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Coal’s role in modern infrastructure

Economic development involves the increased use of highly energy intensive materials, such as steel, cement, glass and aluminium. These materials are necessary for the construction and development of transport, energy, housing and water management infrastructure. Coal is the most widely used source of energy in energy-intensive industries and is important in the development of modern infrastructure in growing economies. Coal is also an important component of global steel production which is critical in the construction of modern infrastructure such as transport, residential housing and commercial buildings.

Download the full Coal Matters: Coal and Modern Infrastructure fact sheet.

May 8, 2013 | Categories: Coal News, Sustainable Development

Basic energy services create more value than revenue

Milton Catelin, Chief Executive, WCA

Yet another report which pretends to make a cost-benefit analysis of coal-fired power generation has been published.

This time it’s TEEB (The Economics of Ecosystems and Biodiversity), an organisation claiming to promote the uptake of natural capital accounting in business decision-making, ranking businesses activities according to their externalities and questioning the business case behind coal-fired power generation, cattle ranching, cement and steel production and wheat and rice farming, arguing that the revenue these activities generate are often just as high as the environmental costs.

The problem with this report and many others that see the world only through the lenses of climate policy is that it does not attempt to quantify the social and economic value of affordable energy fuels and farming or industrial products. In other words, the cost benefit analysis doesn’t include the benefit side!

Surely we could all agree that for a society to have access to affordable sources of electricity, food products and basic infrastructure such as roads or bridges, which require both steel and cement, is of huge value. Most people appear to agree that value far exceeds the revenue that companies working in these sectors generate; otherwise we would not be talking about reinforcing and protecting energy and food security as one of the core policy objectives of Governments around the world, and we would not be talking about strategic infrastructure and its role in stimulating economic development.

There is also a serious methodological issue with this report – it assumes that each tonne of CO2 presents a cost of $100 to the society. This is way above the current CO2 price in the EU – currently around €3 – which is what the market defines as the right price to fulfil EU’s share of the objective of limiting global temperature increase to 2 degrees Celsius.

I would like to think that the authors of this report are not advocating phasing out of coal, steel, cement, meat, wheat and rice production because that would equate to starvation and life without energy and prospects for many around the world; but it is hard to draw any other conclusion from such a biased report.

April 22, 2013 | Categories: Climate change, Energy access, Sustainable Development

Sustainable Development Goals post 2015 must include coal

LONDON, 8 April 2013 – Ahead of the high-level summit on energy in the post 2015 development framework taking place in Oslo on 9-10th April 2013, The World Coal Association (WCA) has called for clear action to improve energy access and address the challenge of energy poverty affecting 1.3bn people worldwide.

Participants in the Oslo event will discuss key energy recommendations and potential global energy objectives, with the aim of informing and shaping the post 2015 development agenda on energy issues. As the world’s leading source of electricity, the WCA wants coal to be recognised as having a major role to play in meeting global energy access and climate change objectives.

Milton Catelin, Chief Executive of the WCA, commented “One of the biggest criticisms of the Rio+20 conference was the lack of ambition to improve energy access and no real statement on how the international community can work together to deliver energy for all. In the current global discourse on energy poverty there is too much focus on patchwork solutions for energy access.

“During this meeting in Oslo, we must look to longer term and broader solutions for providing grid-based electricity going further than the immediate challenge of energy for households and into energy for business and industry, to support real economic development and stronger social infrastructure. It is this broader approach that needs to be incorporated into an energy target in the Sustainable Development Goals.

“Including energy access targets post 2015 will be critical to mobilising global action and support investment in modern energy technologies in the developing world. A robust energy access target is one essential component, but what derives from that target must also be recognition that different countries will achieve it in different way. For some, renewable energy might be the best approach, but for many other countries, coal is going to play a huge role in delivering energy access. For example, South Africa, India, Pakistan and many Asian countries are already looking to utilise their significant coal resources to meet this particular challenge.

“The International Energy Agency recently said that more than half of the on-grid electricity needed to meet the energy for all target will come from coal. What we put into the Sustainable Development Goals must recognise that reality.”

April 8, 2013 | Categories: Energy access, Sustainable Development

New WCA Case Study: PT Adaro – Making Water Work

Envirocoal has multiple environmental benefits, but it is the sustainable community-building work above ground that’s attracting international recognition and awards for producer PT Adaro Indonesia, a World Coal Association Member.

