Coal Industry’s Climate Plan Doesn’t Add Up

Ian Dunlop, The Age, 25th September 2015

Coal producers and lobbyists are yet again promoting “clean coal” as the justification for continued expansion of energy coal as we make the inevitable transition to the low-carbon economy. Conscious that they can no longer credibly reject the evidence of accelerating climate change, the Minerals Council of Australia and the World Coal Association claim that the latest “clean coal” technologies, in the form of lower emission coal plants and carbon capture and storage, are an effective response.

Last week, the Minerals Council released a paper by the International Energy Agency’s Clean Coal Centre contending that new high efficiency “ultra-supercritical” coal plants in 10 countries in South and East Asia, including India and China, could reduce carbon dioxide emissions by 1.1 billion tonnes per annum compared with less efficient “subcritical” coal plants. They also heralded the opening of a new coal-fired power generation CCS plant in Saskatchewan as evidence that commercial scale CCS is now available.

While such technological advances are welcome, that argument displays a fundamental misunderstanding of the climate science, and is being economical with the truth to put it mildly.

The full IEA picture emphasises that to stay below 2 degrees celsius of global warming, we can’t afford to add any additional coal plants to the existing stock, no matter how efficient they are, unless their emissions can be sequestered or unless existing plants with equivalent capacity can be retired. Every new unabated coal plant locks in decades of additional coal burning and carbon dioxide emissions that our planet cannot afford.

In the IEA’s scenario to meet the 2 degree C limit, by 2040 there is room for only 780 GW of unabated coal power generation, and all of this must be the most efficient ultra-supercritical coal plants. The size of the world’s current coal fleet is 1900 GW, with an additional 300 GW under construction. Therefore even if not another single additional coal plant was built from today, we still need to retire two-thirds of the world’s current coal fleet by 2040 in order to stay within 2°C.

CCS is presented as the solution to overcome this constraint and allow unbridled coal expansion. It is not rocket science; it has been done in the oil industry for decades, reinjecting carbon dioxide produced with oil and gas back into the geological formations from whence it came. However the global storage capacity in depleted oil and gas reservoirs is limited and they are rarely close to coal power generators. If other geological storage structures have to be used, and the carbon dioxide transported any distance, storage security, technical difficulties and costs escalate dramatically which is why progress has been slow and industry has been reluctant to invest strongly in its development.

Expert analysis suggests that to sequester around a fifth of global power generation emissions would require the creation of an industry far larger than today’s world oil industry; implying the construction of more than 3000 plants within the next 20 years to have any chance of making a realistic contribution to emissions reduction. It is not going to happen, not least because the Minerals Council and WCA have continually undermined sensible efforts to introduce a price on carbon pollution, thereby weakening the incentive to develop CCS.

Despite decades of rhetoric, globally we have only the one commercial scale coal power CCS operation in Saskatchewan and even that is sequestering its emissions in a depleted gas reservoir. The project cost $1.5 billion for a mere 110 MW of output. A study by Saskatchewan Community Wind found that investment in wind power instead of the CCS plant could have saved ratepayers more than $1 billion. CCS will be viable in limited, specific circumstances and should be encouraged where that is the case, but it is never going to contribute substantially to the emergency reduction of global emissions now required. The industry should stop pretending otherwise.

The coal industry justifies expansion on the basis of demand supposedly “forecast” under an IEA scenario which assumes only limited change from “business as usual”. As the IEA put it, this cannot be allowed to happen: it would be a world where temperature increases by around 4 degrees C on average, with greater extremes regionally, a world where economic activity as we know it ceases as global population rapidly declines.

In short, the world would be toast. Australia, as the hottest, driest continent on Earth, would be toasted first. Coal leaders need to rein in the Minerals Council and the World Coal Association, and start restructuring their companies, and retraining their workforce for the real opportunities the low-carbon world opens up.

Ian Dunlop was formerly an international oil, gas and coal industry executive, chairman of the Australian Coal Association and chief executive of the Australian Institute of Company Directors. He is a member of the Club of Rome.