Can We Afford to Keep Using Coal?

- October 14th, 2015

Part two of an interview with Dr. Keith Burnard, head of the Energy Supply Technology Unit at the International Energy Agency. Burnard talks about the future of coal in the world’s energy mix.

According to Keith Burnard, head of the Energy Supply Technology Unit at the International Energy Agency (IEA), the world won’t end if we keep using coal for the near future — or even for the medium term.
However, when it comes to the long term, it’s a different story. “We will have to find alternatives for all our fossil fuels in the very long term,” Burnard said, clarifying that we’ll likely need to stop using fossil fuels by at least 2100 or so. Until then, clean coal, or high-efficiency, low-emissions (HELE) coal technologies, will play a key role in fighting global warming and keeping pollution levels down.
As Burnard explained, countries have internationally agreed that they’d like to keep the global average temperature from increasing by more than 2 degrees. That doesn’t sound like much, but Burnard stated that a global average temperature increase of 6 degrees — which the IEA believes will happen if the world continues its fossil fuel consumption as is — would be “catastrophic.”
The IEA has calculated that in order to keep the temperature from increasing by more than 2 degrees, the world needs to drastically reduce the amount of coal it uses — essentially, coal needs to be responsible for 13 percent of electricity production, not 41 percent. Most of that will need to include carbon capture and storage technologies too.
Below is part two of the Investing News Network’s interview with Burnard. In it, he talks about the climate and coal’s long-term future. Read part one here.


INN: At your recent presentation at the Coal Association of Canada conference, you spoke about retiring old and inefficient plants and bringing in new technology; however, you also said that’s going to be expensive. How do you see that change happening?
KB: It’s expensive, but it is actually happening. I’ve used China as an example a couple of times because China is the major coal user in the world today. Over the past decade, China’s coal-fired plants have been among the most efficient in the world. For China to get authority to build a new, large, coal-fired plant, it must retire, old inefficient plants at the same time. So it’s part of the contract.
INN: That’s great news. But can clean coal really be a viable solution for continuing to produce coal now that climate change is an issue that a lot of people are concerned about?
KB: China clearly uses a huge amount of coal. A high share of its power generation comes from coal. India’s coal use is increasing. In Southeast Asia, GDPs are increasing. People that do not presently have access to electricity are gaining access to electricity. And a lot of it is due to cheap and abundant coal in the region.
So whether we like it or not, coal will continue to be used in power generation
In industry, the real issue is that it is essential for emissions going forward that they use clean coal or HELE technology. Ourselves, the IEA, and many countries around the world, and the US for example, coordinate, collaborate and cooperate very closely with [other] countries to try to influence an increase in the use of clean coal technologies, rather than using what, on first appearance to them, would be a cheaper way to generate electricity from coal.
Cheaper in these terms usually means less efficient, more polluting. So it’s important that they use better-quality technologies.
Now, as I alluded to, the problem with more efficient technologies is that they generally have a higher capital cost. Over the lifetime of a plant, some of these costs are offset because to generate the same amount of electricity, you require less coal and so you have savings in coal use over the period of the life of the plant.
But we can’t get away from plants that, in terms of capital cost, are more expensive, and some of these countries don’t have the wherewithal to be able to [afford] clean coal technologies. So from that point of view, it is essential that they are supported in their aims — firstly, to look to see if there are alternative means, less polluting means, to produce their electricity. But if there’s no getting away from the fact that coal will be used, then to help them use it in the most efficient manner.
INN: That really puts into perspective how different the energy situation is in various parts of the world. What does that mean going forward?
KB: I mentioned earlier that globally, coal produces 41 percent of our electricity. Projecting forward at the IEA, we generally run three scenarios. One of those is current policies/business as usual. The second one is what we call a new policy scenario, which means that we include in our projection pledges that countries have made to reduce their emissions, but that they’ve not yet implemented.
The business-as-usual scenario would raise temperatures to around 6 degrees Celsius. That’s catastrophic. So it’s clear we can’t carry on business as usual.
The new policy scenario would raise temperatures to approaching 4 degrees, which is still pretty bad, if not still catastrophic.
Now, we also run a 2-degree scenario, which means that we keep temperatures below the 2-degree threshold that internationally countries have agreed is their ambition to try to achieve. And in the 2-degree scenario, we still see that coal should produce around 13 percent of our electricity.

