Juggling Development Objectives and the Role for Coal After the Paris Agreement

20th Oct 2016

By Milagros Miranda R.
Policy Director, World Coal Association

First published in Cornerstone, Volume 4, Issue 2

As of 2015 the world has a new global framework for sustainable development, supported by these four pillars: the Paris Agreement on climate change, the UN 2030 Agenda for Sustainable Development, the Sustainable Development Goals (SDGs), and the Addis Ababa Action Agenda on Finance for Development (AAAA). There are crucial and supportive links between these as the new framework calls for a holistic and integrated approach to guide actions toward achieving sustainable development.

Adopted in December 2015, the historic Paris Agreement has 178 signatures. To enter into force, however, the agreement requires ratification by 55% of countries that represent at least 55% of the global emissions reductions. Currently, only 19 countries, representing 0.18% of global emissions, have ratified the agreement.1 Notably, a second UN assessment report on the Individual Nationally Determined Contributions (INDCs) filed by each country indicates that implementation of the current INDCs would not fall within the scope of the 2°C scenario by 2025 and 2030.2 In reality, the global emissions levels as a result of these INDCs are expected to be higher compared with global emissions levels in 1990, 2000, and 2010.

The Paris Agreement’s aim is to set a low-emissions path by which the world should hold the increase in the global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°C above such levels. This goal is further stressed in Decision 1/CP.21, which adopts the Paris Agreement and emphasizes the urgent need to address the significant gap between the aggregate effects of parties’ mitigation pledges in terms of global annual emissions of greenhouse gases by 2020 and aggregate emission pathways consistent with the agreement’s goal.1

Achieving both a low-emissions path and the goals in the Paris Agreement will require countries reliant on coal to implement high-efficiency low-emissions (HELE) and carbon capture and storage (CCS) technologies.

The success of the agreement relies on the implementation of the INDCs that develop into NDCs once a country ratifies the agreement. To achieve a successful, real, and effective Paris Agreement, implementation must be ambitious and efficient. The international community should focus primarily on support and assistance to coal-reliant countries with limited resources in implementation of HELE technologies. The provision of adequate technological and economical resources will allow those countries to achieve and scale up their mitigation ambitions.

The Paris Agreement and Decision 1/CP.21 request parties with INDCs containing a time frame up to 2025 or 2030 to submit new NDCs by 2020, and to periodically increase their ambitions. In 2018, parties will meet to assess all efforts undertaken to peak global greenhouse gas emissions. These events will mark important stepping stones toward increasing the ambitions of the NDCs.

The INDCs submitted by many countries are conditional, stating that if adequate technological and financial support is not forthcoming they will be unable to fulfil their current pledges or offer more ambitious pledges in the future.

Climate finance, technology transfer, and capacity building were potential deal-breakers to adoption of the Paris Agreement. Failure to address technological and financial support issues is likely to result in the unsuccessful implementation of the Paris Agreement. Those same issues also present difficulties for achieving the SDGs and the UN Agenda for Sustainable Development.

ENERGY AND CLIMATE ARE COMPLEMENTARY PRIORITIES

Energy is an essential enabler of development. However, 1.1 billion people globally lack access to electricity.3 This reality is one of the greatest challenges of our time.

Climate change and energy access are embedded in SDG 13 (take urgent action to combat climate change and its impacts) and SDG 7 (ensure access to affordable, reliable, sustainable, and modern energy for all), respectively. As countries work toward those goals, they are simultaneously working to address other development needs and priorities—some of which are embedded in other SDGs and some in their INDCs concerning mitigation and adaptation objectives.

Coal continues to play a critical role in the world economy. Globally, coal accounts for around 29% of primary energy supply and 41% of electricity generation.4 It is an essential raw material in the production of 70% of the world’s steel and 90% of the world’s cement, and its use will remain critical in supporting infrastructure, modernization, and urbanization efforts in the world, especially in emerging economies.4

Climate change and energy are not competing priorities. Rather, climate and energy action are complementary and can be mutually reinforcing. With HELE technologies, countries can use coal more efficiently to reduce emissions while increasing energy efficiency in the electricity generation sector. Utilization of HELE technologies will enable countries to improve energy access without undermining their climate objectives. In that way, policies supporting access and deployment of modern and cleaner coal technologies will actually address climate and energy objectives.

