On the 20th March, the independent energy think tank KAPSARC of Riyadh hosted a one day workshop at the Netherlands Institute of International Relations ‘Clingendael’, in the Hague, which I attended. This workshop entitled ‘Does coal have a Future?’ was part of a three day event, the other two days covering oil and gas.
The overall conclusion of the day was that coal has a promising future, but the fortunes will be unevenly spread, with growth in Asia, and some market contraction in parts of Europe and North America.
While coal is compromised in terms of having high greenhouse gas emissions relative to gas and renewables, we were reminded that coal offers a real stabilising force in energy markets. The price of coal is the same today as it was in 1991. Such a stabilising factor seems welcome in energy markets where the price of oil and gas seems to take analysts by surprise.
Fossil fuel peaking is inevitable, and in Europe, the USA and China, it is arguable that peak demand and supply has already passed or is fast approaching. But, globally, the idea that the coal markets will hit some catastrophic buffer with regards to availability of supply seems misplaced for now.
What is clear is that scenarios show a flattening of coal demand in the world in coming decades; but a major slow down in growth is not driven by a scarcity of coal, but rather policy driven in an attempt to slow the growth in CO2 emissions from unabated coal power generation. Yet even under the 450 ppm scenario, fossil fuels would still account for 60% of future primary energy demand and much of this could be coal.
From a technology perspective, China is building immensely clean power plants, but in Europe CCS is not completely off the agenda. A business model for two CCS plants in the UK means both coal and gas plants could be built in coming years.
An area that the IEA Clean Coal Centre has kept a keen eye on is the Far Eastern power markets. 67% of all new power capacity in Malaysia is coal-fired, including supercritical stations; a surprising outcome from a country that was dominated by gas and renewables.
The development of high efficiency coal technologies such as ultra-supercritical steam conditions can dramatically reduce CO2 emissions/kW, although expectations in countries with higher ambient air temperatures such as Malaysia may suffer from a small efficiency penalty.
The overall sentiment of the meeting was positive for coal, but with cautious optimism as the recognition that high efficiency coal developments, and especially CCS were making slower progress than desired. Nevertheless, many factors created a climate of uncertainty for energy policy decision makers, not least the speed of change in Japanese nuclear policy, China’s role as a coal importer/exporter, and the state of the global economic recovery.
KAPSARC is an independent, non-profit research institution dedicated to researching energy economics, policy, technology, and the environment across all types of energy. KAPSARC’s mandate is to advance the understanding of energy challenges and opportunities facing the world today and tomorrow, through unbiased, independent, and high-calibre research for the benefit of society. KAPSARC is located in Riyadh, Saudi Arabia.
The Netherlands Institute of International Relations ‘Clingendael’ is the leading Dutch think tank and diplomatic academy on international affairs. The institute provides public and private sector organisations with in-depth analysis of global developments in the fields of economic diplomacy, international security and conflict management. Clingendael specifically focuses on security and Europe, and the position and the role of the Netherlands.
More information can be obtained at the following addresses: