According to a report published by IEA (International Energy Agency), the world must act quickly to significantly reduce carbon dioxide emissions from coal, in order to avoid serious impacts of climate change.
The study indicated that there is a need for a Immediate political action to mobilize massive funding all with clean energy alternatives to coal and ensure safe, accessible and fair transitions, especially in emerging and developing economies.
The company's new analysis, which is part of the World Energy Outlook series, shows that the overwhelming majority of current global coal consumption occurs in countries that have committed to achieving net-zero emissions.
However, far from declining, global demand for coal has remained stable at record levels over the past decade. If nothing is done, the IEA pointed out that such emissions alone would tip the world beyond the 1,5°C limit.
“More than 95% of global coal consumption occurs in countries that have committed to reducing their emissions to net zero,” said Fatih Birol, executive director of the IEA.
“But while there is an encouraging push for the expansion of clean energy in many governments’ policy responses to the current energy crisis, a major unresolved problem is how to deal with the huge amount of coal assets that exist around the world,” he highlighted.
According to him, coal is the largest source of CO2 emissions from energy and the largest source of electricity generation worldwide, which highlights the damage it is causing to the climate and the enormous challenge of replacing it quickly, ensuring the energy security.
Every future path for the global energy sector that avoids severe impacts of climate change involves early and significant reductions in coal-related emissions. The report makes clear that there is no one-size-fits-all approach to reducing coal emissions.
The IEA's new Coal Transition Exposure Index highlights countries where coal dependencies are high and transitions are likely to be most challenging: Indonesia, Mongolia, China, Vietnam, India and South Africa stand out. “A range of approaches, adapted to national circumstances, is essential,” concluded Birol.
How to reduce coal?
IEA data shows that, currently, there are around 9 coal plants around the world, representing 2.185 GW of capacity. The age profile varies greatly by region, from an average of over 40 in the United States to under 15 in developing economies in Asia.
Industrial facilities that use coal are equally long-lived, with investment decisions set to be made this decade that will largely shape the outlook for coal use in heavy industry for decades to come.
“Coal transitions are complicated by the relatively young age of plants across much of the Asia-Pacific region. If operated for typical lifetimes and utilization rates, the world's existing fossil fuel fleet, excluding plants under construction, would emit more than the historical emissions to date of all coal plants that have ever operated. ”, explained the Agency.
According to the study, a massive scale-up of clean sources of power generation, accompanied by system-wide improvements in energy efficiency, is the key to unlocking reductions in the use of coal for power and reducing emissions from existing assets.
In a scenario where current national climate pledges are met on time and in full, output from existing uninterrupted coal plants falls by around a third between 2021 and 2030, with 75% replaced by solar and wind power.
This decline in coal production is even more pronounced under a scenario consisting of achieving net-zero emissions by 2050 and limiting global warming to 1,5°C. In the Net Zero Scenario by 2050, coal use falls by 90% by mid-century.
An important condition, in the IEA's view, for reducing coal emissions is to stop adding new uninterrupted coal-fired assets to power systems.
New project approvals have slowed sharply over the past decade, but there is a risk that the current energy crisis will foster a new readiness to approve coal-fired plants, especially given the report's conclusion that about half of the 100 financial institutions that backed the coal-related projects since 2010 have made no commitments to restrict this financing, and another 20% have made only relatively weak pledges.
Support from governments
According to the entity, governments can provide incentives for asset owners to adapt to the transition. Favorable economics for clean electricity generation alone will not be enough to ensure a rapid transition from coal to power generation.
Coal plants are often protected from market competition, in some cases because they are owned by incumbent utilities, in others because private owners are protected by inflexible power purchase contracts.
“Our analysis shows that outside of China, where low-cost financing is the norm, the weighted average cost of capital for coal plant owners and operators is about 7%. Refinancing to reduce this by 3% would accelerate the point at which owners recoup their initial investment, paving the way for a third of the global coal fleet to be retired within ten years,” they reported.
International collaboration, public financial support, and well-designed approaches that incorporate the need for people-centered transitions will be essential to moving away from coal unabated.
IEA estimates highlight that energy transitions will create millions of clean energy jobs, although not necessarily in the same places as the jobs lost in coal, and the skills needed in many cases may be different.
While it is unlikely to absorb all the jobs lost in the coal sector, critical mineral mining could offer new industrial opportunities and sources of revenue for companies and communities previously dependent on coal.
Other analyzes
Michael R. Bloomberg, UN Secretary-General's Special Envoy for Ambition and Climate Solutions and founder of Bloomberg LP and Bloomberg Philanthropies, said coal-fired power plants are in decline, but not at the pace to save lives and win the battle against climate change. “By increasing investment in clean energy, we can completely eliminate coal plants in advanced economies by 2030 and in the rest of the world by 2040.”
“On the other side of this transition is a stronger economy and healthier communities – and we have no time to waste to get there. This IEA special report is an essential guide on practical steps that governments and the private sector can take, including financial institutions and investors,” he said.
Arifin Tasrif, Indonesia's Minister of Energy and Mineral Resources, shares the same premise and added that reducing coal emissions at the scale and speed needed to achieve net-zero pledges will be a significant challenge, particularly for emerging markets and developing economies. , including Indonesia.
Ja Teresa Ribera Rodríguez, Deputy Prime Minister and Minister of Ecological Transition and the Demographic Challenge of Spain, concluded by saying that the country is committed to accelerating the energy transition for both climate security and supply security.
“Having closed our coal mines by 2018 and 90% of our coal generation capacity in just the subsequent four years, Spain has made a huge effort to achieve a fair and balanced energy transition, particularly for the regions and workers that depended on mining. coal and thermoelectric plants”, he emphasized.
