Coal: Economic forces may heal the environment

Source : Daily World

Humans have used coal since at least the 4th millennium BC. In the 3rd millennium BC, it was used in funeral pyres in Britain and the Romans used it for smelting iron ore. It was critical to the Industrial Revolution and was the fuel of choice for steam engines. In the 20th century, oil gradually replaced coal for transportation and its main use remained for power generation and metallurgy. Coal has been notorious for its inevitable environmental impact. Open pit coal mining results in degradation of land, air and water, while underground mines suffer from gas explosions and continuous slow fire. The volcano-like Burning Mountain of Australia actually comprises underground coal deposits that have been burning for 6,000 years. Coal combustion produces large amounts of greenhouse gases and is the main cause of acid rain. Coal ash adds to soil, air and water pollution.

Coal smoke was the earliest contributor to air pollution as it continues to be even today. Environmental activism has its roots in coal smoke. Air inthe 19th-century industrial Britain was thick with coal smoke and the Coal Smoke Abatement Society came into being in 1898. There was, however, a conflict in all industrial countries whether nature should be conserved for its own sake with humans remaining a part of nature or natural resources should be managed for fulfilling human desire for dominating nature. Antagonistic moral and ethical norms evolved from these conflicting goals. The conflict continues even today.

The first Earth Day was celebrated on April 22, 1970.In 1971, Greenpeace came into existence as did the European Management Forum, which later became the World Economic Forum, and their yearly jamboree at Davos.The UN Conference on the Human Environment was held in 1972. All these initiativesfailed to stop the march of coal. Coal consumption continued to relate to population and economic growth. Accelerating environmental degradation caused by coal did contribute to intense movements for population control and sustainability but could not impact the rise in coal consumption.

As the demand for metals and electricity expanded, the production of coal boomed in spite of all these movements. Since 1971, coal production has increased from three billion tonnes to eight billion tonnes. While the metallurgy industry in developed countries was the first to take note of additional costs in terms of carbon tax, ash management and worker health and made a gradual shift to electricity, the shift further contributed to the rapidly increasing electricity demand. The high capital cost of solar and wind equipment, obstruction of hydro projects by environmentalists and the high price of gas made coal the cheapest alternative for generating electricity.

China, India and the US continue to remain major consumers of coal, accounting for more than 60 per cent of global consumption, with China itself using more than 45 per cent. After a slight dip in 2015-16, the demand continued to grow with Indonesia, Vietnam, Malaysia and Philippines adding to the growth. All these countries were slow in abandoninguse of coal in metallurgy and increased prosperity alsofuelled electricity demand. One of the election promises of Trump in 2016 was to revive coal in the USA both for the metal industry and for power generation. In the two decades of this millennium, the world has doubled its coal-based power generation to 2045GW (1GW=1000 megawatts). As of now, an additional 200GW is under construction and a further 300GW is planned. While India and China are the main contributors to this addition, 268 GW of coal-based capacity was retired in the EU and the US anda further 213GW is on the anvil for being phased out.

These contrary trends on the use of coal for power generation in Asia on the one hand and US/EU on the other show that forces of economics may be succeeding in the short span of a decade where five decades of environmental activism failed. The following factors seemed to be causing the demise of coal for power generation: 1. Lower oil prices: The discovery of vast shale deposits in the US helped that country shift from being a major importer of oil to a net exporter. The spat between the US and China since 2018 on the trade imbalance and the alleged tariff inequities did its bit to slow down economic growth and lower oil prices. The proverbial last nail was Covid19 and the resulting lockdowns, which caused a crash in oil demand and prices.

2. There was considerable increase in coal prices during the last several years till 2018though the slowdown did result in a fall during 2019. On the other hand, electricity from the sun and the wind became cheaper as windmills and solar panels became cheaper. In the last few years, renewable energy has been consistently quoted at lower rates than coal-based energy. Even in the US, with its history of high coal consumption, renewable energy overtook coal-based energy in 2019. Worldwide, 75 per cent of new capacity added in 2019 was from renewable sources.

3. Lower economic activity resulted in lower than expected power demand. The thermal plants, with their higher energy cost, were the first victims. The plant load factor (PLF) of thermal plants has been falling worldwide. In India, coal-based plants have been operating at less than 60% PLF. Since these plants have a high fixed cost, the lesser energy produced at lower PLF has a higher per unit cost. There is huge stranded capacity of coal-based generation and many plants under construction are not likely to be completed.Of the 40GW of the stressed capacity in India, 15 GW has not been commissioned.

4. The biggest impediment to large-scale adoption of wind and thermal generation was the fact that these cannot give power continuously for all the 24 hours. Storage was expensive until recent times. However, with falling battery prices, storage is now viable and financial institutions and investors are no more interested in putting their money in thermal plants. The recent news about a “million-mile battery” coming soon will further accelerate the trend away from coal and oil. Some communities in the US have already gone off-grid with wind-solar generation coupled with battery storage.

The cumulative impact of these factors has been a drastic fall in coal consumption in all countries of Europe. In the UK, the “original” coal producing country, consumption fell from 60 million tonnes to 13 million tonnes in just six years from 2012 to 2018. In the US, the earlier second largest consumer of coal, investors are backing away from coal as its economics become even more “toxic” than its fumes. Market forces choose their own direction; these pander neither to the activist nor to a President. In the next decade, these forces are likely to phase out coal and perhaps even oil to a large extent, and give us back the blue skies, no thanks to the environmental activists.

The writer RN Prasher is a retired IAS officer of Haryana cadre | Personal Opinions

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