Climate deal may be terminal for coal, but death will be lingering

Today Online 15 Dec 15;

It is tempting to take the champagne-fuelled view that the historic global climate agreement reached in Paris signals the death of coal, but even if the dirty fuel is terminal, it will be a long, lingering demise before the final hacking cough.

This is simply because coal is, and will remain for decades, the main fuel in the world’s top and third-biggest emitters, China and India.

While China has changed direction on coal fairly dramatically in the past two years, its pledge at the climate summit that ended last weekend in the French capital is only that its emissions will peak by 2030.

That means the Chinese are allowing themselves 14 more years of increasing emissions, despite their commitment to lower the share of coal in their energy mix to below 60 per cent.

India did not commit to any absolute cuts in carbon emissions, instead promising to shave a third off the rate at which it emits greenhouse gases over the next 15 years.

What this means is India aims to cut carbon intensity, or the amount of carbon per rupee of economic output, by between 33 and 35 per cent by 2030 from 2005 levels.

But given that India is also planning on rapid economic growth in order to lift hundreds of millions of its people out of poverty, this means that pollution will rise in absolute terms, even if the South Asian nation does manage to use energy more efficiently in economic terms.

India is still planning on doubling its coal output to 1.5 billion tonnes by 2020, which is an ambitious target, but one that is ominous for its carbon emissions should it be achieved.

India may add another 170 to 200 gigawatts of coal-fired power in the next few years, which would require as much as 500 million tonnes of coal a year to operate.

India’s planned new coal-fired generation is roughly equal to its target of 175 gigawatts of renewable generation by 2020, which could be scaled up to 350 gigawatts by 2030.

MORE MONEY NEEDED

This does show that India, like China, is planning on adding significant amounts of clean energy, but not so much as to end the need for a new coal-fired generation.

The undertaking by developed countries at the Paris summit to provide US$100 billion (S$141 billion) a year of clean-energy funding to the developing world by 2020 sounds like a major commitment, but in reality is probably well short of what will be required if China, India and other emerging Asian countries such as Indonesia are going to limit pollution.

India needs US$2.5 trillion by 2030 to achieve its already fairly modest plan, meaning developed nations are likely going to have to spend more than they currently envisage on helping the developing world.

Whether this level of funding is possible is a moot point, especially if the Republicans manage to win back the United States presidency before 2030.

It is hard to see a Republican president being as supportive of combating pollution as President Barack Obama has been, given many of the conservative party’s leading figures are climate-change sceptics.

What the Paris summit has changed is that coal, and other fossil fuels, have effectively been put on notice that their time is coming to an end.

This, of course, assumes that there is genuine follow-through on the words of the summit, and countries and private companies commit to spend the trillions of dollars needed to de-carbonise the global economy.

But in the meantime, coal is far from dead in Asia, even if it is under threat in the US and Europe, although how much is driven by climate policies and how much by the economics of alternatives, such as natural gas and rooftop solar panels, becoming cheaper.

The only way to limit coal’s growth in Asia is to try and encourage countries such as India and Indonesia to effectively skip a step in their industrial development.

In other words, they should not build power plants and distribution grids, rather, they should electrify their economies by going straight to small-scale renewables for households and larger-scale projects for industry.

This is not the current path being trod by India, Indonesia, or indeed any Asian country. Rather, they are all planning on building huge power plants and distribution networks.

But it can be done, with mobile phones showing the way in Africa. Many countries in the continent effectively skipped the step of building fixed copper or fibre networks, moving straight to cellular networks that can deliver voice and data.

A similar process can happen in electrification in Asia, and in Africa as well, but it will require a dramatic change in the policy mindsets of the governments involved.

Until this happens, coal’s future in the developing world is assured, at least for the next decade or two. REUTERS

ABOUT THE AUTHOR:

Clyde Russell is Asia Commodities Columnist at Thomson Reuters.