By Benjamin Sporton
Acting Chief Executive, World Coal Association
As another round of climate talks approaches, recent headlines have highlighted the critical role developing countries play in achieving a climate agreement—and they are. Concerned about the restrictions it might place on their efforts to grow their economies and eradicate poverty, many developing countries are cautious about what a future global agreement on climate change might mean. With one billion people living in extreme poverty in addition to a similar number with incredibly low standards of living, it is hardly surprising that poverty eradication ranks number one on the list of priorities for developing country governments.1 The recent proposal document for new Sustainable Development Goals also acknowledged that “poverty eradication is the greatest global challenge facing the world today”.2
This is the reason that developing countries are key to a global climate agreement: Any proposed agreement that hampers their ability to grow their economies and eradicate poverty will not win their support.
THE LONG AND WINDING ROAD
Negotiations toward a global agreement on climate change have been long and tortuous. Beginning in 1992 with the original “Earth Summit” in Rio de Janeiro, the negotiation process produced the Kyoto Protocol, which came into effect in 2005 but covered only around one third of global CO2 emissions. A 2009 summit in Copenhagen was originally intended to be the apex of the process with a binding global deal on emissions reduction, but it failed to live up to expectations. World leaders will gather again in Paris in November 2015 for the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) for what is now expected to be the pinnacle of the climate negotiations process.
This September, UN Secretary General Ban Ki-moon hosted a summit in New York intended to push climate change back up the international agenda and spur action toward November 2015. With celebrity endorsements and a series of coordinated announcements from activists, governments, and the private sector, the summit did have some success in raising the profile of an issue that has struggled to maintain the profile it once had, but which has since been drowned out by other priorities, chief among them economic and security crises.
Ultimately, however, the negotiation process has struggled for more than two decades because of a fundamental disconnect between developed and developing countries. This disconnect centers on a desire by developed countries to require emissions reductions commitments by developing countries while they are still developing—potentially limiting the ability of those countries to grow their economies and eradicate poverty. It comes about because many in the developed world refuse to acknowledge that the development pathway their countries took—one that relied on abundant, affordable, and reliable energy—is the pathway that the developing world will need to take if it is truly to eradicate poverty.
All sources of energy have a role to play in achieving climate and development objectives. An overemphasis on renewable technologies, however, risks limiting developing countries to “light bulb and cook stove” solutions: that is, solutions that address the immediate needs of poverty and climate without addressing the longer-term fundamentals needed for poverty alleviation.
This fact was recognized in recent remarks by World Bank President Jim Yong Kim at the U.S.–Africa Leaders Summit in August when he said that “there’s never been a country that has developed with intermittent power”3 and that, despite recent policy announcements, the World Bank would still likely fund coal projects. His statement came as African leaders argued they were living in “energy apartheid” and demanded the right to use their natural resources, particularly coal, to fuel their economic development.4
If the climate negotiation process is to have any success it must integrate development and climate objectives.
THE DEVELOPMENT AND ENERGY CHALLENGE
With 1.3 billion people globally lacking access to modern electricity and about double that number lacking access to clean cooking facilities, it is hardly surprising that developing country governments are focused on affordable and reliable energy to help grow their economies.5 Energy is fundamental to development. Without reliable modern energy services hospitals and schools can’t function and business and industry can’t grow to provide employment and economic growth.
In its 2011 World Energy Outlook, the International Energy Agency (IEA) reviewed what would be needed to meet their own “minimal energy access for all” scenario—a scenario that would barely meet basic energy needs, but is the basis for the proposed Sustainable Development Goal on energy access for all. Even in this minimal energy access scenario, half of the on-grid electricity needed comes from coal.6 A more ambitious target would likely see a much larger role for coal—and it is a more ambitious scale of development and energy access that developing and emerging economies are targeting. That is why statistics about coal’s growing role in the world continue to confound those who forecast its demise.
Coal’s role in development explains why coal consumption in Southeast Asia is projected to grow at 4.8% a year through to 2035 along with significant growth in other developing regions (see Figure 1).7 It is why a 2012 report from the World Resources Institute8 identified 1199 planned new coal plants (representing 1400 GW) across 59 countries—most of them in developing and emerging economies.
