Coal seems to be making a comeback, despite the Glasgow climate pact

Faced with power shortages due to extreme weather and war, countries from Asia to Europe have taken up coal again, pushing global consumption towards a record high
The great coal phase-down agreed to at the UN climate change conference in Glasgow last year is starting to look more like a phasing in of the fuel

Kavitha Yarlagadda

Published: 4:30am, 20 Oct 2022

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Coal is both the cheapest source of energy and the biggest producer of greenhouse gases, which are responsible for climate change. Most developing countries still rely on coal – India is the second largest consumer of coal behind China.

Despite India’s net-zero carbon goal and plans to develop renewable energy sources, its demand for coal is at an all-time high. And this demand is set to rise by a further 63 per cent by 2030, according to the country’s coal minister.

China, too, is increasing its coal production to cope with a rise in electricity demand in the recent heatwave, which dried up the rivers that generate its hydropower. China accounts for 50 per cent of global coal consumption and its demand only seems to be rising. All this shows that despite aggressive decarbonisation goals, the coal industry is still booming.

Coal-fired thermal power plants provide about 70 per cent of India’s energy needs. In April, coal stocks at more than 100 thermal power plants fell below the critical threshold of 25 per cent of what was needed, prompting several states to ask for extra coal supplies from Coal India Ltd, the government-owned coal producer. Six months on, coal stocks remain low.

Rising demand for electricity is the main cause of the coal shortage, forcing India to import the fuel, increasingly from Indonesia and Russia. According to consultancy Wood Mackenzie, India’s thermal coal imports are expected to rise by 7 per cent to 158 million tonnes this year, and a further 3 per cent to 163 million tonnes next year.

Coal loaders at the Jharia coalfield in Dhanbad in India’s Jharkhand state on October 14, 2021. The Asia-Pacific accounts for about three-quarters of global coal consumption, even as the region struggles with the impact of global warming. Photo: AFP

India traditionally experiences coal shortages during the monsoon season, when coal mining is disrupted. But this year, the shortage came early as summer arrived sooner and lasted for longer. Many villages in the states of Uttar Pradesh and Madhya Pradesh started experiencing power cuts as soon as in April. In India, as in many other nations, growing coal demand is holding back climate goals.

In response to rising coal demand, the Indian government has given states permission to exploit up to 25 per cent of captive coal reserves. To lessen the strain on Coal India, it has also allowed generating businesses to increase the imported coal mix up to 10 per cent. With imported coal prices rising, Coal India is boosting its production, confident of making up the shortage by 2023.

The coal mining states of Jharkhand, Orissa and Chattisgarh have sufficient stocks and are not facing a shortage. NTPC Limited, India’s largest power supplier, also has sufficient coal stocks to meet demand. But the push to develop new mines threatens the displacement of more than 165 villages, according to a Global Energy Monitor report, threatening agricultural and forest lands while underusing existing mines and delaying climate goals.

In contrast, China’s coal imports are falling, with demand curbed by its Covid-19 lockdowns. Wood Mackenzie expects China’s imports of thermal coal to drop from 246 million tonnes last year to 182 million tonnes this year, and 176 million tonnes next year.

An Australian National University study looking at both thermal and coking coal – the latter used for steelmaking – expects China’s total coal imports to shrink by as much as 49 per cent by 2025 due to its decarbonisation efforts and plans to increase local energy security.

02:13

Shanghai turns off decorative lights on the Bund to save power

China is the world’s largest importer of coal for power generation and steel production. Its moves are affecting its coal imports from Indonesia and Australia. To meet its climate goal of net zero carbon emissions by 2060, China plans to cut down on coal usage from 2026. But in the meantime, to stabilise domestic energy supply, it plans to push its coal output to 12 million tonnes a day.

After China and India, the next biggest coal consumers are the United States, Germany and Russia. As the war in Ukraine has driven up the price of natural gas and caused power shortage concerns across Europe, global coal consumption could rise by 0.7 per cent this year, returning to an all-time high, according to the International Energy Agency.

Boosted by demand, thermal coal prices have doubled this year, though there are signs the surge may be easing.

Don’t let China’s ‘coal boom’ enable backsliding on climate pledges

As the European Union works to cut its reliance on Russian gas, and Russia limits critical supply to the continent, global demand for coal will continue to rise. This stands in stark contrast to the hype on “phasing down” and phasing out coal in the face of climate change.

The spotlight is on Asia, which has the world’s largest importers and consumers of coal, and the actions of these countries in cutting their coal usage.

As a step towards combating climate change, many countries have set ambitious net-zero goals. At the UN climate change conference in Glasgow last November, countries agreed to phase down coal. But what should be a global coal phase-down is looking more like a phasing in as more countries increase demand for coal and boost domestic production.

On paper, many countries are investing in alternative energy sources, such as solar and wind power, while failing to address the huge emissions from their coal industries. Several countries are even pushing the development of new coal mines and renewing coal production, pushing back their climate goals. To be on track to meet climate goals by 2050, the world must reduce demand for coal.

Kavitha Yarlagadda is an independent writer based in Hyderabad, India