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Scott Belinksi

Scott Belinksi

Scott Belinksi is an international energy consultant currently based in Moscow. His interests and areas of expertise include Eastern European politics, shale gas, deep-water drilling…

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Was Trump Right About Coal?

Coal

In the six months since becoming president of the United States, Donald Trump has markedly shifted the global conversation on the long-term viability of fossil fuels. The recent announcement that the U.S. would use its seat on the board of the UN’s Green Climate Fund to promote the construction of clean coal power plants across the globe, represents the administration’s stated intent to use its influence in a range of global energy and climate bodies to promote carbon capture technologies. Despite withdrawing from the Paris Climate Agreement less than two years after it was signed, the Trump administration has managed to stay on as a global energy player by changing the outlook on a resource that is crucial to the developing world: coal.

Never mind the uproar. Trump might actually be onto something – a surprising fact for an administration not known for its savvy policymaking. Among developing economies, including the rising giants of China and India, there is an existing, long-standing recognition of the need for fossil fuels, especially coal energy. While some have argued that natural gas is a better fit for developing economies, the fact remains that coal is more abundant and has a competitive edge over natural gas in many markets - especially in Southeast Asia and Sub-Saharan Africa, where coal reserves are plentiful.

For example, India’s rapidly expanding economy means the country’s appetite for gas, nuclear and coal energy grows by the year: 30 percent of all increase in the world’s energy demand from now to 2040 will come from India. In China, a similar pace of growth will see coal-fired generation activity increase by as much as 19 percent by 2020.

But massive growth in coal is not only limited to Asia, as Africa too is expected to become a major coal consumer. The International Energy Agency (IEA) estimates coal consumption in Africa to increase from 5 quadrillion Btu in 2012 to 7 quadrillion Btu in 2040 as a result of skyrocketing demand for electricity. Sub-Saharan Africa sits on vast coal reserves that are readily available and easily exploited, meaning that installing coal-powered electricity will remain a major economically viable source for the foreseeable future.

Unfortunately for developing countries, the global rhetoric is adamant that a straightforward path to fossil fuel phase-out is possible, despite the obvious economic ramifications for growing economies. Global institutions and international finance bodies have adopted a hardline stance on the issue by promoting renewables over more flexible approaches to energy consumption that could include an abundant resource such as coal. The World Bank’s decision in 2013 to heavily restrict funding for coal plants, or Deutsche Bank’s 2017 policy to pull the plug on all coal financing, are both examples of this global trend. Related: Oil Rises To 8-Week High Following Unexpected U.S. Inventory Draw

Especially in Africa, where countries rely on coal to cover their energy needs, these restrictions have been putting the breaks to their development. Unsurprisingly, African leaders such as Nigerian finance minister Kemi Adeosun have lamented that African countries are being denied coal power plants in the face of crippling energy shortages for the sake of CO2-reduction goals. With Africa’s CO2-emmissions being low in both absolute and per capita terms, Tanzania’s energy minister defiantly expressed in 2014 his country’s intention to intensify coal use in the future during a visit from then-President Obama.

However, there may be a light at the end of the tunnel. Trump’s policy to promote carbon capture and clean coal technology is now putting pressure on multilateral development banks (MDBs) like the World Bank, to rethink their stance. With the U.S. Treasury’s recent declaration that it will use its vote to push MDBs to help countries access and use fossil fuels more cleanly and efficiently, it is clear that the Trump presidency has brought one major change: developing countries now have the U.S. on their side. Trump wants those restrictions lifted, since new coal plants abroad would undoubtedly create demand and jobs in the American coal industry. But exporting energy resources abroad is also a cornerstone of Trump's plans for US trade, with a view to creating “energy dominance” – an ambitious goal to say the least.