Coal’s critical role in development is one of the reasons coal has been the fastest growing fossil fuel for decades and why its share of global primary energy consumption in 2013 reached 30.1%, the highest since 1970.9 Even under the IEA’s New Policies Scenario (which accounts for all currently announced climate policies) coal demand is expected to grow from 3800 million tonnes of oil equivalent (Mtoe) today to almost 4500 Mtoe in 2035.5
These figures alarm climate activists who argue for an end to coal and encourage divestment from the coal industry. What they ignore, however, is that there is a pathway that provides a role for coal in achieving both climate and development objectives.
A PATHWAY THAT INTEGRATES CLIMATE AND DEVELOPMENT
Alongside last year’s climate summit in Warsaw, the World Coal Association joined with the Polish government to host the International Coal and Climate Summit. The summit was widely criticized by environmental groups for trying to take the focus away from climate negotiations, an argument which ignored the significant contribution cleaner coal technologies can make to achieving ambitions to reduce CO2 emissions. A key part of the summit was the launch of the Warsaw Communiqué, a document that called for increased international action on deployment of high-efficiency, low-emissions (HELE) coal-fired power generation.
21st-century HELE coal technologies have huge potential. It is well known by now that a one percentage point increase in efficiency at a coal plant results in a two to three percentage point decrease in CO2 emissions. Less widely known is that the average efficiency of the global coal fleet currently stands at 33%. Off-the-shelf technologies for supercritical and ultra-supercritical coal have about 40% efficiency or higher, while more advanced technologies expected to become available in the near future will approach 50% efficiency. The IEA estimates that increasing the average efficiency of the global coal fleet up to 40% would save around two gigatonnes of CO2 annually—roughly equivalent to India’s total annual emissions.10
Taken in the context of other climate policies the potential impact of improving the efficiency of the global coal fleet is significant. The Economist recently published a graphic showing the impact various policies or events have had on global CO2 emissions, which has been reproduced in Figure 2.11 If a global initiative were in place to increase the average efficiency of the global coal fleet to the level of off-the-shelf technology, its two gigatonnes of savings would place it fourth on this list of 20 activities. It would be more than three times more effective in reducing CO2 emissions than the global deployment of all non-hydro renewable energies combined.
Nowhere is the potential of HELE technology better demonstrated than at J-Power’s Isogo power plant outside of Tokyo. J-Power is the largest producer of coal-fired electricity in Japan and is leading the way in HELE deployment with its 600-MW ultra-supercritical plant. The plant achieves gross thermal efficiency of 45% and has reduced emissions to the equivalent of a high-performing natural gas plant.
However, plants like that come at a cost. Developing countries need international support to deploy the most efficient plants. In the face of decisions by the World Bank and European Bank for Reconstruction and Development to limit funding for coal projects, the IEA raised some serious concerns:12
While increased investor awareness of climate-related issues is a positive development, policies deliberately adverse to coal may have unintended consequences. In the 450 Scenario, which limits the global average temperature increase to 2°C, world investment in coal-fired capacity totals $1.9 trillion (25% higher than in the New Policies Scenario), of which $800 billion is for plants fitted with carbon capture and storage (CCS). Coal-fired power plants become more expensive on average because, in most regions, more efficient technologies are deployed, as well as greater emphasis on CCS technologies. If development banks withhold financing for coal-fired power plants, countries that build new capacity will be less inclined to select the most efficient designs because they are more expensive, consequently raising CO2 emissions and reducing the scope for the installation of CCS. In addition, many of the countries that build coal-fired capacity in the 450 Scenario need to provide electricity supply to those who are still without it, a problem that may be resolved less quickly if investment in coal-fired power plants cannot be financed.
This is a warning from the IEA: International action against coal creates two distinct risks. First, from a climate perspective, failing to invest in new coal technologies risks higher future emissions from coal; second, failing to invest in coal threatens the energy access and development priorities in some of the world’s poorest countries.
AFFORDABLE, LONG-TERM ACTION
As the IEA notes, deployment of HELE plants is also an important first step in the longer term drive for near-zero emissions coal-fired plants incorporating carbon capture, utilization, and storage (CCUS). CCUS technology is critical to achieving global climate objectives. More importantly, CCUS plays a significant role in reducing the economic costs of limiting CO2 emissions.
