Werner's Blog — Opinion, Analysis, Commentary
Coal on the retreat is good news for climate change

Thermal coal is still used widely around the world to generate electricity. It is one of the major sources of greenhouse gas emissions and is thus a major contributor to climate change. Phasing out coal is simply the first order of business fighting climate change. How far have countries come? Two charts reveal the progress (or lack thereof). The first chart ranks country in descending order of their coal use for electricity generation. It shows that coal is still a main energy source for many developed and developing countries. The second chart shows the change between 2000 and 2015, and the picture is only partially encouraging. While some countries make progress towards reducing reliance on coal, some have actually increased their reliance.

Electricity production from coal sources 0 10 20 30 40 50 60 70 80 90 100 % of total (2015) South Africa 92.7 Poland 80.9 India 75.3 Kazakhstan 71.6 China 70.3 Hong Kong SAR 65.4 Australia 62.9 Indonesia 55.8 Morocco 55.5 Czech Republic 53.1 Israel 45.4 Philippines 44.5 Germany 44.3 Korea 43.1 Greece 42.7 Malaysia 42.3 Netherlands 38.6 Chile 37.1 Ukraine 34.6 United States 34.2 Japan 33.1 Vietnam 29.6 Turkey 29.1 Portugal 28.7 Romania 27.6 Denmark 24.5 United Kingdom 22.8 Hungary 19.5 Thailand 19.4 Spain 19.0 Ireland 17.4 Italy 16.1 Russia 14.8 Slovak Republic 12.5 Colombia 11.8 Mexico 10.9 Canada 9.84 Finland 8.30 Austria 8.23 Belgium 6.11 Brazil 4.72 New Zealand 4.25 France 2.16 Argentina 2.03 Bangladesh 1.69 Singapore 1.20 Peru 0.840 Sweden 0.670 Iran 0.160 Pakistan 0.140 Norway 0.100

What stands out most in this chart is that two of the largest countries in the world, India and China, continue to rely heavily on thermal coal. It shows that at 70-75%, these countries still face a very long road to ween themselves off coal, which is not only a major source of greenhouse gases but also a main source of local air pollution.

Even Germany, whose Energiewende has led to a large increase in the use of renewable energy, remains a large user of coal. In 2015 it exceeded 40%, and by 2018 it had fallen below. However, renewable energy has been displacing nuclear energy, and thus Germany's progress to reducing carbon dioxide has been stagnating. Among the large industrial nations, Australia is also using its large domestic sources and produces more than 60% of its electricity from coal. Many East European countries also still rely heavily on coal, and none more so than Poland. In part this is a legacy of domestic availability and the need for energy independence, but today it provides a major energy challenge for these countries.

Canada's reliance on coal is small and continues to drop, while the United States still produces its electricity a third with coal. Given its much larger size, the US remains a large contributor to the world's GHG problem.

Producing coal and consuming coal is also contributing to adverse health outcomes. Coal is the world's most deadly form of energy: according to the International Labour Organisation (ILO) as reported by the BBC, mining employs only around 1% of the global labour force but it generates about 8% of fatal accidents. Air pollution from coal contributes to chronic respiratory diseases and other illnesses. A study by Chen et al. (2013) found that life expectancies in China are about 5.5 years lower in the north due to an increased incidence of cardiorespiratory mortality. The benefits from phasing out coal go therefore well beyond the benefits from reducing greenhouse gas emissions. Compared to the measurable human toll, GHG emissions are probably the lesser worry when it comes to coal.

Change in electricity production from coal, 2000-2015 -30 -20 -10 0 10 20 30 40 Change in % of total (2015 vs. 2000) Malaysia 31.2 Indonesia 19.3 Vietnam 17.8 Chile 16.0 Japan 11.7 Netherlands 8.40 Philippines 7.72 India 6.81 Colombia 6.75 Hong Kong SAR 5.00 Italy 4.81 Ukraine 4.50 Korea 4.47 Russia -5.06 Portugal -5.15 Slovak Republic -7.33 China -7.90 Hungary -8.11 Germany -8.88 Romania -9.52 Canada -9.58 United Kingdom -9.86 Ireland -11.4 Morocco -12.8 Belgium -13.3 Poland -15.4 Spain -17.6 United States -18.7 Australia -20.2 Greece -21.6 Denmark -21.7 Czech Republic -22.3 Israel -23.1

Some countries have actually increased their reliance on coal, and chief among them are Malaysia, Indonesia, Vietnam, and Chile. Given its size, India's increase of nearly 7%-points from 2000 to 2015 is also particularly worrisome. On the other hand, China's reliance on coal has been diminishing slowly (8%-point drop since 2000), and the United States at last has dropped nearly 19%-points. In the US case, coal has been displaced by cheaper natural gas. Australia has also declined by 20%-points, but starts from a very high point.

Progress towards reducing reliance on coal remains slow. If the world wants to meet the targets of the Paris Agreement, phasing out coal must accelerate dramatically in the next few years. What will it take to get there? Cheap natural gas has helped transition away from coal where these sources can be accessed easily. Ultimately, the price of renewable energy needs to come down sufficiently to make these sources cheaper than coal and gas. Combined with carbon pricing to level the playing field, speeding up innovation and cost reductions for renewable energy is what is needed. Grid parity is already reached for wind energy in many locations, and the cost of solar power is approaching grid parityrapidly. The best source for this information is Lazard's Levelized Cost of Energy Analysis (currently in version 12.0 from 2018). There are encouraging signs of progress: combined-cycle natural gas is cheaper than coal, and wind is highly competitive with natural gas. Solar PV at utility scale is quickly coming of age. While it is becoming one of the cheapest sources of energy generation, what restrains its wider adoption is the lack of dispatchability. The cost of electricity storage has to come down along with the cost of solar PV.

The data in this blog are all from the World Bank World Development Indicators, series EG.ELC.COAL.ZS.

Posted on Tuesday, January 8, 2019 at 12:30 — #Energy
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