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David Caploe PhD

David Caploe PhD

David is a writer for the popular economic news site Economywatch.

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Coal’s Incredible Comeback – But at What Environmental Expense?

Coal is currently experiencing a phenomenal comeback everywhere. Demand has grown considerably, making coal the second-most important energy source worldwide, after oil. Billions of people depend on coal for their electricity supply.

Experts at the International Energy Agency (IEA) in Paris estimate that demand for coal will increase in the next two decades for more than any other energy source except wind and solar – from the current level of about 6.7 billion tons per year to almost 10 billion tons in 2030.

China and India are mainly responsible for the coal boom, with the two countries already accounting for more than half of global demand. According to the IEA, they will have more than doubled their coal consumption by 2030.

Coal provides them with electricity, and electricity is the elixir for progress and prosperity. In China, a new coal power plant is placed into service about once a week.
Coal drives machines, illuminates apartments and houses, heats stoves and moves high-speed trains.

The raw material that made industrialization possible in the 19th century remains an essential element of modern life in the 21st. Politicians around the world can enthuse as much as they want about the potential benefits of renewable energy sources, but the dirty truth is that the future of the world's energy supply is black.

Given the alternatives, what else can it be?

Many people feel that nuclear power is too dangerous. Crude oil is getting more and more difficult and expensive to produce. Natural gas creates a dependency on temperamental suppliers. And solar, wind and water are not yet sufficiently developed to provide a large share of the energy supply.

Which leaves tried-and-tested coal.

No other fossil fuel is available in such large quantities; current coal reserves will last for generations. No fossil fuel is as comparatively cheap. It costs only about 5 euro cents (around 6 US cents) to generate a kilowatt-hour of electricity from coal,
compared with about 40 cents for solar power.

And no fossil fuel is as widely distributed. Every continent has adequate reserves and, unlike oil, most of those reserves are found in regions which are relatively stable in geopolitical terms, such as North America, Europe and Australia.

But no other raw material is as devastating to the environment when used. Coal is the worst climate killer in the history of humanity. Coal thus comes with a high environmental price.

Almost one kilogram (2.2 pounds) of carbon dioxide is emitted to generate one kilowatt-hour of electricity from black coal, and emissions from lignite are even higher.

By comparison, a modern gas power plant emits about 350 grams of CO2 per kilowatt-hour generated, while nuclear power is responsible for only about 30 grams.
In other words, it isn't geology that defines the limits of growth. Instead, environmental concerns raise doubts as to the future viability of the fuel.

"Coal is the environmental problem of the 21st century," says Ottmar Edenhofer, chief economist at the Potsdam Institute for Climate Impact Research. Not surprisingly, the industry is already warning of a potential power supply gap if further projects are torpedoed.

The German Energy Agency, for example, estimates that by 2020 the country will lack about 13,000 megawatts in power generation capacity, which corresponds to about 10 large coal-fired power plants.

Coal critics counter that the supposed power supply gap is an invention of the energy industry. And coal areas around the world are booming, with Russia and Australia leading the shipping parade, but also Colombia, which is already the world's fourth-largest coal exporter.

Mining companies like BHP Billiton, Rio Tinto, Xstrata and Peabody Energy
are outbidding one another for licenses to extract coal in the best production areas,
which, as noted, are scattered around the globe, in, for example:

• Australia's Hunter Valley,
• the Powder River Basin in the US state of Wyoming, and
• on the eastern coast of Kalimantan, one of Indonesia's two main islands.

In places like these, the coal seams are readily accessible, mining is cheap and labor costs are usually low. Nevertheless, only one in seven tons of coal enters the global trade. The biggest coal-producing countries need most of the fuel themselves.

In China, in particular, the coal industry is in full swing. In Shanxi province in northern China, one coal train after another winds through the loess landscape,
heading for the port of Qinhuangdao on the country's east coast.

A seemingly endless string of trucks, their beds inadequately covered with tarps, thunder along the highway running alongside the railroad line. The drivers take risks with their overloaded vehicles, as evidenced by the occasional truck lying overturned next to curves in the road. The Shanxi region is one of the country's most important coalfields. During the day it resembles a smoke-filled back room in a bar. About 1,500 mines are in operation there, manned by thousands of miners working in shifts –  except when a fire shuts down production yet again.

In December, 12 miners were killed in a mine near the city of Jiexiu. Authorities have kept it closed since then. Some of the survivors speculate that large amounts of coal dust developed underground and triggered the explosion. Accidents are commonplace in Chinese mines. Some 3,215 workers died in accidents in 2008 alone.
Rarely are the rescue attempts as successful as one spectacular operation in early April, when rescue crews managed to pull 115 miners out of the Wangjialing mine alive after they had been trapped there for eight days.