The recent New Climate Economy report by the Global Commission of Energy and Climate, led by former Mexican President Felipe Calderón, argued that substantial emissions cuts would effectively pay for themselves when a range of co-benefits are considered.13 That reflected recent work from the Intergovernmental Panel on Climate Change (IPCC) which stated that annual GDP growth would decline by as little as 0.006 percentage points with substantial emissions reduction.
Many environmental activists argue that this demonstrates the viability of renewable energy technologies as the exclusive energy pathway toward a near-zero emissions economy. However, analysis by the Council on Foreign Relations’ leading energy expert Michael Levi noted that CCUS is far more critical to achieving the 2°C target.14 He highlighted that in the IPCC research, failing to deploy CCUS causes the cost of climate action to rise by about 140%, but that the most likely outcome is that the 2°C target could not be reached at all.
A CLIMATE DEAL CAN ACHIEVE BOTH OBJECTIVES
If global action to reduce CO2 emissions is to be affordable and have a realistic chance of meeting the 2°C target it must account for the role of cleaner coal technologies in achieving that aim. That is even more critical when the need for affordable and reliable energy for development is accounted for.
India’s new Environment Minister made clear recently where his country’s priorities lie: “India’s first task is eradication of poverty … Twenty percent of our population doesn’t have access to electricity, and that’s our top priority.”15
It is clear that if the November 2015 climate summit in Paris is going to achieve any level of success, then it must support the development ambitions of the world’s poorest countries. It must integrate the priorities of countries like India, which need to address their poverty situation and provide affordable and reliable electricity, with global climate ambitions. It means that rather than ignoring coal, the international community must recognize 21st century coal as part of the solution.
- World Bank Group. (2014). Ending poverty and sharing pros-
perity: Global Monitoring Report 2014/2015, www.worldbank.org/en/publication/global-monitoring-report
- United Nations. (2014). Outcome document – Open Working Group proposal for Sustainable Development Goals, sustainable
development.un.org/focussdgs.html, (accessed 29 September 2014).
- Ginski, N. (2014, 5 August). World Bank may support African coal power, Kim says. Bloomberg, www.bloomberg.com/news/2014-08-05/world-bank-may-support-african-coal-power-kim-says.html, (accessed 30 September 2014).
- Scientific American. (2014). Africa needs fossil fuels to end energy apartheid, www.scientificamerican.com/article/africa-needs-fossil-fuels-to-end-energy-apartheid/, (accessed 30 September 2014).
- International Energy Agency (IEA). (2013). World energy outlook 2013, www.worldenergyoutlook.org/publications/weo-2013/
- IEA. (2011). World energy outlook 2011, www.worldenergyoutlook.org/publications/weo-2011/
- IEA. (2013). World energy outlook special report 2013: Southeast Asia energy outlook, www.iea.org/publications/freepublications/publication/SoutheastAsiaEnergyOutlook_WEO2013SpecialReport.pdf
- World Resources Institute. (2012, November). Global coal risk assessment, www.wri.org/publication/global-coal-risk-assessment
- BP. (2014). Statistical review of world energy 2014, www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy.html
- IEA. (2012). Energy Technology Perspectives 2012 – How to secure a clean energy future.
- The Economist. (2014, 20 September). The deepest cuts, www.economist.com/news/briefing/21618680-our-guide-actions-have-done-most-slow-global-warming-deepest-cuts
- IEA. (2014). World energy investment outlook, www.iea.org/publications/freepublications/publication/WEIO2014.pdf
- The New Climate Economy. (2014). New climate economy, newclimateeconomy.report/, (accessed 20 September 2014).
- Levi, M. (2014). Is solar power making climate policy cheap?, blogs.cfr.org/levi/2014/09/19/is-solar-power-making-climate-policy-cheap/, (accessed 30 September 2014).
- Davenport, C. (2014, 24 September). Emissions from India will increase, official says. The New York Times, www.nytimes.com/2014/09/25/world/asia/25climate.html?_r=0, (accessed 30 September 2014).