The policy is already bearing fruit. At the U.S.-sponsored Clean Energy Ministerial Meeting in June, U.S. Energy Secretary Rick Perry highlighted the role America plays in the transformation of the Indian energy market. In light of recent progress in India’s clean coal sector, the US and India are currently discussing plans to broaden joint research on clean coal and carbon capture. Related: Electric Vehicles No Threat To Oil Prices Anytime Soon

Most tellingly, global competitors such as China are also keen to develop better coal power plants for their domestic agendas and are reaching out to the U.S. China’s National Energy Administration has recognized the need to prioritize clean coal technology as well, and signed an agreement with the US that will allow Beijing and Washington to share results and innovations as they refine technologies to capture gases produced from burning coal.

Overcoming the barriers presented by global institutions will be a critical step in Trump’s bid to revive coal. For the U.S., this is an opportunity to establish itself as a global clean coal power, while developing nations dependent on coal for energy may finally be able to tap into their resource wealth. The bottom line is that while the scandals engulfing the White House make any cool-headed appraisal of Trump’s policies increasingly difficult, the administration’s policy shift away from renewables is nevertheless creating global effects that analysts and pundits should not ignore.

By Scott Belinski for Oilprice.com

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  • EdBCN on July 30 2017 said:
    What a load this is. Clean Coal?! Ha! How could one write about the state of 'clean' coal in 2017 with no mention of the Kemper coal (now gas) plant. The fact is that despite Donnie's best, spastic attempts, coal is skidding downhill faster than ever.
  • Coffeeguyzz on July 30 2017 said:
    So far in 2017, compared to 2016, US coal exports to France are up 100%.
    US coal exports to the UK are up 175%.

    Truly, coals to Newcastle.
  • RenewATL on July 30 2017 said:
    Given many billions of dollars spent already on "clean coal" technology (without much success at wrenching down carbon emissions), it's difficult to see how coal can play much of role in the global energy past 2040, or at best 2050. Wouldn't you agree?
  • Josh Gregner on July 31 2017 said:
    The only way to get coal into new power stations is to massive corruption. Coal is simply for any new power stations.
    Aside from that: why on earth would anybody voluntarily want to have all the environmental issues + external energy dependence coal causes? Africa is most likely leapfrogging fossil fuels and build out renewables straightaway.

    Check this analysis by the IEA: https://twitter.com/IEA/status/889861461157318657/photo/1
  • hall monitor on July 31 2017 said:
    Lucidly written article. A shame the facts, including many of the provided links, do not support the argument. In fact, the article is packed with old data, incorrect or irrelevant links and misleading interpretations of the linked articles.

    I will not provide a detailed critique of the entire article. But, consider these points:
    1. The second paragraph speaks about coal versus gas reserves in Southeast Asia and in Sub-Saharan Africa. The link provided for SSA is solely about oil and gas, nothing about coal. It provides no support for the article.
    2. The next paragraph references growth in China coal generation capacity of 19% by 2020. While this is potentially correct, it is misleading and probably unlikely. The coal generation capacity by 2020 and thereafter has been capped at 1100GW. (If that is achieved, it would be a 19% growth.) However, it is likely this amount will not be achieved. See below.
    3. In the same paragraph, the article indicates that 30% of the world's growth in energy demand will come from India. Whether this is correct or not, it does not mean India's use of coal will change proportionally.

    I could go on.

    Now consider these points.

    1. Per the 2017 BP Review
    1.1 global consumption of coal peaked in 2014 and dropped in 2015 and dropped again in 2016.
    1.2 Coal use in all of Africa is relatively negligible. Thus, although use is likely to grow, it will remain relatively low compared to North America, China, etc.
    1.3 Coal use in China has dropped in each of the last 3 years. More imprtant, the government is actively pursuing further decreases.
    2. Although China is still building coal plants, many of them are meant to replace existing inefficient, highly polluting plants
    3. The capacity factor for Chinese coal plants dropped below 50% in 2015 and dropped a bit more in 2016. This would suggest they aleady have as much coal based generating capacity as they need.
    4. Similarly, the 2016 draft National Energy Plan for India explicitly states that, excluding coal plants already under construction, no new coal plants will be needed before 2027.
    5. The rest of the world (excluding India & China) have less than 100GW of coal plants under construction. This is roughly 5% or less of the total coal fired capacity in the world. A meaningful amount...but not a game changer.
    6. Many of the new plants under construction will obtain coal from other sources, including from their own country's mines, not from the US.