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INN: That’s much less than we use now.
KB: That’s right. Much less. Now we use 41 percent. In a 2-degree scenario, that would be reduced to 13 percent. So you can see that we would need to reduce our coal consumption quite dramatically, but even so, we can achieve our targets with the use of coal. However, the majority of that coal must have carbon capture and storage.
INN: So if we reduce our coal usage to 13 percent without including carbon capture and storage, would we still fall below the 2-degree scenario?
KB: No, then we would be over.
INN: So in order to keep a future global average temperature increase to below 2 degrees, we need to reduce our coal consumption for electricity to 13 percent, with carbon capture and storage?
KB: Yes, and underpinning the scenarios that we run is a cost-optimization model. So that is what we currently see as the lowest-cost approach to doing a 2-degree scenario.
So we’re saying that if you wanted to reduce coal further than that, then it would come at a higher cost.
INN: Do you think coal is always going to be a part of the energy mix? I’ve seen a lot of excitement about solar, wind, nuclear and other forms of energy potentially taking over from coal. Will countries really give up their coal?
KB: Well, in the very long term, of course we will have to if we want to meet 2 degrees; if we want to stay below 2 degrees, then we will have to find alternatives for all our fossil fuels. In the very long term. The numbers I was giving you are for 2050.
So firstly, it’s a matter of time. It will take time for us to ramp up our renewables contributions. It will take a lot of development of our electricity transmission and distribution infrastructure. It will take the development of effective storage technologies to achieve that, and it will also be very costly.
So yes, we will in the very long term move away from coal, but the speed at which we do this will determine what the costs are. And as I say, the numbers that I just gave you are the lowest cost, according to our models, to achieve a 2-degree scenario by 2050.
Will coal always be a part of our energy mix? It depends on how you define always, but for the next several decades, we see coal in use, albeit in decreasing quantities.
INN: Right. So you’ve touched on this quite a bit already, but do you have any more comments on how key carbon capture technology is to the future of coal?
KB: Carbon capture and storage is essential to the future of coal because if we don’t deploy carbon capture and storage at a large scale, within the next couple of decades, then we will have to reduce our coal consumption much, much faster. And it throws into doubt our ability to meet a 2-degree scenario. Carbon capture and storage is essential to the story.

 
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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2 responses to “Can We Afford to Keep Using Coal?

  1. Yes, we’ll have to stop using fossil fuels in a few hundred years. Here’s a long term graph of fossil fuel usage, actual past and estimated future:
    http://cdn.oilprice.com/uploads/AC1045.png
    [Scaled to peak at 1. The star is where we are now.]
    But that’s all to do with supply and has got nothing to do with global warming. In fact, no-one really knows whether the world will warm or cool over the next few decades, and there are scientific arguments both ways.
    Carbon capture and storage? That’s an evil joke. Regardless of global warming or cooling we need more carbon dioxide, not less. Patrick Moore, co-founder of Greenpeace, spells it out:
    http://www.thegwpf.com/28155/

  2. Yes, we’ll have to stop using fossil fuels in a few hundred years. Here’s a long term graph of fossil fuel usage, actual past and estimated future:
    http://cdn.oilprice.com/uploads/AC1045.png
    [Scaled to peak at 1. The star is where we are now.]
    But that’s all to do with supply and has got nothing to do with global warming. In fact, no-one really knows whether the world will warm or cool over the next few decades, and there are scientific arguments both ways.
    Carbon capture and storage? That’s an evil joke. Regardless of global warming or cooling we need more carbon dioxide, not less. Patrick Moore, co-founder of Greenpeace, spells it out:
    http://www.thegwpf.com/28155/

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