But China’s not the only place coal mining is a dangerous and dirty affair, as Greenpeace describes in a 2008 report entitled "The True Cost of Coal." In the US state of Kentucky, for instance, mining companies blast away entire mountaintops to reach the coal more easily.

In South Africa, the acidic pit water from abandoned mines is contaminating rivers.
And in Colombia, mining companies are displacing families to expand the Cerrejón mine, the world's largest open-pit mine for black coal.

According to Greenpeace's calculations, the coal business causes €360 billion worth of damage each year. Environmentalists warn that if mankind continues along its current path, CO2 emissions from coal will increase by another 60 percent by 2030.
Given these consequences, can the world even afford to continue its reliance on power from coal?

The coal companies, of course, say yes, saying new technologies, like carbon capture and storage, or CCS, and compression,  can separate CO2 from coal and then capture it. "The technology is working," says Tuomo Hatakka, head of Vattenfall Europe.
In a few years, the Swedish company plans to build a demonstration power plant and test it to see how it performs on a large scale. "There is a future for coal," says Hatakka. "Coal without CO2 emissions."

The hope is these and other technologies could even turn into a significant source of economic growth, as it opens up new business areas for advanced heavy industry companies like Linde, Siemens and BASF.


The United States and China want to try out the first of the new generation of coal-fired power plants in the next few years. It is clear, though, that anything like this will come at an enormous economic cost. Retrofitting power plants, transporting the CO2 through pipelines and compressing it underground – all of these things bring up costs considerably, which will affect electricity prices accordingly.

Experts estimate it will take at least 10 years before the new technology is used on a large scale worldwide. When carbon capture and storage, CCS, is used, power plants lose about 10 percent of their efficiency, because the capture of carbon dioxide consumes an immense amount of energy.

In other words, more coal has to be burned to produce the same amount of electricity,
which essentially means that raw materials are being wasted. But no matter how sophisticated the technology, the biggest obstacle remains nearly impossible to overcome: the lack of acceptance by citizens who live near planned CO2 storage sites.
Not everyone shares these concerns.

And even the environmental movement is divided over the CCS issue.
Greenpeace and the leading German environmental group BUND flatly reject the process. Greenpeace argues that the technology constitutes "an enormous gamble,"
while BUND describes it as nothing but a "fig leaf" for the power companies.
Germany's Nature and Biodiversity Conservation Union (NABU), and the global conservation organization WWF, previously known as the World Wildlife Federation,
on the other hand, believe it is at least worth trying out.

Their argument is that it would be foolish to rule out this option from the outset.
In this sense, they are joined by Lord Nicholas Stern, an economist who caused a stir four years ago with his report for the British government on the costs of climate change. He sees no alternative to clean coal technology in the foreseeable future,
and recently devised a scenario on what the global energy mix could look like in the future.

In his scenario, coal plays a key role in the mix, for many years to come – largely because there seems no other economically viable choice. Even if the most optimistic forecasts came true, and the world could satisfy half of its energy needs from renewable sources, massive amounts of fossil fuels would still be needed, Stern argues. He believes that industry, if it hopes to achieve the world's climate goals, must do everything possible to reduce CO2 emissions – and that the use of CCS technology will be an unavoidable part of the equation.

"We need several thousand facilities," Stern said recently, speaking at a conference in Berlin. In this view, the age of coal seems far from over, according to this article from Der Spiegel On-Line. Until water, wind and the sun can provide enough energy, "clean" coal could at least play a role as part of a transition to renewable technologies.

Of course, Stern has no illusions about the amount of time it will take before a low-carbon future can be reached. "It will be a long bridge," he said. Which, given its evident environmental destructiveness, means the future will belong to nations that can lead the way in clean / green technology – yet another reason China, despite its current reliance on coal, seems more likely every day to be the global leader of the future – providing, of course, the proponents of the China bust are wrong, and it doesn’t collapse in a heap of bad debt and the resultant political chaos.

Let’s hope that doesn’t happen – for not just the Chinese, but the rest of the world’s economy AND ecology as well.

David Caploe PhD
Chief Political Economist
Economy Watch

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  • Anonymous on August 13 2010 said:
    Geesh, what good is a PhD if you are seriously lacking info / research (on new technology)? Nice article, but leading people astray. We have the clean techs to produce power from the Sun (and BioMass) at rates less than from coal (around 6 cents/Kwh). And we can process all the waste (animal and human) at a profit instead of polluting our environment with it. Some benefits and how to convert Income Tax into an income producing asset: tnns.org/energy Also, CO2 is always considered the big problem, but it is the MERCURY and other toxic elements that do the most destruction - impossible to figure the cost on. Plants live on CO2 - it's not so bad - not nearly the major concern. The other pollutants are killing us, and dependence on oil (& coal) allows for almost total control by a corrupt small minority. We should be working to get off the filthy fossil fuels at all costs, and we do NOT need nuclear (with the major costs & dangers with disposal of the waste).

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