The future of coal
Michael Schwartz describes the delicate and changing situation faced by energy-quality coal.
There is no denying that coal destined for power stations is in a difficult situation. Headlines are full of negativity. At the 2017 Conference of the Parties talks held under the UN Framework Convention on Climate Change – the convention which aims to prevent dangerous anthropogenic interference with the climate system – it was agreed that over 20 countries would join the alliance to phase out coal.
Some of the signatories are minor, eg. the Marshall Islands, but some, such as Italy, Mexico and Ethiopia, are substantial. Even more acutely, individual US states (Washington and Oregon) have signed on for the ban, in contrast to the ebullient support for coal voiced during President Trump’s election campaign four years ago. Bluntly, OECD and EU phase-out is required by 2030 and 2050 for the rest of the world.
Even at the height of the recent devastating Australian bushfires, the Australian coal industry was singled out for attention, with at least the implication that the coal in question was somehow responsible for these tragic events. During the subsequent driving rains, there was an absence of any such accusation.
This article will look at global trends, while simultaneously summarising individual countries and their policies, whether they are phasing out steaming coal or identifying opportunities.
Global trends
One factor which has not been mentioned is the group of emerging economies. Here, India and China come to mind, although why China is still classified as emerging when its economy is so massive and its free-market reforms are now 40 years old, is questionable.
These economies naturally impact worldwide trends and consequent predictions. As an example, the Transparency Market Research (TMR) Coal Trading Market forecasts stiff competition in the coal trading market, at least until 2023. Partnerships and joint ventures are identified in the report as current tactics. At this point, one must determine whether this competition will result from reduced availability as a consequence of those countries committed to ceasing coal production, or whether the industrialisation of emerging economies will lead to so much more demand for coal that there will be pressure on mine operators to produce enough of it.
In all likelihood it is both factors that will affect the market for coal. TMR singles out certain key global players up until 2023, eg. Glencore and Peabody, but its overall review centres on the period 2015-2023 for which CAGR is declared at 3.43%.
In fact, TMR answers its own question by identifying industrialisation and the Asia-Pacific region as the dominant generators of opportunities. It is the former that will lead to overall coal production of 10,951Mt by 2023. India and China are the unsurprising catalysts behind the Asia-Pacific trend - overall coal refers to bituminous, sub-bituminous, lignite and a small amount of anthracite.
For those who believe that coal is on its way out for the energy sector, TMR’s Coal Trading Market report serves a timely conclusion, namely that coal is regarded as a cheap, and therefore desirable fuel, with steel-quality coal waiting alongside to force coal prices up via added demand.
In the global context, the final notes are those of the International Energy Agency (IEA). The IEA observes that worldwide energy demand grew 2.3% in 2018, the steepest in the previous 10 years. This growth rate will, in the IEA’s opinion, mean a 27% growth from 2017 to 2040, that is 17.7bln tonnes of oil equivalent. The agency does, however, see a lower growth rate for fossil fuels, by 16%, 13.1bln tonnes of oil equivalent. Reflecting received opinion, the IEA’s coal prediction is falling demand in Europe and North America but continued growth in Asia-Pacific.
The USA’s predicament
One iconic moment from President Trump’s 2016 campaign was a young man asking about the future of coal. The response was sympathetic and there appeared to be a definitive split whereby the Republicans collared the coal industry vote.
More recently, the US Energy Information Administration (EIA) has stated that four years of successful growth for US energy are set to ensue. Crude oil, for example, will continue to be a net export until next year at least. Regarding renewables, the 17% share of US electricity generation predicted for 2019 will increase to 22% in 2020.
So, where does this leave US coal? Well, in a specific example, Rio Tinto has just phased out the coal component of its power station at Kennecott, near Salt Lake City in Utah. Rio Tinto is now buying renewable energy from Rocky Mountain Power, primarily from wind and solar resources, with a reduction in emissions of 65%.
On a national level, EIA expects that the share of US utility-scale electricity generation from natural gas-fired power plants will remain relatively steady — 37% in 2019, 38% in 2020 and 37% in 2021. Electricity from renewable energy will rise more steeply from 17% last year to 20% this year and 21% in 2021 with increased wind and solar energy being the cause. Nuclear power is estimated to hover around the 20% mark.
