burning gas and bump up demand for their own products in the process.

The unspoken alliance of climate campaigners and gas companies appears to have convinced the Obama administration.

Cutting coal consumption and replacing it with gas is the central objective of new U.S. regulations on power plants at home. ("Regulatory impact analysis for the proposed carbon pollution guidelines for existing power plants" June 2014)

And the U.S. Treasury has stated it will not provide financial support for any new coal-fired plants in poor countries. ("Guidance for U.S. positions on multilateral development banks engaging with developing countries on coal-fired power generation" Oct 2013)

The stigmatisation campaign against coal, in the words of the Oxford researchers, is already well underway and has notched up some notable early successes.

Recent successes in developing shale gas and oil have led some campaigners to imply the world could do without coal.

But the effort to put coal off limits is doomed to fail. Coal resources will remain an essential part of the energy mix far into the future.

Coal accounts for roughly a third of known fossil fuel resources (excluding highly unconventional resources such as methane hydrates which are unlikely to be developed in any foreseeable time frame).

Gas and oil appear much more abundant than before thanks to the shale revolution. But they would start to look scarce again if coal was put off limits and the entire power generation sector switched to gas.

On a global scale, switching entirely from coal to gas would put a tremendous strain on gas supplies and push prices sharply higher. It would be a windfall for gas companies but not for everyone else.

Coal also has important benefits for energy security. Coal reserves are much more widely distributed around the world than the other fossil fuels. Major developing economies with fast-growing energy demand, including China and India, have abundant coal resources but relatively little oil and gas.

Shale oil and gas could change that calculation, since they are more widely distributed than conventional oil and gas, but their widespread development still lies in the future.

In the meantime, coal is cheaper than oil and gas, available from a broader range of suppliers, and the major emerging economies have more of it at home. Coal is therefore vital to energy security in developing economies.

For these reasons, coal has been the fastest-growing source of energy in the 21st century, driven by growth in emerging markets. Coal is the second-largest source of primary energy after oil and the largest source of electricity.

"Coal has been, is and will be the backbone of modern electricity and the bedrock on which the modern world is built," according to the World Coal Association. ("The public image of coal: inconvenient facts and political correctness" May 2014)

The trade association has an obvious interest in promoting the future of coal, but that does not make its claims any less true.

There is no conceivable energy future over the next 30 to 40 years in which coal does not play an enormous role.

The divestment campaign, however well intentioned, will therefore fail. While it might shut down some of the aging U.S. coal mines in Appalachia and Kentucky, it will not dent the developing world's prodigious demand for coal-fired power.

If coal is set to remain a big part of the energy mix, however, the way it is burned will have to change. Coal power plants in China and other developing economies are creating killer smogs, which are poisoning the population as well as spewing billions of tonnes of greenhouse-causing carbon dioxide into the atmosphere.

In future, coal must be made to burn more cleanly (to cut air pollution) and more efficiently (to reduce the amount of greenhouse gas emitted for every kilowatt-hour of electricity generated).

In both cases, the challenge is to bring the whole fleet of coal-fired power stations up to the standards of the best.

Even in the United States, more than half of coal-fired power plants are over 40 years old. China and India, too, have lots of very old facilities. Most of these old plants are too small to reach maximum efficiency and employ outdated technology. ("Focus on clean coal" Nov 2006)

The average power plant in the United States or China achieves a thermal efficiency of just 33 percent. For every three units of energy contained in the fuel burned in the plant only one unit of usable electrical energy is delivered to the grid. In India, the percentage is even lower.

But modern plants built on a scale of 500 or even 1,000 megawatts, with ultra-supercritical boilers, can achieve thermal efficiencies of 40% or more, burning less coal to produce the same amount of power.

Even higher efficiencies are possible if instead of burning the coal directly it is gasified and the gas is then used in a combined cycle system (first driving a gas turbine and then a steam turbine). Integrated gasification and combined cycle plants are tricky to build and operate but could achieve thermal efficiencies of 45%.

China, India and even the United States are now building power plants that are larger, far more efficient and with better pollution-control technology. Modern coal-fired power plants can make a contribution towards slowing climate change, in combination with more use of natural gas, renewables such as wind and solar, nuclear power, and energy efficiency measures on the demand side.

The question is how to shut down the fleet of old power plants that fall far below these standards. "To reduce emissions, replacement of the oldest plant should be a high priority, but it is rarely economic, and electricity demand growth dictates that these plants often remain open," the International Energy Agency explained in 2006.

In the United States, the Obama administration is now attempting to force these old power plants to shut or undertake expensive upgrades by introducing strict rules on pollution and carbon emissions.

China, India and other developing countries will eventually have to overhaul their own older coal-fired plants if they are to enjoy clean air and contribute to global efforts to limit climate change.

The realities of the energy system mean there has to be a future for coal.

Even in the United States, with its shale gas boom, coal is still expected to account for 30% of power generation by 2025, down from 37% currently. In Asia, coal's share is currently much higher and cannot conceivably be replaced by gas.

To limit the impact, however, coal will have to be burned in power plants very different from most of those in existence today.

Rather than trying to shut down the coal industry, campaigners would be more effective if they focused on trying to modernise the electricity sector to use newer, larger, cleaner and more efficient power plants.

© (c) Copyright Thomson Reuters 2014.

©2024 GPlusMedia Inc.

16 Comments
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I know this is a controversial topic however coal is one of the world's most significant mineral resources. We all use coal in one form or another in our lives everyday. Coking coal is an important ingredient in the production of steel used to make things such as automobiles, electrical appliances, and buildings. The electricity that is needed to operate lights, televisions, computers, and electronic components is created from thermal coal. Derivatives of coal are also important ingredients in plastic, explosives, dyes, ammonia, medicines, soap disinfectants, detergents, synthetic rubber, fertilizers, and cement. Therefore coal is vital but opponents claim that coal as a fuel is the worst emitter of carbon dioxide. In other words converting coal to a liquid fuel produces CO2 and pumping it into the ground creates a waste hazard and environmental destruction. In the end to resolve this issue they need to find a better approach by increasing the efficiency of energy-using products and develop better ways to reduce the production of CO2

0 ( +1 / -1 )

People really have NO IDEA how much we absolutely DEPEND on all fossil fuels, coal included.

The bottom line truth (regardless of what anybody thinks we SHOULD do) is cutting back significantly on ANY fossil fuel means cutting back significantly on the population.

Every single morsel of food produced in the global economy is HIGHLY DEPENDENT on fossil fuels.

There's literally a mathematical equation between fossil fuels and food.

So when people say (for WHATEVER reasons, noble or not) we need to CUT DOWN on fossil fuels, they are ALSO saying (whether they realize it or not) that we need to CUT DOWN on food product, and thereby CUT DOWN on people.

Meaning artificially restricting fossil fuel use (again, for whatever reasons, noble or not) NECESSARILY means letting people starve, OR lowering EVERYBODY'S standard of living to sustenance, third world status.

No matter what people say, this is NOT an easy issue, and people will NEVER voluntarily lower their standards of living so others (on the other side of the world) won't starve.

0 ( +2 / -2 )

So when people say (for WHATEVER reasons, noble or not) we need to CUT DOWN on fossil fuels, they are ALSO saying (whether they realize it or not) that we need to CUT DOWN on food product, and thereby CUT DOWN on people.

Not necessarily. If cutting down on coal usage means less food production, then we need to find other ways to fill in the gaps if coal usage is lowered. What you are saying is correct under the current paradigm, but that just means the paradigm needs to be changed.

...though the world could use a population reduction as well.

0 ( +1 / -1 )

artificially restricting fossil fuel use (again, for whatever reasons, noble or not) NECESSARILY means letting people starve, OR lowering EVERYBODY'S standard of living to sustenance, third world status

The BBC reported recently that the average UK family throws away the equivalent of 6 meals a week. Some 86 million chickens are discarded uneaten every year. The 40 million tonnes of food that goes to waste in the US annually would adequately feed 1 billion malnourished people. So restricting the use of fossil fuel does not necessarily mean letting people starve, or lowering anyone's standard of living in terms of the amount of food potentially available.

And yes, fewer people (caused by fewer births, not mass starvation) would also not be a bad thing.

0 ( +1 / -1 )

The question should be, "Can we really do with coal?", and 99% of scientists researching human induced climate change (1% are paid by the fossil fuel industry) conclude from actual data and modeling that at the present rate of consumption and emissions, we will be hard pressed to keep temperatures from rising to 4 or even 6 degrees celsius above pre-industrial times over the coming few decades. To hold it at 2 degrees would basically mean a forced and sustained global recession. One poster wrote about population and food and its important relationship. An increase of even 2 degrees and beyond that will so greatly disrupt the global agricultural system, especially one now based on mono-culture, high fossil-fuel fertilization and factory meat production, that population decline from a lack of food and the wars it could bring seems likely. We should remember that during WWII, more people died from starvation than directly from conflict.

As for coal, and other fossil fuels, estimates are that two-thirds of supplies must be left in the ground if we wish for a climate that resembles the present. The present stock price for energy companies are based on using up all know reserves. So if the world ever comes to its senses and takes climate change seriously enough to limit use of fossil fuels, investors would be wise to dump these stocks as they are vastly over-valued.

-2 ( +1 / -3 )

Wow what a load of nonsense all for propoganda to promote the carbon is a toxin scam and global warming is caused only by carbon. No worries. The fantasy number produced by rigged computer models are just fantasy. No experiments , No data and the real climate is not behaving as the models Do, so the article is really pointless

-5 ( +2 / -7 )

If we have the political will, yes.

0 ( +2 / -2 )

These changes need to happen slowly - we can definitely switch to alternatives, but it's not a cold turkey thing. It'll take decades.

-1 ( +0 / -1 )

Plus it is good manners to give all employees a lump of coal as a Christmas present.......

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I think the age of coal as a fuel for electric power plants may be coming to an end within the next 45-50 years.

The reason is simple: burning coal creates huge air pollution problems, we as note by the VERY serious air pollution problems plaguing China itself. The rapid drop in the price of solar power panels for homes and the arrival of the liquid fluoride thorium reactor (LFTR) nuclear reactor within the next 15 years means we can phase out burning coal to generate electricity and replace it with something that does not directly threaten local air quality.

-1 ( +0 / -1 )

I say let's not be so concerned about future generations. What have they ever done for us?

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Who will find all the coal miners jobs and what about the million other jobs that revolve around the coal industry? These people have keep us warm for hundreds of years. My grandfather mined coal in Scotland to feed his family in N.I.

0 ( +0 / -0 )

@Michael J Cassidy

Doesn't mean it's necessarily right or good...there are plenty of examples in history of people doing things based on tradition rather than deviating from the norm.

0 ( +0 / -0 )

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