Developing countries are forecast to increase their coal use to meet electrification needs. According to the International Energy Agency (IEA), even with a significant increase in use of renewables, coal will still be a substantial source of energy in 2040, accounting for 30% of global electricity generation. Despite reducing its share of electricity generation from 41% to 30%, coal will increase in terms of total electricity generated, reaching almost 24% growth in absolute terms by 2040.4

Growth in coal power generation is driven almost exclusively by Asian economies. According to the IEA, coal is the fuel of choice in Southeast Asia, where energy demand will increase from current levels by 80% by 2040.5

“One size fits all” does not apply when dealing with mitigation objectives. Availability, reliability, affordability, and energy security are the key factors that influence countries’ energy mix. Depending on national priorities and circumstances, countries will apply different policies and technologies to achieve their energy and development objectives.

Coal-using countries will continue to use it because it is affordable, reliable, and available. This is particularly true with developing and emerging economies. A major challenge for those countries is developing policies compatible both with a sustainable development path and their INDC mitigation objectives.

The IEA forecasts that, by 2040, India’s energy consumption will be more than OECD Europe combined. India, as China did before it, will fuel its economic growth with coal, because it is affordable and available. India’s INDC highlights that coal will continue to dominate power generation in the future. Its government is implementing several initiatives to improve the efficiency of its coal power plants, and future policies will focus on developing and deploying cleaner coal technologies such as supercritical and ultra-supercritical.6 As India’s INDC states, “Given the current stage of dependence of many economies on coal, such an effort is an urgent necessity.”7

In China, India, and other developing countries, coal contributes substantially to the baseload electricity that is critical to economic growth and energy access. Moreover, coal-fired power plants can support renewables deployment, making it more viable and counteracting its intermittent nature.8

Hence, moving away from coal is not a realistic solution to the climate challenge faced by developing countries which must juggle other priorities simultaneously: energy access, growing electrification rates, energy security, poverty alleviation, and other environmental objectives. Implementation of HELE and CCS technologies, however, can offer realistic options to developing countries. According to the IEA’s Coal Industry Advisory Board, “Coal-fuelled power plants are indispensable in the near future and thus more focus should be put on making coal technology more efficient and clean. It is a false notion, at least for the next 50 years, that coal-fuelled power plants can be completely replaced with non-conventional technology.”8

A ROLE FOR COAL IN A LOW-EMISSIONS PATH WITH HELE AND CCS

HELE coal technologies increase the efficiency of coal-fired power plants and substantially reduce CO2, NOx, SO2, and particulate matter (PM) emissions. A one-percentage-point improvement in the efficiency of a conventional plant results in a 2–3% reduction in CO2emissions. With supercritical and ultra-supercritical HELE technologies, power plants can achieve efficiencies of up to 42% and 45% (LHV), respectively.9

China offers an example of how countries can change the way they use coal. Measures implemented in China include the adoption of high-efficiency advanced boiler technology and emissions standards for coal-fired power stations. Using supercritical HELE technologies, Unit 4 at the Zhoushan power station achieved thermal efficiency levels equal to or even better than levels achieved in some ultra-supercritical units. Similarly, the Ninghai power station utilizes supercritical and ultra-supercritical HELE technologies—and releases almost five times less SOx, NOx, and PM than the average coal-fired power station in China. Table 1 shows the saving rates of both plants concerning CO2, SO2, NOx, and PM emissions.

TABLE 1. Annual emission reductions of SO2, NOx, PM, and CO2 in Zhoushan Unit 4 and Ninghai Units 5 & 6 power station in China8

Nineteen developing countries have recognized the importance of HELE technologies as mitigation tools by committing to their use in reducing emissions from coal-based energy generation in their INDCs.10 Collectively these countries are responsible for 44% of the world’s emissions and include Bangladesh, China, India, Egypt, Japan, the Philippines, and Vietnam, among others.