    Summary...coal will be in use for years. There may even be several years of increase in global coal use (most likely due to price increases in natural gas). However, use coal production is unlikely to see a substantial increase. And...this article used outdated data and misleading interpretations of information to support its thesis.
  • Independence01776 on August 01 2017 said:
    It's over folks, stick a fork in it. Companies around the US and world are building their own energy plants and replacing the use of utility provided energy. Why would I pay 10 cents or more per KW, when I can have electricity that I provide at 5 cents per KW.

    This invites lots of questions of course for those who are unaware of the paradigm shift that is occurring. Local production of energy with storage is now on par with utility supplied electricity. This is why company after company is announcing they are going to be 100% renewable. It's about saving money.

    Prices are declining at 100% every 6 years or so for renewables. As demand increase more investment goes into newer technologies and prices decline further and maybe even faster. Those of us in technology understand this price decline model brought on by scale and technology improvements. You've seen it with computers, mobile phones, TV's, etc. No different for renewable energy, prices will continue to decline with time and as demand increases. We are at the tipping point where price declines may even accelerate as investment grows. The acceleration of this trend is just beginning and will be exponential. The more prices decline the greater demand and the cycle continues until you've basically replaced the old paradigm with the new.

    It will likely be 10 years or so and then every govt. that signed onto go green can say how successful they have been with their regulations in meeting their green goals ahead of time. Even though it has very little to do with govt and everything to do with the free market and providing consumers with something that is faster, better, cheaper. (Every govt. minus one large economic power can say they've met their green goals that is.)

    For a detailed explanation of this you can watch Tony Seba (Stanford Professor) discussion of transportation and energy on youtube. He's spot on and it's going to spread fast over the next few years. Government is irrelevant in this equation, though the Obama administration did help accelerate it over the past 8 years with significant subsidies. The tipping point has been reached, which is why new electricity generation in the US for 2015 and 16 were mostly from wind and solar. First time in history of course. 2017 and going forward looks even more so.
  • Independence01776 on August 01 2017 said:
    Who said dinosaurs don't exist. I guess all the fortune 500 companies that have decided to go 100% renewable should be putting coal plants on their roofs instead of solar panels. Obviously those companies can't crunch the numbers like Scott can.
  • me on August 01 2017 said:
    it's takes a very highly educated person to willfullly believe in this nonsense
  • Boganboy on August 01 2017 said:
    Coal burning is a nice simple technology using a cheap plentiful fuel. Since places like Africa want to industrialise, and have made sure they're excluded from the effects of the Paris agreement, no doubt they'll continue to increase their usage. If they can't afford to import oil, perhaps they'll also adopt South Africa's coal to oil technology.
    I can't pretend to have much faith in carbon capture and storage, though. It seems a clumsy expensive and inefficient technology. I'm sure the Africans'll find it much simpler to just dump the CO2 into the atmosphere.
  • Dave on August 01 2017 said:
    It's dismaying that some of the posted comments represent resentment that folks in less developed counties may have the opportunity to bootstrap themselves out of dire poverty through coal-fired power plants because they have huge coal deposits.

    After all, if in fact clean coal tech is available why not use it?

    Because I served two years & 8 weeks as a Peace Corps Volunteer in Liberia, West Africa I'm aware that those folks need all the breaks they can get to push their economies forward.
  • Donald Clifford on August 04 2017 said:
    Coal is projected to be an increasing share of energy production. US coal exports are presently increasing rapidly, with no end in sight. Liberals are fools to think wind and solar will ever be a major energy source. If anything, I think thorium is the next new fuel source, filling the gap of the ever elusive fusion power.
  • snoopyloopy on August 08 2017 said:
    "Trump’s policy to promote carbon capture and clean coal technology is now putting pressure on multilateral development banks (MDBs) like the World Bank, to rethink their stance."

    Saddling developing countries with one of the most expensive forms of energy, the so-called "clean coal", is a cruel joke. Fortunately, many of them are already realizing that and just completely leapfrogging the whole coal-fired power plant debacle stage and going straight to microgrids powered by renewables. Much like they did with cell phones.
  • Wayne on August 09 2017 said:
    It was actually kinda shocking to read this article. "Clean coal" is an oxymoron if ever there was one. It might be possible, but the expense and technological difficulties make its use in any meaningful way highly unlikely.

    Several billion dollars recently went down the drain in Mississippi at the "clean coal" plant being developed there. Imagine what could have been accomplished if this money had been invested in proven alternative technologies that are already transforming the world.

    Mention was made of the vast coal reserves in Africa. What about the vast solar energy reserves from the Sahara desert alone? Or vast areas that are likely for wind energy as well?

    I could go one and on, but again, it's kind of shocking to see how the handwriting is on the wall for coal, and it's well-deserved phasing out will likely happen sooner than most people realize.
  • John on August 10 2017 said:
    Everything about Trump is pie-in-the-sky rhetoric and propaganda to get votes. It's silly anyway to go to West Virginia and bray that Trump Digs Coal since Democrats never expect to win that state anyway.

    But, the reality is, though coal is plentiful it is not easier today to mine and it is more expensive unless today's coalminers are willing to work for less pay and even fewer benefits such as health care and pensions.

    As others here have pointed out, "clean coal" is an oxymoron, renewables are getting more competitive cost-wise with fossil fuels, battery and electrical storage capacity are improving, hydrogen technology is advancing, fuel efficient vehicles, both gasoline, hybrid and all-electric are all improving and they DON'T damage the environment like burning mainly fossil fuels do.

    In short, coal is dirty, it's getting less competitive and guess what else? More people in the human race are realizing that keeping the air we breathe and the water we drink free from pollution is not only positive health-wise but cutting the costs of respiratory illness results in more production in the workplace and fewer days lost due to illnessess. As the old business adage goes, time is money.
  • JLB on August 13 2017 said:
    Check out a plot of global coal consumption over time. Coal use has nearly doubled since 2000 growing far more rapidly than any other time in history.

    Renewables may be reaching parity in the US and Europe but in locales without stringent environmental regulations (and associated costs), low labor costs and plentiful supply it is still far less expensive to burn coal than solar or wind. Coal costs are dropping fast in India as they begin to exploit their domestic supply and rely less on expensive imports. Africa is cheaper still.

    That's why a doubling of coal consumption has occurred in recent years and will continue.
  • Mark Bahner on August 16 2017 said:
    "It's dismaying that some of the posted comments represent resentment that folks in less developed counties may have the opportunity to bootstrap themselves out of dire poverty through coal-fired power plants because they have huge coal deposits."

    But less developed African countries don't have huge coal deposits. Of all the countries in Africa, only South Africa is even in the top 30 countries for proved recoverable coal reserves.

    What Africa has in abundance is solar energy for photovoltaics.
  • Mark Bahner on August 16 2017 said:
    "That's why a doubling of coal consumption has occurred in recent years and will continue."

    I would be happy to bet that world coal consumption will never double from its current level of 3.7 billion tons of oil equivalent.

    http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/coal/coal-consumption.html

    In fact, I'm even willing to bet that global coal consumption (expressed in millions of tons of oil equivalent) will never rise more than 20 percent above its apparent peak in 2014 (of approximately 3.9 billion tons of oil equivalent). Or I would be willing to bet that global consumption 10 years from now or 20 years from now will be less than the value of 2014.

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