PT Adaro Indonesia produces one of the cleanest fossil fuels in the world. Ultra low levels of sulphur, ash and nitrogen mean its ‘Envirocoal’ branded product is in demand with the global power industry, where it’s used as a direct feed or mixed with other types of coal.

These environmental attributes have in turn been extended and integrated into the company’s approach to doing business.

Recycling mine water

Perhaps the most striking illustration of Adaro’s Corporate Social Responsibility (CSR) approach is a new initiative to recycle waste water from its mines into clean drinking water.

Energy and water, probably mankind’s two most vital resources, are closely linked. In the villages of Padang Panjang and Dahai, closest to the mines, this interdependence has a profound impact. Waste water, primarily from rainfall, is continually pumped from the mine to settling ponds, where it is treated before being released into local waterways. But Adaro, following Reduce, Reuse and Recycle principles, has now built a treatment plant that produces drinking water of the highest standards.

The benefits to villagers are significant. Most people in rural Indonesia get their water from rivers and streams; and wells if they can afford it. But these settlements sit in low-lying areas where a lot of the standing water is stagnant, creating continuous health issues. A 15km network of pipelines built by Adaro now transports potable water from the treatment plant to the heart of the villages, all year round. The firm’s employees and more than 5500 villagers alike benefit.

Encouraging self-sufficiency

But what has made this scheme a multiple award-winner is the way in which the treatment plant is managed. Planning long-term, Adaro aims to help create sustainable and independent post-mine communities.

To encourage self-sufficiency, the facility is governed and run by the community themselves. Board members from the community are elected at village meetings. They’re then trained on water supply management techniques by PT Adaro Indonesia and other industry experts. To encourage a sense of responsibility towards its new plant, the water is not given away for free. Customers pay for their water at locally affordable rates, and the funds are in turn collected and used on village improvements. This is just one example of projects where Adaro is combining environmental management and rehabilitation with community development.

Magic cars

They range from sponsoring dozens of local students through university, to running a biodiesel plant to replace diesel in dump trucks, to re-using water from the reclaimed Paringin mine to cultivate freshwater shrimp and tilapia fish. And its free, mobile cataract surgeries, nicknamed ‘magic cars’, have returned the sight or significantly improved life quality for more than 3600 people.

The multiplier effect

The company is keenly aware of the multiplier effect its work has on the economy, education, health and the environment everywhere it operates. And it makes business sense.

“We cannot increase our production if we cannot manage our surroundings,” says Garibaldi Thohir, President Director of PT Adaro Energy.

“That is why I spend most of my time dealing with CSR and the development of the local area. If we can better develop surrounding communities, then those communities will feel that Adaro belongs to them”.

Download the full case study

April 4, 2013 | Categories: Case Studies, Sustainable Development

Coal’s impact on economic development – Results of our reader poll

Milton Catelin, Chief Executive, WCA

Last month, WCA asked blog readers to what extent has the availability of affordable coal impacted global economic development.

84% of people thought that the availability of affordable coal had had a high or medium impact on global economic development. Only 16% felt coal had made little impact on global economic development.

So let’s look at the true economic impact of coal. Coal currently provides 40% of the world’s electricity needs. It’s the second source of primary energy in the world after oil, and the first source of electricity generation. Since the beginning of the 21st century, it has been the fastest-growing global energy source. The last decade’s growth in coal use has been driven by the economic growth of developing economies, mainly China. The availability of affordable coal to meet China’s energy needs has had a huge impact on economic and social development. Last year, the World Bank and the UN celebrated the fact that global poverty was halved – a goal which was set as one of the Millennium Development Goals. However, virtually all of the world’s poverty reduction over recent history has been in China.

No other poverty alleviation strategy in history has been more effective than the one implemented by China and driven by an economy fuelled more than 70% by coal. China has provided access to the national electricity grid to 99% of its population and lifted 662 million of its people above the poverty line.

In South Africa coal is being used to bring electricity to some of the 12.5 million people – 25% of the South African population – who lack it. This electricity will help address the fact that half of South Africa’s population lives in poverty. India’s substantial coal resources can be deployed to help bring electricity to the 600 million people who lack it there. As nations develop, they are naturally going to seek secure, reliable and affordable sources of energy to strengthen and build their economies – coal is the logical choice. Without energy, people cannot access the opportunities provided by the modern world, and social and economic development is unfairly curtailed.