According to an article published in the Proceedings of the U.S. National Academy of Sciences, increase in energy demand might be driving a “renaissance of coal” in developing countries, “which is not restricted to a few particular cases but instead is a general phenomenon occurring in a broad set of countries”.11

China and India are the two largest fast-growing developing countries that have increased use of coal to meet energy and electricity demand, and have also begun to switch from subcritical to supercritical and ultra-supercritical HELE technologies. Other coal-producing and -consuming countries in the developing world following suit include South Africa, Indonesia, Kazakhstan, Thailand, Colombia, and Malaysia. It will be particularly important that the rest of Asia follows at a rapid pace.12

Bangladesh, for example, has 121,160 MWe of coal-fired power generation capacity planned or under construction post-2015, of which 5440 MWe is planned to be ultra-supercritical.12In its INDC, Bangladesh has pledged that 100% of new coal-based power plants will use supercritical technologies by 2030. For this to happen, Bangladesh has estimated that an investment of US$16.5 billion is required.13

Clearly, the transition pace from older, less efficient, and higher emission subcritical technology to more advanced HELE technology must be accelerated. However, without the needed support, the INDC pledges will not be implemented and countries will continue to allocate economic resources to subcritical capacity, thus missing a vital opportunity to slow emissions growth. Figure 1 depicts the projected CO2 emissions reductions achievable by switching from subcritical to ultra-supercritical technologies, in India, China, and other Asian countries.

FIGURE 1. IEA-CCC study on potential HELE impacts in Asia12

World Coal Association studies indicate it will cost US$31 billion to convert 400 GW of coal capacity from subcritical to HELE technologies in non-OECD countries by 2040, saving around six billion tonnes of CO2 from 2015 to 2040.14

HELE coal technologies are also critical precursors to CCS. Without CCS, achieving the goals in the Paris Agreement will be more expensive.15 According to the IEA, “CCS is a critical component in a portfolio of low-carbon energy technologies aimed at combatting climate change. Fossil fuels will continue to dominate primary energy consumption for the foreseeable future increasing the urgency of CCS deployment.”16 The Boundary Dam coal-fired power station in Canada demonstrates that CCS can achieve 90% CO2 emissions reduction.1

Over the last 20 years, CCS has been applied to many uses and with multiple processes and fuels. Industrial applications of CCS are equally important within a low-emissions path.

The IEA forecasts that, by 2050, emissions from coal-fired electricity generation need to be reduced by around 90% if the world is to achieve a 2°C scenario.17 This is doable only with implementation of HELE and CCS. All sources of energy and a varied portfolio of low-emission technologies will need to be implemented with countries’ forthcoming NDCs to achieve electricity for all.

CONCLUSIONS

Governments and policymakers in countries reliant on coal and with ambitious INDC pledges will need to use and promote HELE and CCS technologies. Without their use, any transition toward a sustainable and low-emissions energy system will be difficult. International financial and technical institutions also play a critical and catalytic role in accelerating that transition. Without technical and finance support, decision makers will be reluctant to invest in the best available technologies, due to upfront capital investment costs. As indicated by the Addis Ababa Action Agenda on Finance for Development, public-private partnerships must ensure that HELE and CCS are part of national investment plans and decisions, to avoid unnecessary delays in achieving mitigation objectives.

The Paris Agreement established a Technology Framework to provide overarching guidance to the Technology Mechanism of the Convention in facilitating technology development and transfer. One key area of work will be the provision of enhanced financial and technical support for the implementation of the Technology Needs Assessment and Technology Action Plans.

As many developing countries have included HELE coal technologies in their INDCs, those technologies will be part of their Technology Action Plans and most likely require the new Technology Framework to facilitate the required technology transfer and financial support.

UN financial and technological institutions such as the Green Climate Fund and Climate Technology Centre and Network are technology-neutral. These institutions should provide the necessary support for the development of HELE and CCS technologies when countries request it.

A different approach will neglect the reality of the global electricity generation system and result in the likely failure of implementing and achieving the Paris Agreement’s goals. As Yvo de Boer, former Executive Secretary of the UN Framework Convention on Climate Change, has warned: “Without support for new highly efficient coal plants, the world may end up with something much worse.”18