Clearing the air on the coal debate

The growing consumption of coal in emerging economies highlights the need for a realistic and fully integrated climate policy.

Extrapolating the past and present in to the future is risky business. Hopefully, Rhodes scholar Tony Abbott knows this. Critics of his “coal has a big future as well as a big past” statement don’t think so, but the numbers around suggest that their assault on his view is also over the top.

The University of Queensland Energy Initiative, in canvassing the “energy-prosperity-climate dilemma” in its latest newsletter, has some eye-opening data on the current role of coal in global energy use.

Looking at 2013, the obvious starting point is that overall energy consumption worldwide grew 2.3 per cent. Fossil fuels not only accounted for 86.7 per cent of what was used, but three-quarters of last year’s increase.

No-one will be surprised to hear that the growth is dominantly in the non-OECD countries, or that China is still a massive presence in surging energy use. But, as the UQ Energy Initiative points out, the much less heralded story is what is happening in the ASEAN countries and South Asia.

Over the past three years, it says, coal consumption has grown by nearly 25 per cent in India and 22 per cent in ASEAN countries versus just under 20 per cent in China.

“Though they may be coming from a lower starting point, these countries represent a massive population base -- more than 1.25 billion in India and 600 million in the ASEAN nations -- whose appetite for energy is only just beginning.”

The hard truth, as UQ Energy Initiative reports it, is that the combined global increase in zero-emission electricity supply -- from renewable energy and nuclear plants -- was only 7 per cent in these 36 months.

“In fact,” it adds, “the growth in primary energy from all near-zero carbon energy sources over three years globally was just 30 per cent of the incremental energy from coal in the Asia-Pacific region alone.”

Top dog in this, of course, is China, which has added new coal-fired power generation capacity equivalent to or greater than Australia’s total installed capacity every year for 10 years.

In 2013, says UQ, it increased its coal consumption four per cent to 3.7 billion tonnes, roughly half the global consumption of the fuel and more than 10 times Australia’s coal exports.

Professor Chris Greig, director of the university’s Energy Initiative, says fossil fuel use is on the rise despite all the dire warnings about climate change. And it seems that its use will continue to grow.

“As the world avoids strong policy choices and waits for a miracle energy solution that is as reliable and affordable as coal but has no adverse environmental or climate impacts, we need to consider how we prepare for a scenario where a renewable energy transition (or more appropriately, a revolution) doesn’t eventuate,” he argues.

Carbon capture and storage seems to be an important technology in most credible decarbonisation projections. But he asks: what happens if CCS is also not widely deployed because of issues relating to a lack of storage resources, limited public acceptance or techno-economic constraints that simply cannot be overcome?

“If nothing changes, what then?”

Greig says that, if dire IPCC predictions are correct, “we may need to contemplate some rather drastic interventions (‘geo-engineering’) to manipulate the climate”, ranging from using aerosols and cloud seeding to reflect heat away from the atmosphere to ocean fertlisation to absorb carbon dioxide.

These options at present look to be extreme and in some cases absurd, he adds, “but the longer we do nothing about emissions, the more likely such interventions may need to be seriously considered.”

In the context of what Greig is saying, it is interesting to also read the views of Robert Stavins, a member of the IPCC and prominent Harvard professor.

On the Sunday in September when New York was the venue for Ban Ki-Moon’s climate summit and a massive street march, Stavins wrote in a New York Times op-ed that “the reality is that the emerging economies of China, India, Brazil, South Korea, Mexico and South Africa are rapidly putting in place new infrastructure that depends on burning fossil fuels.”

Current cost projections of tackling the problem are high, Stavins adds elsewhere, but, if CCS doesn’t become available, if there isn’t a significant expansion of nuclear energy and the take-up of cleaner sources of energy is insufficient, then you can double the bill.

Meanwhile, he points out, China alone, even while pursuing a goal of a 45 per cent cut in its emissions intensity, plans to add a new 500 megawatt coal-fired power station every 10 days for the next decade., 

He says that a huge part of the solution is a convergence of Chinese and American interests.

All of which puts local sloganeering by politicians, green warriors, street marchers, campus campaigners, the many vested interests and the morally vain in a rather sober light. It raises the question of when Australia will have a fully thought-through, integrated energy policy and an approach to climate change not aimed at the next opinion poll?

Keith Orchison, director of consultancy Coolibah Pty Ltd, publisher of the This is Power blog and editor of OnPower newsletter, was chief executive of two national energy associations from 1980 to 2003. He was made a member of the Order of Australia in 2004 for services to the energy industry.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles