1xThe future of energy is green, we are assured. After all, what other scenario is conceivable for a sweltering Earth where global temperature records are now smashed annually?[1] Ongoing progress within the renewable energy industry, much amplified in the media, appears to justify such optimism: In 2023 the world added an estimated 507 GW of new renewable electricity capacity, almost 50% higher than the previous year.[2]
Carry on like that, and we could be forgiven for running a bath, turning on the heating or boiling a kettle without feeling that familiar twinge of guilt. There is just one problem. A combustible, jet-black problem, millions of years in the making, temptingly abundant and cheap . . . Coal.
Even as solar, wind and hydropower installations – together with battery storage systems – continue to soar year by year, coal continues to be an addiction the world cannot quite kick.
And what damage it wreaks. In 2022 coal was held accountable for some 41% of global greenhouse gas (GHG) emissions from energy, more than any other fuel source.[3] Yet despite its status as the most carbon-intensive fossil fuel on Earth, we still rely on coal for more than a third of our electricity production worldwide.
Many scientists and environmentalists hoped that the curtain was set to fall on coal as a viable energy source at the recent COP28 climate conference in the UAE. However, after some bitter wrangles in the closing stages of the conference, the agreement did not overtly commit to phasing out coal altogether, instead settling on an encouragement for countries to “transition away” from fossil fuels.[4]
Coal, it seems, is here to stay, at least in the immediate short term. So, just how much coal are we burning annually, and why is it so hard to leave it behind once and for all?
Coal consumption and capacity rise in tandem
Renewable energy capacity might be expanding all the time, but unfortunately our collective thirst for energy is growing even more rapidly. In 2022, the world consumed 178,899 TWh of energy in running its homes, businesses, food systems and transportation networks, already a sharp increase from the 122,857 TWh required as recently as 2000.[5] Any graph showing global energy consumption since the dawn of the Industrial Age resembles an intimidatingly precipitous mountain – one with no peak in sight. By 2050, the International Energy Agency (IEA) estimates that global electricity demand will be anywhere from 75% to 150% higher than at present.[6]
Notwithstanding its reputation as the climate change bogeyman, coal consumption rose 3.3% to 8.3 billion tons in 2022 – a new record.[7] In 2023, while demand for coal is expected to have dipped slightly in the USA and Europe, consumption in the world’s developing economies will more than offset this. Once final figures are tallied, China, India and other Southeast Asian countries are likely to account for three-quarters of all coal consumption in 2023.
Inevitably, capacity is rising in tandem with consumption.
In 2023 global coal power capacity grew by 2%, spurred by a declining rate of plant closures in the USA and Europe and by a wave of new plants across Asia. In total, some 69.5 GW of new coal plant capacity was activated last year, two-thirds of it in China, with substantial new builds also noted in South Korea, Japan, Vietnam, Pakistan, India and Indonesia. Just 21 GW of coal capacity was closed last year, resulting in a net annual increase of 48.5 GW – the highest single-year increase since 2016.[8]
Such trajectories appear to clash directly with the IEA’s scenario for net zero emissions by 2050, which will require all unabated coal generation to cease completely by no later than 2040.[9] Such a turnaround would mean an average of 126 GW of coal plant closures globally per year for the next 17 years – roughly two plants per week.[10]
However, the scale of the challenge is no justification for shrugging and admitting defeat. In fact, peering into the near future, the outlook is far from bleak.
Outside of China, less than 4 GW of new coal plant construction commenced last year, a quarter of the annual average recorded between 2015 and 2022. In another positive sign, coal plant closures are expected to accelerate again this year in the USA and Europe following their recent slowdown.
Furthermore, analysts anticipate that even China’s adherence to coal will waver in the coming years as cheaper low-carbon options become available, with growth in hydropower and nuclear power supplementing gains within solar and wind generation.
Which begs the question, why is our global transition away from coal so stubbornly slow?
A pernicious pact: Why coal is a hard habit to kick
Dependency on coal is a global issue – and even ‘progressive’ nations remain at the mercy of circumstance.
The European Union (EU) and the UK turned to coal to increase short-term energy security following the Ukraine conflict and subsequent sanctions on Russia, an oil and gas giant. Germany added most coal-fired capacity, with an additional 10 GW for winter 2022/2023. During the early days of the crisis the Netherlands added a further 3.8 GW by removing the 35% production cap on coal-fired plants.[11]
Despite having just one coal-fired power station currently operational (and a clear deadline for all coal-fired power stations to halt production by the end of 2024) even the UK cannot entirely sever its ties with coal. In December 2022, citing ‘energy security’ concerns, it controversially gave the green light to a new coal mine near the coast at Whitehaven, Cumbria. The coal will come from seams beneath the Irish Sea.
The move carries a heavy price tag for the environment. Independent advisory group the UK Climate Change Committee has calculated that the mine and its coal will emit approximately nine million tons of planet-warming emissions annually.[12] Other sources suggest the mine’s activities will equate to the pollution output of an additional 200,000 petrol cars on the road.[13] Construction on Whitehaven’s Woodhouse Colliery could begin in 2024, with the site granted planning permission until 2049.
Even meteorological factors can exert an influence on coal consumption. In the Asia Pacific region, for instance, extreme weather events in 2022, led to greater reliance on coal for electricity generation and a 3% year-on-year spike in consumption. In India that same year, blistering summer heatwaves led to unprecedented electricity demand, chiefly satisfied via an 8.5% rise in coal-fired power generation.
In China, the demands of a booming economy only multiply these pressures. In Shanxi Province, China’s coal heartland 300 miles from Beijing, fossil fuel companies continue to excavate new mines in the hilly landscape. Coal consumption grew by 80% during the 2010s to provide energy for steel mills and cement factories.[14] Whether this plundering continues apace depends on policy decisions governing new gas pipelines linking China with Russia, itself subject to a delicate web of cross-border treaties and international power plays.
From a practical perspective, regardless of renewable energy growth, China feels compelled to keep its coal-fired power stations operating to at least 30% of capacity. Why? Because this enables them to be quickly ramped-up to peak performance in the event of lulls in sunshine or wind; in contrast, bringing a coal-fired plant up to speed from a standing start can take up to two days, by which time machinery might have ground to a halt or neighborhoods been left shivering. Until such considerations are abated, societies with large populations and thriving industrial bases will remain at least partly wedded to coal.
Elsewhere, we see that cutting ties with coal requires diligent efforts from lawmakers. Some templates are emerging that offer hope for those seeking a cleaner, greener world.
Burning bridges with coal once and for all?
Global leaders openly acknowledge the importance of transitioning away from coal, and the importance of regulatory powers in safeguarding that journey. A brief perusal of statute books highlights a number of recent milestones on the path to a coal-free future.[15]
The influential G7 forum (comprising Canada, France, Germany, Italy, Japan, the UK and the United States) released a special communique in April 2023 from the Ministers of Climate, Energy and the Environment officially calling for an immediate halt to the construction of all new coal-fired power stations.[16] Members resolved “to create an international market that minimizes GHG emissions across oil, gas, and coal value chains” and ensure a predominantly decarbonized power sector by 2035, aligned with 1.5oC temperature goals.
Individual nations are paving the way. Germany recently brought forward its deadline for halting the burning of coal in the state of North-Rhine Westphalia from 2038 to 2030, with more regions to possibly follow suit.
Similarly, Slovakia has hastened its nationwide coal phase-out date from 2030 to 2024.
Portugal has confirmed it has no plans for any further coal plants after shutting its last remaining facility in 2021, becoming the latest EU country to jettison coal after Belgium, Austria and Sweden.
In Asia, two new Just Energy Transition Partnerships (JETPs) have been unveiled. The schemes, in Indonesia and Vietnam, with budgets of US$ 20 billion and US$ 15.5 billion respectively, are intended to support a fair and equitable transition from coal and financial backing for decarbonization initiatives.
China is making tangible progress towards climate amelioration, installing carbon capture, usage and storage (CCUS) equipment at its Taizhou coal-fired power plant in the Jiangsu province – the third major coal plant globally to be equipped with such technology. There are real hopes that this represents more than a mere concession to the climate lobby, with China’s president, Xi Jinping, promising his country’s net carbon emissions will peak before 2030 and reach net-zero by 2060.
How relevant is CCUS to the coal debate – a genuine opportunity for mitigation, or a mere distraction? It is worth noting that CCUS technology continues to evolve rapidly. Government studies indicate that up to 90% of carbon emissions from coal power plants could potentially be captured via CCUS, constituting around one-fifth of the global cuts in emissions required by 2050.[17] Under the IEA’s own Sustainable Development Scenario, power generation from coal plants with CCUS could amount to 246 TWh annually by 2030, rising to 994 TWh by 2040.[18] However, CCUS is a costly option and, for now at least, remains unproven at scale.[19]
Any successful energy transition must respect the needs of communities traditionally dependent upon coal’s copious bounty. Brazil, Poland and the Czech Republic have all passed legislation enshrining their own JETPs – social contracts vowing to improve quality of life, restore natural habitats and bankroll clean energy schemes during the decisive break from coal. Similar schemes with multi-billion dollar budgets are also gaining traction in countries including South Africa.
The private sector is paying its part, too. Within the financial community many investors, insurance companies and pension funds have formalized their plans to scale back, or even eliminate entirely, their support for coal – part of a global surge in so-called environmental, social and governance (ESG) investing. In Japan, the Sumitomo Banking Corporation revealed in 2023 that it would end all project and corporate financing for coal mines and coal-fired power plants by 2040.
Elsewhere in the private sector, some forward-thinking businesses are taking more direct action to secure the downfall of coal and advance the prospects of renewable alternatives.
Private capital key to sustainable energy
At Abdul Latif Jameel, we recognize that the best way to seal the demise of coal globally is to promote the performance, and the economic vitality, of suitable alternatives.
That is why, in accordance with UN Agenda 2030 and the Sustainable Development Goals, we are supporting the development of renewable energy initiatives worldwide.
Fotowatio Renewable Ventures (FRV) is our flagship renewable energy business, part of Jameel Energy. It manages an ever-expanding catalogue of wind, solar, energy storage and hybrid energy projects throughout the Middle East, Europe, Latin America and Australia.
FRV’s innovation wing, FRV-X, is busy pioneering efforts to guarantee clean, round-the-clock energy to communities around the world. Crucially, it is also ensuring renewable energy supplies are as reliable as power derived from traditional plants.
FRV-X’s utility-scale battery storage (BESS) plants act as repositories for energy from renewable sources, ready for deployment whenever needed by homes and businesses. FRV-X manages BESS plants across the UK at Contego, West Sussex; Holes Bay, Dorset; and Clay Tye, Essex – this last one recently inaugurated as Europe’s joint largest in operation.
Further afield, it also runs a hybrid solar and BESS plant at Dalby, Queensland, Australia. FRV-X continues to grow its portfolio, purchasing a majority stake in a BESS project in Greece alongside two additional BESS projects in the UK in autumn 2022, establishing their BESS Center of Excellence in the country.
FRV-X has further pumped significant investment into ecoligo, the German ‘solar-as-a-service’ provider developing customized, crowd investment solar projects in emerging markets in South America, Africa and Asia.
Looking further ahead, the Jameel family investments, through JIMCO, are eyeing exciting new greenfield technologies such as fusion power.
This includes MIT’s Plasma Science and Fusion Center spinout, Commonwealth Fusion Systems, and Canada’s General Fusion.
Coal has been with us for millennia and, as the main driver of the industrial revolution which has transformed all our lives, will remain embedded in our energy systems for the foreseeable future. However, if we value our quality of life, it is imperative we minimize its presence in our power plants and factory furnaces and continue planning for its ultimate replacement. The private sector must incentivize the inevitable transition by advocating a better, more sustainable alternative – renewable energy. If we can create a society run on cleaner, greener forms of power, we can help sever our centuries-old addiction to coal and look toward a more beautiful tomorrow.
[1] https://wmo.int/media/news/wmo-confirms-2023-smashes-global-temperature-record
[2] https://www.iea.org/reports/renewables-2023/electricity
[3] https://essd.copernicus.org/articles/15/5301/2023/
[4] https://www.theguardian.com/environment/2023/dec/13/cop28-second-draft-text-of-climate-deal-calls-for-transitioning-away-from-fossil-fuels
[5] https://ourworldindata.org/energy-production-consumption
[6] https://www.iea.org/reports/world-energy-outlook-2022/outlook-for-electricity
[7] https://www.iea.org/news/global-coal-demand-set-to-remain-at-record-levels-in-2023
[8] https://www.theguardian.com/environment/2024/apr/11/worlds-coal-power-capacity-rises-despite-climate-warnings
[9] https://www.iea.org/energy-system/fossil-fuels/coal
[10] https://www.theguardian.com/environment/2024/apr/11/worlds-coal-power-capacity-rises-despite-climate-warnings
[11] https://www.iea.org/energy-system/fossil-fuels/coal
[12] https://www.forbes.com/sites/heatherfarmbrough/2022/12/09/uk-government-approves-first-coal-mine-in-30-years-in-cumbria
[13] https://www.theguardian.com/environment/2022/dec/07/what-is-the-cumbrian-coalmine-and-why-does-it-matter-woodhouse-colliery
[14] https://www.nytimes.com/2022/11/03/business/energy-environment/china-coal-natural-gas.html
[15] https://www.iea.org/energy-system/fossil-fuels/coal
[16] https://www.meti.go.jp/press/2023/04/20230417004/20230417004-1.pdf
[17] https://www.parliament.uk/globalassets/documents/commons/lib/research/key_issues/key-issues-carbon-capture-and-storage.pdf
[18] https://www.iea.org/reports/the-role-of-ccus-in-low-carbon-power-systems/how-carbon-capture-technologies-support-the-power-transition
[19] https://www.reuters.com/business/environment/why-carbon-capture-is-no-easy-solution-climate-change-2023-11-22/
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