Coal

Mark C. Thurber

• Publisher: Polity
• Year: 2019
• ISBN:
  9781509514045
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Trade & Tariffs
• Index: Politics & International Relations

By making available the almost unlimited energy stored in prehistoric plant matter, coal enabled the industrial age – and it still does. Coal today generates more electricity worldwide than any other energy source, helping to drive economic growth in major emerging markets. And yet, continued reliance on this ancient rock carries a high price in smog and greenhouse gases.

We use coal because it is cheap: cheap to scrape from the ground, cheap to move, cheap to burn in power plants with inadequate environmental controls. In this book, Mark Thurber explains how coal producers, users, financiers, and technology exporters drive this supply chain, while fragmented environmental movements battle for full incorporation of environmental costs into the global calculus of coal. Delving into the politics of energy versus the environment at local, national, and international levels, Thurber paints a vivid picture of the multi-faceted challenges associated with continued coal production and use in the twenty-first century.

CHAPTER ONE
The Double-Edged Sword of Coal

Fueling the world with coal

The modern, industrialized character of life today can be traced directly back to coal. Coal liberated industrial production from dependence on energy from water and trees. It created a self-reinforcing cycle of industrialization. Coal made iron and steel, which made steam engines, which helped mine and transport more coal. A coal-fueled Industrial Revolution started in Britain in the late 1700s and spread to the rest of Europe, to North America, and beyond.

Since then, the scale of global coal use has only grown. In 2015, coal was used to produce approximately 28% of the total primary energy consumed worldwide.¹ Coal’s most significant role is in generating electricity, an application in which it is the leading energy source, with a 39% share (see Figure 1.1). But coal is also burned to produce heat for industrial processes, and in some regions it even serves as a residential fuel for heating and cooking. Coal with special properties, known as coking coal, is a crucial input into steelmaking. One major part of the energy landscape where coal no longer has a significant role is transportation, with oil-based fuels now providing over 90% of the energy needed.

Coal’s low cost has been a significant part of its appeal, as has the energy security it is believed to bring. After two oil shocks in the 1970s, oil-consuming countries made a conscious choice to deepen their reliance on coal-fired electric power plants as a bulwark against the perceived power of oil-exporting countries. (Oil used to be a more important fuel for power generation than it is today.) Today, roughly 85% of developed countries generate significant electricity with coal.² In many of these countries, coal accounts for a large share of overall power generation – for example, 61% in Australia, 46% in South Korea, 37% in Germany, 34% in Japan, and 31% in the United States as of 2017.³ Coal is even bigger in major developing nations, with China and India relying on coal for 67% and 76% of their electricity, respectively.⁴

Figure 1.1 Global gross electricity production by source, 2015

Source: IEA, Electricity Information 2017

World coal consumption grew massively in the 2000s, mainly because of a huge expansion of coal-fired power capacity in China (see Figure 1.2). From 2000 through 2013, China turned itself into the world’s manufacturing powerhouse and boosted per capita GDP sevenfold in the process – an achievement made possible in part by a nearly threefold increase in coal production and consumption.⁵ India’s coal consumption has also grown steadily, and other developing countries are following China’s and India’s lead in ramping up coal-fired power capacity (see Figure 1.2).

Figure 1.2 World coal consumption, including thermal and coking coal, in million tonnes of coal equivalent (Mtce) (Mtce is an energy unit that normalizes tonnage of coal by the energy value of the coal)

Source: BP Statistical Review of World Energy 2018

Now, we may be at an inflection point when it comes to coal. China’s massive coal expansion is over, which contributed to an overall drop in global coal use in 2015 and 2016. Whether coal consumption in China has peaked for good is not entirely clear – it ticked up slightly in 2017 – but China’s government is trying to put the brakes on further growth in coal use. Coal is in terminal decline in North America, a victim mainly of the shale gas revolution, which has caused natural gas to supplant coal as the preferred energy source in the power sector. Other developed countries – notably Germany, Japan, and South Korea – have continued to lean on coal-fired power plants in recent years, but the appetite for further growth has cooled.

The big question going forward is what happens in countries that are still in an earlier phase of development than China. India plans to expand coal production and use even as it seeks to significantly increase wind and solar capacity. Other countries in South Asia (Pakistan and Bangladesh) and Southeast Asia (especially Indonesia, Vietnam, the Philippines, and Malaysia) are building long-lived new coal power plants at a rapid pace. Beyond these fast-growing economies, the next wave of countries hoping to develop still appear to view coal as their “default fuel.” The energy choices of countries on the steep part of the economic development curve will determine whether the global coal consumption trajectory shown in Figure 1.2 continues to go down, plateaus, or starts trending up again.

