Is coal finished, to be displaced by renewables in a move that will solve climate change and clean up air quality across the world? Is coal – as one headline writer put it recently – in free fall? Or is it still the dominant and growing source of power and heat in countries that make up the bulk of the global economy? Hasn’t its future just been rescued by President Donald Trump’s announcement that he is scrapping the environmental regulations that threatened coal use in the US? Casual readers could be forgiven for being confused. Consider the following statements, all published in reputable papers over the last few weeks: The share of electricity production in the UK accounted for by coal fell to just 3.5 per cent in the third quarter of 2016. Worldwide, the number of new coal-fired power stations starting construction fell by over 60 per cent in 2016. Over-suppl y has pushed thermal coal prices down to half the level reached in 2010. And these: Some 42,000MW of new coal-fired generating capacity was brought on stream in China last year and Beijing announced that coal consumption was set to rise by 19 per cent over the next five years, despite rapid growth in the use of renewable sources. In spite of extensive subsidies for renewables, 40 per cent of electricity in Germany last year came from coal, leading to an increase in carbon emissions in 2016. Across the world 50 per cent of aluminium, 70 per cent of steel and 40 per cent of electricity are produced from coal. All of these are true. The “false news” lies in the way a selective choice of these and similar facts can be spun to prove almost any desired conclusion. Let’s try to find a more objective interpretation of what is happening. Until the new sources of energy supply can beat the current low prices coal will rem ain the leading source of heat and power and will meet something like a third of the world’s energy needs. The proportion burnt in high efficiency, low emission plants will rise but that will remain a fraction of the total for the foreseeable future, not least because coal users cannot afford the upgrades necessary. Coal is the energy source of choice, through necessity, of the poorer half of the world. Times may be tough for the industry, and the continued use of coal in sub-critical technology may be bad for the environment, but like it or not coal is not in free fall.
FT 4th April 2017 read more »