And then there is coal, where the EIA forecasts that coal-powered electricity generation will fall from 24% in 2019 to 21% in both 2020 and 2021. As a result, the prediction is that US coal production this year will decrease by 95Mt. This is precisely because of lower demand from domestic coal-powered energy and lower demand for US-mined exports. For EIA, one ray of hope for coal is that its production might stabilise in 2021 – ironically, as rising natural gas prices could make coal more attractive.
Responses from industry
Several projects are to receive US$3mln in funding from the US Department of Energy (DoE) in recognition of American coal’s importance. In the projects, which also use non-DoE funding, new market opportunities will be created for both steaming and coking coal.
In detail, coal will play its part in the following DoE-funded projects:
- A new composite material aimed at improving lithium-ion batteries
- A domestic coal-derived graphene process to evaluate quantities of graphene oxide as well as graphene quantum dots - all forms of coal will be involved
- The production of high-value isotropic and mesophase coal-tar pitch for carbon fibre products using coal from five US states. Overall, the intention is a low-cost carbon-fibre product possibly for the automotive sector and to aid coal-based local economies
American coal is not giving up lightly. Its National Energy Technology Laboratory (NETL) is funding research to enhance efficiency of existing coal-fired stations. NETL will focus on the condensation or film which sometimes forms when steam contacts metal tubes. Here, limited heat transfer and less efficiency are the consequences.
Thus, NETL is cooperating with companies such as Oceanit Laboratories and is testing a coating called HeatX, which is applied to the surfaces of condenser components. The coating, non-toxic and extremely thin, forces the condensation to form into droplets that very soon roll off condenser surfaces rather than stick to them. At the time of press, testing is continuing.
Programmes such as those just described show that the depiction of the USA as a rogue country pursuing the untrammelled burning of coal and without caring for the environmental consequences is not correct.
Australia
And so, to the convenient villain, whose coal industry was almost accused of some form of responsibility for the recent devastation of the world’s driest continent. As already pointed out, there has been a lack of accusations that coal — if it is actually responsible for climate change — has created the recent flooding.
One defender of coal from Australia has been Minerals Council of Australia CEO, Tania Constable. She points out that coal is indispensable for a consistent supply of low-cost energy in key economies such as Vietnam, India and China. Coal, indeed, is not the only energy form challenged by environmental criteria.
It is clear that coal has to meet the requirements for a high-energy but low-cost and low-impurity product. In just one example, Donaldson Coal Pty, the environmental assessment relating to its planned Tasman Extension, covers 18 areas where the environment can be affected.
All too appropriately, a bushfire strategy is discussed by Donaldson Coal. It is comprehensive, to put it mildly, as it takes into consideration wind speeds and directions, existing susceptibility of the mine area to bushfire, types of vegetation, and several reasons why bushfires occur. The latter are listed as: illegal burning activities, arson/incendiarism, car dumping, escapes from legal burning, lightning and arcing of electrical power lines.
In light of all these factors, Donaldson Coal has implemented a bushfire management plan for the pre-extension Tasman mine as part of the Health and Safety Management System. It is clear that there are many factors behind bushfires, and they are not all coal-related.
India
So, where does that leave economies such as China and India, which are still very dependent on coal? And, how will they rise to the clean-coal challenge?
The World Coal Association (WCA) submitted a report on India this January. It notes that India increased its use of renewable sources to the extent that they fulfilled 30% of the country’s increased power demand between 2017 and 2018. Much of this came from solar power, where India has more than met its initial target of 20GW of solar capacity by 2022.
Then there are the times when, in the WCA’s opinion, ‘the wind doesn’t blow, and the sun doesn’t shine.’ Coal still often provides the base-load power. Add to that the WCA’s description of the growth in Indian energy demand in India as a ‘staggering’ 6.5% per year to 2040, and it is clear that coal has a major part to play.
The Indian government supports coal, having recently announced that coal capacity will rise from 195GW to 238GW by 2027, 40GW of coal-fired capacity is now under construction, and it is clear for New Delhi that renewables simply cannot meet the demand. Coal is dominant and will continue to be in 2040.
Which raises the question of the environment and how to meet obligations. One answer is the retirement of inefficient power stations and consequent upgrading. This is taking place under India’s 12th five-year plan, which builds substantially on the fully commercial (and non-subsidised) carbon capture, use and storage facility developed by Carbon Clean Solutions in the port of Tuticorin.
For all the reputation of steaming coal and its hostile depiction, it can be said that coal is now a fuel of change, with new technologies ensuring the usage of coal, it no longer has to be an energy source doomed to a long and lingering oblivion.
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