Believe Coal is Dead? Think Again.
Coal is an abundant, cheap, secure and reliable source of energy. It currently generates approximately 40% of the world’s electricity (click HERE). But it’s also dirty and a major source of carbon emissions. For each unit of energy produced, coal generates two times the carbon dioxide released by natural gas and about 133% that released by oil (click HERE).
Given the recent boom in natural gas production and the collapse in oil prices, many have stated coal is dead. I’m not convinced, and here’s why.
More than 90% of the population growth and 70% of the increase in economic output expected between now and 2030 is happening in the emerging markets (click HERE). This alignment of population and income growth is generating what I believe will be an unprecedented global consumption boom, a development that will affect demand for everything from healthcare to education to food and, you guessed it, energy. According to BP’s Energy Outlook, emerging markets will account for more than 90% of the growth in energy consumption between now and 2030 (click HERE).
Although coal usage is slowing in the United States and Europe, these two markets represented ~20% of global coal demand in 2013; China and India represented ~60% (click HERE).  Further, China and India are growing their coal consumption rapidly and show no signs of slowing. India has proposed building 455 coal-fired power plants to provide electricity to its 340 million citizens currently without any power. China is planning on adding 363 new coal-fired plants (click HERE) to keep pace with power demands from a booming middle class.
Coal is stockpiled at the Onahama port of Iwaki in Fukushima Prefecture in February 2014. Photo: Bloomberg News
And then there is Africa, a continent with ~1 billion people that is on the verge of an enormous population boom (click HERE). Germany, a country with a population of about 80 million, has a larger electricity generation capacity than all of Africa (click HERE). Sub-Saharan Africa has less capacity than Alabama; it generates barely enough electricity to power one light bulb per person for ~3 hours per day (click HERE). I have no doubt that coal is going to play a large role in Africa’s power sector.
Clean coal technologies such as carbon capture and storage (CSS) have proven expensive and are believed to raise costs by 25-45% (click HERE); even the Intergovernmental Panel on Climate Change suggests costs may be high (click HERE). Further, effective global regulation of carbon seems elusive. Australia last year became the world’s first country to repeal its carbon tax (click HERE), and Japan has been relaxing its restrictions on coal power in the wake of the Fukushima nuclear accident (click HERE). Might others follow?
Archaeologists have evidence that humans burned coal as early as 3490 BC (click HERE). For 5000+ years, coal has played a role in improving the lives of humans. While its relative importance may fall, it’s unlikely to disappear as an energy source anytime soon.
Vikram Mansharamani is a Lecturer at Yale University in the Program on Ethics, Politics, & Economics and a Senior Fellow at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School. Visit his website for more information or to subscribe to his mailing list. He can also be followed on Twitter.