Coal’s environmental problems

From the start, coal has brought environmental problems alongside prosperity. Smog from coal combustion was offending Londoners as far back as the 1300s.⁶ Today, respiratory disease associated with air pollution from coal is responsible for hundreds of thousands of premature deaths per year, especially in developing Asia. Coal mine accidents, illnesses affecting miners, and mine-related environmental damage remain significant problems in mining regions. People who don’t directly experience health, safety, or air quality impacts from coal may be concerned about its massive emissions of carbon dioxide (CO₂), a long-lived greenhouse gas.

It is little surprise that discussions around coal – including those in this book – are polarizing. Environmentalists may bristle at the suggestion that coal should have any role at all in the energy system, given its environmental downsides. Those working in the coal sector – or planning energy policy in fast-growing countries – may bristle at the implication that the benefits of economic growth, which coal has played a role in providing, are not an equally important factor to take into account.

It is not the purpose of this book to render a verdict on whether the benefits coal has brought have exceeded its costs, or whether they will in the future. Nor is the goal to forecast how long it will be until global coal use peaks. As we have learned from the shale gas revolution in the United States, or from the unexpectedly rapid decreases in the costs of renewable energy worldwide, energy markets are dynamic and likely to surprise.

The goal of this book, instead, is to explain the basic economic and political dynamics that will shape coal’s future. Why does coal play such an important role in today’s energy system? What are the political conflicts on local, national, and international levels that will influence policies affecting coal? What would it take for other energy sources to outcompete coal in the marketplace?

The nature of energy resources

In order to address our questions about coal, we first need to understand some fundamental characteristics of energy resources. A good starting point is the recognition that energy is not an end product. What the final consumer actually cares about is energy services. As an individual, I want energy to drive a car, or to watch television, or to have light at night. As a business owner, I want energy to run machines on my manufacturing line, or to provide air conditioning that keeps my employees (and computer servers) cool, or to cook the food I am selling. I want these energy services to be there when I need them, to have minimal undesirable side effects (for example, my stove shouldn’t fill the restaurant with smoke), and to be as cheap as possible. But apart from that – and apart from any broader social or environmental concerns I might have as a citizen – I don’t care where my energy comes from. Whether my stove runs on electricity or natural gas or propane is largely unimportant to me as a consumer. So is whether the electrons flowing out of the socket on my wall were generated by a coal-fired power plant or a wind turbine or a hydroelectric dam.

Since demand for energy is a derived demand, meaning that it comes from demand for energy-using applications, any energy source can in theory compete with any other energy source that is able to provide the same services. All else equal, markets will supply consumers with the cheapest energy. Where fossil fuels are concerned, this phenomenon of “BTU arbitrage” (BTU, for British Thermal Unit, is a measure of energy) has traditionally favored coal (see Figure 1.3). More than anything else, coal’s low cost and wide geographical distribution explain why it is the dominant fuel for electricity generation around the world, as well as an important source of energy for industrial applications. (Oil-based fuels have the dominant role in transportation because of their higher energy density and easier transportability, while natural gas is more easily piped into dense residential areas as a fuel for heating and cooking.)

Energy resources decline in importance because alternatives emerge that are cheaper and/or better suited to supplying the energy services desired. The same will be true for coal. Whether the world still uses significant quantities of coal decades from now will depend on how competitive coal remains with other energy sources. Interfuel competition is shaped by three main factors: resource depletion, technological change, and policy. These factors interact with each other.

Figure 1.3 Coal, natural gas, and oil prices compared on an energy basis (Powder River Basin coal prices are at mine mouth)

Source: IHS McCloskey, Bloomberg

Resource depletion is often misunderstood. As we will discuss further in Chapter 2, depletion does not mean we will ever run out of coal – or any other energy resource, for that matter. What does happen is that more geologically favorable deposits are mined first. In the absence of improvements in mining methods, this would cause production costs to increase over time, making coal less competitive against alternatives.

In reality, technological change means that mining methods do improve. If technological improvements outpace the effects of mine depletion, production costs can go down over time. The same is true, of course, of other means of producing energy, which makes the competition between energy sources very dynamic. For example, the shale gas revolution in the United States was driven by the ...

Table of contents

• Cover
• Front Matter
• Acknowledgments
• 1 The Double-Edged Sword of Coal
• 2 The Quest for Energy Security
• 3 Tensions along the Coal Value Chain
• 4 Environmental Politics and Policymaking
• 5 Alternatives to Coal
• 6 Policy, Technology, and the Future of Coal
• Selected Readings
• Index
• End User License Agreement