We all know the environmental consequences and we should do all that we can to use coal as cleanly as possible. And that is beginning to happen. China, for example, is now making 36% of all its global investments in advanced coal technologies. Deploying advanced coal-fired power generation and CCS in developing countries will be a key means of delivering cleaner energy to those who need it most. In the developed world it will help secure energy supplies and provide a low cost pathway to achieving a cleaner energy future.

March 19, 2013 | Categories: Energy access, Sustainable Development

Coal & China – let’s look at the full picture

Milton Catelin, Chief Executive, WCA

China’s coal use has been in the news this week, following the release of US Energy Information Administration data which shows that China now accounts for 47% of global coal consumption. This is almost as much as the rest of the world combined. This growth has largely been the result of a more than 200% increase in Chinese electricity generation since 2000, fuelled mainly by coal.

The coverage of these figures has largely been negative, with dismay at the environmental consequences of this growth.

I can’t help feeling some dismay myself at the one-dimensional coverage of coal, particularly in China. Behind these figures, there is a positive story to tell, which rarely gets heard.

The availability of affordable coal to meet China’s energy needs has had a huge impact on economic and social development. Last year, the World Bank and the UN celebrated the fact that global poverty was halved – a goal which was set as one of the Millennium Development Goals. However, virtually all of the world’s poverty reduction over recent history has been in China.

So rather than simply characterising the coal and China story as one of doom and gloom, we should look at the full picture, which is one of coal making a massive contribution to poverty alleviation.

Yes, there are environmental consequences and we should do all that we can to use coal as cleanly as possible. But China is doing that too. China is making 36% of all global investments in advanced coal technologies.

I’m not making light of the current environmental issues in China; I’m just trying to widen the debate. If we simply characterise coal’s role in China in negative terms, we’ll be doing nothing to meet the challenges we face over this century. What’s needed is practical action made against the backdrop of reality…and for China, that reality is coal.

January 31, 2013 | Categories: Climate change, Sustainable Development

Coal’s growing role is good news for the energy poor

Milton Catelin, Chief Executive, WCA

Today the International Energy Agency released its annual “Medium Term Coal Market Report” (MCMR) which forecasts a growing role for coal in the world’s energy supply over the next five years, potentially surpassing oil as the world’s biggest supplier of primary energy.

In earlier reports, the IEA has already highlighted that coal has met almost half of the increase in the world’s energy demand in the past decade. They’ve also shown that coal will provide more than half of the on-grid electricity needed to meet its ‘Energy for All’ scenario – helping to lift 1.3 billion people out of energy poverty. So coal’s growing role in the global energy mix can only be good news for meeting one of the developing world’s most pressing challenges.

It means developing countries will have access to an abundant, affordable and reliable fuel source to meet their growing energy needs well into the future, powering homes and businesses and lifting millions out of poverty. The huge achievement in China of lifting 600 million people out of poverty since the early 1980s has been fuelled by coal.

Unfortunately, many still only see coal use through the lens of climate change. They lament the increasing role coal has in meeting the world’s ever-growing energy needs because of the associated carbon emissions. From today’s launch of the MCMR it seems the head of the IEA, Maria van der Hoeven is firmly within this group. While her comments highlight the need to reduce carbon emissions to meet global climate objectives, she appears to ignore the importance of coal to meeting global energy access objectives.

These two global challenges, energy access and climate change, should be treated as integrated priorities. Governments, the international community and the IEA need to recognise that the increasing demand for coal means they must treat it as part of the climate solution, not part of the problem.

As Ms van der Hoeven says, we need to get serious about deploying carbon capture and storage, but we can take much more effective, affordable and immediate action by supporting the deployment of high-efficiency low-emission coal-fired power plants. Another IEA report published earlier this month, highlights the role these plants will play in dramatically reducing the emissions from coal. Deploying modern, highly efficient coal plants can reduce CO₂ emissions by as much as 30% from coal-fired power generation and it can do this at a much lower cost than renewable energies. That means there are huge economic and climate benefits from building more efficient coal-fired power stations.

It’s time to add a development filter to the climate lens when looking at coal’s role in the global energy mix. This report from the IEA is good news for the developing world when it comes to meeting their energy access challenges. But there is good news too when it comes to coal’s role in meeting global climate ambitions.

