Is Coal Now on Life Support?

I noticed that yesterday, a number of US-based news outlets picked up on some European news around Coal. A couple of weeks ago, and without much fanfare, at least here in Europe, Eurelectric’s 3500 members agreed to not invest in new coal plants after 2020 (Polish and Greek members did not support this). The UK and France are already engaged in a movement from coal for power generation and have committed to eliminate coal-fired generation. Others may follow.

What was really quite interesting was that on April 22, the UK had its first coal-free day in generation for 135-years. Something that is now bound to happen more often in the coming years. So is coal dead?

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I think the answer to that is it depends where you are talking about. In the EU, coal is struggling for its life as a generation fuel. The UK and French governments have committed to eliminate it entirely and it has been replaced by wood chips and biofuels at facilities like Drax. The Polish and Germans still have a large dependence upon the coal or lignite industry and there are attempts to protect the employment the industry provides there. However, this last week, they were over-ruled in new EU rules on NOx, SOx and particulate pollution. The tighter pollutant emissions limits for power plants and other large-scale combustion facilities in the EU were resisted by a group of eight mainly Eastern Europe and former communist EU members that rely on coal for electricity. Their opposition, however, was not enough to prevent approval of the limits which will apply 4-years after the formal decision of approval and will cover a range of substances, including ammonia, nitrogen oxides, carbon monoxide, sulfur dioxide, fine particles and heavy metals. This is yet another nail in Coal’s European coffin.

However, while Europe moves steadily towards the elimination of coal, developing countries are more reliant on than ever. Pakistan just announced a deal to have the Chinese build $15 billion on new coal generation there over the next 15-years. New Chinese data shows that China’s dependence on coal for power generation went up a full 7% reaching new records to to 396.1 billion kWh at the end of March 2017 for the preceeding year. However, even in developing countries the writing may be on the wall. In India, for example, twice as much renewable capacity as coal capacity was added in the last 12-months in this highly coal-dependent country. Even where coal is an important part of the generation stack, renewables and other forms of generation are beginning to come onstream faster and it is probably just a matter of time before coal-fired generation’s death knells are sounded.

Even in the US where President Trump is attempting to facilitate a coal industry resurgence, the opposite is happening and power industry leaders voiced their opinions at the S&P Global Platts’ 32nd annual Global Power Markets Conference in Las Vegas. “I don’t know one CEO who says, now that Trump is in office, let’s go build a coal plant,” said David Crane, senior operating executive of Pegasus Capital Advisors and former CEO of NRG Energy. “[Trump] will be out of office before such a plant is even permitted.” and Declan Flanagan, Lincoln Clean Energy founder and CEO, said, “largely, there’s zero appetite” for new coal-fired generation.

Basically, a cluster of different reasons to chose anything but coal for generation is driving this death spiral such as pollution rules, competitive costs of competing generation fuels, environmental issues, consumer choice, and other such drivers. Perhaps though, there is a glimmer of light for coal in the form of clean coal technologies such as carbon capture.”There are thousands of coal plants around the world. Many were recently built, and over a thousand more are planned. How likely is it that governments are going to shut down a power plant that’s only 10 years old that might have cost a billion and a half dollars or more to build?” said David Dawkins of the Natural Resources Defense Council, for example, in arguing for more investment in such technologies and there remains significant political interest in developing these technologies in North america especially.

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