The Paris Agreement, signed in December 2015, focused on combating climate change and setting the path for a low carbon future, aiming at limiting the global temperature increase to 1.5°C, writes Anne-Claire Howard, Executive Director, Bettercoal, UK. The urgency of this was brought to the forefront again with the 2018 Intergovernmental Panel on Climate Change Report. Policy efforts have been focused on how best to reduce carbon emissions, specially seeking an end to the use of coal for electricity generation. But coal production and usage have not shown signs of shrinking globally:
* 2017 saw net additional capacity of 28GW installed globally and there are over 700GW of coal-fired power plants in development or under construction;
* global coal demand grew by 1% in 2017 to 7,585mt (million tonnes). Coal still accounted for 37% of the world’s power generation;
* the BP Statistical Review of World Energy 2018 reported growth in coal consumption in parallel with growth in renewable energy in several regions;
* 74% of steel manufactured uses coal; and
* it takes approximately 200kg of coal to produce one tonne of cement, and about 300–400 kg of cement is needed to produce 1m³ of concrete.
As the world transitions towards more sustainable sources of energy, coal still has a significant role to play. Increasing global urbanization implies that people will need access to affordable energy and buildings made of steel and concrete will have to be built; none of that can happen without coal.
Over 50% of global emissions are produced by 24 countries, which identified a role for low emission coal in their climate pledges as a way of working towards their Paris Agreement targets. In these countries, coal is an abundant, reliable and affordable fuel that fosters economic development. To reach near to zero emission plants in these countries requires financial capital. However, under fire from well-minded organizations, much of the financial community has chosen to remove access to capital for coal projects, which might lead to the use of less efficient technology and an increase in emissions instead of a responsible use of the resource. For instance, many financing agreements (especially backed by development finance institutions such as the International Finance Corporation) require the operator to demonstrate they meet environmental and social performance standards. But without the financial support, this scrutiny has dwindled.
At the same time, coal mining is potentially damaging to the reputation of large mining operators who are under increasing pressure from their shareholders to divest their coal assets and focus on other commodities. When this happens, they are often replaced by smaller operators who do not have the knowledge or financial capacity to invest in strong systems to manage their environmental and social performance.
Therefore, the stigma currently born by the coal industry is dangerous for three main reasons. Firstly, it means that there is insufficient investment in technology to reduce the carbon emissions coming from coal for power generation. Secondly, it has led to a decrease in scrutiny on the performance of coal mining operators increasing the risk in its value chain. And thirdly, it has led to a fragmentation of the industry.
It is imperative to acknowledge the existence and relevance of coal in current and near future systems. Coal for power may be significantly reducing in Europe, but it remains key in the energy mix in parts of the world including Eastern Europe. And, even though the cement and steel industries are making strides to reduce their carbon footprint, coal is still very much part of the equation.
This is why engagement, scrutiny, transparency and dialogue are so important for the coal industry to ensure that whilst it exists, it is being produced responsibly. Bettercoal is in a unique position as the only supply chain initiative which looks at coal mining. The organization ensures that coal production meets ESG principles embodied by the Bettercoal Code.
It also ensures that buyers of coal increasingly purchase from mines which have undergone a Bettercoal Assessment. By doing this, Bettercoal aims to improve the coal supply chain globally working together with both buyers and suppliers, encouraging new members to join the organization and create greater positive impact in the coal industry.