The surprisingly sustainable case for coal

Lauren Glendenning | October 11, 2019 | Craig Press

The following excerpt is from Peabody President and Chief Executive Officer Glenn Kellow’s presentation at CERAWeek in Houston, Texas on March 14, 2019.

Amid a fuel that is so often miscast as a Hollywood villain, there is a surprisingly sustainable case to be made for coal.

The story of global energy is not one of good vs. evil — it is a tale of the pursuit of two goods: affordable, reliable energy and reduced emissions. Maximizing the benefits while minimizing the costs are what so many of us are about every single day.

First, the basics: The world uses some 8 billion tons of coal per year. A bit more than one out of every four units of energy in the world comes from coal.

For the first time ever in 2018, global coal-fueled generating capacity topped 2,000 gigawatts (GW). That’s a massive 62 percent increase since the year 2000 and each GW can use about 3 million tons of coal per year. Some 45 GW of new coal-fueled generation is under construction in 2019 alone, and more than 40 nations have added coal-fueled generation since 2010.

The future of coal

Within the U.S., past years of regulatory burden, financial incentives to switch fuels, and a country-specific shale play have created a secular decline, but coal still fuels more than 25 percent of electricity generation. During the peak day of the 2019 polar vortex, coal fueled 37 percent of electricity — more than any other source.

Coal is also essential to original steelmaking, which consumes a billion tonnes of coal each year, and coal provides about 70 percent of the energy to create cement. Electrification of the transportation sector is already having stunning results, with coal again returning as a major fuel of transportation in places such as China with high-speed trains and electric buses, cars and scooters.

Simply put, the world plans and needs to use coal for the foreseeable future.

Improving the industry through technology

Technology has been the proven answer and has the potential to further drive down emissions from coal.

Step one is to allow the world to access electricity, something lacked by 1 billion people, nearly 15 percent of the world’s population. Around 3 billion people rely on primitive biomass, which would be some 1,000 times cleaner using coal by electrification.

Steps can also be taken to improve emissions from existing fossil fuel generation, and the track record there is excellent through low-emissions technologies.

Since 1970, U.S. emissions from coal have been reduced 93 percent. The first step in reducing carbon emissions begins with higher efficiency. Globally, the average efficiency of coal-fueled power plants today is 35 percent. Raising that average by 5 points, to 40 percent, would reduce global emissions by 2 gigatonnes, or the equivalent of India’s annual total.

Positive steps are already being taken. In China, high-efficiency, low-emissions plants comprise 66 percent of the installed capacity. 

The final “grand prize” for advanced coal technologies comes through widespread deployment of carbon capture, use and storage (CCUS). The Intergovernmental Panel on Climate Change has said not only would the cost of achieving the 2-degree Celsius goal be 138 percent more expensive, it may well not be possible without widespread deployment of CCUS technology.

The case for coal

In reality, the world needs greater regulatory clarity around carbon dioxide storage and greater deployment of plants. The technology exists today, though it is only through learning-by-doing that we optimize project costs to deploy at scale. In addition, there are transformational technologies in the innovation pipeline that promise to reduce costs even further with continued research and development.

In the U.S., we are already seeing renewed optimism in this field with the passage of the FUTURE Act legislation, advancing the 45Q tax credit. Peabody was pleased to be part of a bi-partisan effort supporting its passage.

A world that will use coal for many decades more into the future needs sustainable coal companies more than ever. If you drive first-tier, sustainable companies from coal, then the resulting effects will be negative for multiple stakeholder groups and society as a whole.

The coal industry of course faces multiple challenges, but within those challenges exist opportunities for those of us with the wherewithal to remain financially sound, to manage well, to insist on responsible mining, and to encourage advanced technologies to continually reduce emissions.

I suspect that coal will remain viable for far longer than some would like, but for the far greater good of multiple stakeholders than many might realize.