December 18, 2012 | Categories: Climate change, Energy access, Sustainable Development

Developing countries tell a different story on coal in the European Parliament

Aleksandra Tomczak, WCA Policy Manager

Energy and climate change debates can be quite Eurocentric in Brussels. This is unsurprising and might not be a problem in other policy areas but the global dimension of the climate change challenge makes it especially important not to lose the big picture. That is why the World Coal Association felt strongly about bringing the world outside of the EU into the climate and energy debate in the European Parliament.

Earlier this month, WCA co-organised the 3^rd edition of the European Coal Days – an annual series of events hosted in the European Parliament and other EU institutions by two MEPs; Bogdan Marcinkiewicz and Christian Ehler. One of the key events that week was the WCA-EURACOAL Workshop in the European Parliament. Our panel brought together eight experts from five continents, working in the power generation, banking and coal mining sectors, as well as an NGO representative.

Coal is often discussed only from the point of view of climate protection, regardless of the fact that sustainable development is based on three principles: environmental protection and economic and social development. That is why WCA’s workshop discussed coal’s contribution to economic development, especially in developing countries and emerging economies.

During the workshop, Irfan Ali from Pakistan’s TharPak Consortium delivered a powerful message on the importance of fighting energy poverty in Pakistan. Irfan said that around 64 million people still have no access to electricity in Pakistan, and yet the country is sitting on what could be one of the largest untapped coal deposits in the world.

Gina Downes, Chief Advisor in Environmental Economics at Eskom, South Africa’s largest power generator, talked about the role of coal as a key fuel in South Africa’s electrification efforts. Gina said that thanks to coal South Africa has one of the lowest wholesale electricity costs in the world.

Getting these messages inside of the European Parliament is important because too often, developed country governments and decision-makers ignore the role of coal in delivering affordable energy and modern infrastructure in developing countries.

November 29, 2012 | Categories: Energy access, Sustainable Development

Focusing on mining’s contribution to sustainable development

ICMM has recently released two more reports in its series of publications looking at mining’s contribution to sustainable development.

The series has been commissioned by ICMM to spark a constructive dialogue about the key issues the mining industry faces. It seeks to set out some of the more important benefits, costs, risks and responsibilities related to mining and metals in today’s world.

The data set out in the series of reports shows that mining has a significant and growing role to play in economic development in general and poverty reduction in particular. Evidence from ICMM case studies in Chile, Ghana and Brazil illustrates that mining areas have enjoyed stronger poverty reduction and social development performance than non-mining areas.

All five publications in the series are available on the ICMM website.

November 21, 2012 | Categories: Sustainable Development

More to coal than eyes can see

Aleksandra Tomczak, WCA Policy Manager

Last week I was invited to deliver speeches on clean coal technologies and the UN negotiations on mercury in Taiyuan, China. One theme was present across the Clean Coal Symposium in Taiyuan and the meetings I had with various coal industry stakeholders afterwards and that was increasing the value of coal and using its full potential as we gain a better understanding of what coal actually is. This is extremely important because more efficient management of natural resources is a global priority and therefore making a better use of coal is an important part of sustainable development.

Because coal is the most abundant energy fuel in China, the Chinese authorities put a lot of emphasis on coal-related research. This provides a great opportunity to come back to some of the research which was done around coal in the past and to use modern technologies and knowledge to gain a better understanding of the molecular structure and chemical composition of different coals.

One presentation looked at the potential to recover valuable elements and rare earth elements from coal. According to the presenter, a Russian scientist, many valuable elements can be found in coal, such as Gallium (Ge), which is a key material in microelectronics for producing semiconductors, and Rhenium (Re), which is one of the rarest elements in the Earth’s crust and is used for manufacturing jet engines. In fact, a number of companies in the United States are also hoping to extract rare earth elements from coal combustion wastes, such as fly ash.

After my visit to Taiyuan I also visited the National Institute for Clean and Low Carbon Energy (NICE) in Beijing. One of the areas of research for the Institute is to recover activated carbon from low-rank coals which can then be used for controlling mercury emissions from various industrial facilities and power plants. This is a great example of China using the full potential of its coal, but the implications of this approach are much wider as better understanding of coal will allow not only China but also many other countries around the world to capitalise on the entire value of their coal reserves.

I believe that all this research creates great opportunities for the coal industry and for coal to play a direct role in the climate change and sustainable development priorities.

October 7, 2012 | Categories: Energy access, Sustainable Development