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Coal industry death greatly exaggerated

Straterra Genesis Energy Featured Image

Demand for coal will continue to grow globally because there is no shortage of it and it is cheaper than other alternative energy sources. By CHRIS BAKER, CEO, Straterra

Chris Baker, CEO, Straterra
Chris Baker, CEO, Straterra

Back in August, Genesis Energy announced that it would retire its last two coal-fired electricity generation units by December 2018.

This presumably was a business decision several years in the making to do with aging plant and market conditions. Expected reductions in CO2 emissions as gas-fired generation and renewables take up the slack are a bonus.

The announcement has been hailed “as the next step to a coal-free New Zealand”. The Dominion Post joined in the fray, saying New Zealand “needs to think about coal, one of the villains of climate change”. Now we have Solid Energy’s Voluntary Administration and opposition citing this as another example of the “bleak future of coal”.

What we really need is reasonable debate.

Anyone with a crumb of common sense would conclude that the growing global economy is responsible for climate change. To blame coal for global warming is missing the point – it’s like blaming cars for road accidents.

So, why is it that media reports abound on the death of coal? Financial Times blogger Nick Butler thinks it is “wishful thinking” by those who ignore the facts. His chief source is the International Energy Agency – a reputable and independent source of information and analysis – which says that global coal use has grown by more than 50 percent since 2000.

While China may be at ‘Peak Coal’, and there is a welcome drive to replace the old and inefficient with new high efficiency plant, we should note that China employs 5.2 million coal miners and they still use more than half the world’s coal! The IEA’s projections for India, the world’s next most populous country, are for a tripling in coal use by 2040. Despite the commodity downturn, global demand is tipped to exceed nine billion tonnes a year by 2020.

That is the reality. Coal demand is what it is because coal is lower cost than alternatives; there is no shortage of coal for electricity, energy or heat; and coal is currently the ‘cure of choice’ for energy poverty.

These are the facts. Perhaps the IEA is wrong in some way, and if so we should challenge them, and the other global and reputable bodies that put out similar data such as the WEC. That is legitimate. What is not legitimate is to simply create a different reality to suit a desired outcome.

With Genesis sorted, and NZ Steel having to use coal, former Green Party co-leader and current CANA (Coal Action Network Aotearoa) activist Jeanette Fitzsimons is now gunning for Fonterra. The dairy giant is “the biggest coal user in New Zealand now and therefore the biggest climate changer”, she told Radio NZ last month. She proposes that Fonterra use “waste wood forestry residues”.

For Jeanette’s information, emissions from coal use are 6.4 percent of our total emissions (MfE 2015). Also, importantly, coal for industrial process heat in the South Island is around one-third the price of the next best alternative, electricity. This is important because our efforts to reduce emissions, like all countries’ efforts, must be guided by and measured against the cost. There will be no gold stars for no emissions and no jobs.

Biomass has issues that need to be resolved for use at scale. Significant research investment continues on biomass, and biomass/coal co-firing, and I have no doubt companies will invest as a result of this research when it makes sense to do so. Assessing those options probably will not include a request for CANA’s advice.

For now, thermal coal in New Zealand will continue to be mined to meet demand, and our higher-value coking coal will be exported for use in steel-making.

The transition to lower emissions will be driven by many factors including, for coal, the development of carbon capture and storage technologies, the continuing growth in efficiency in new coal-fired power stations and replacement of old plant, co-generation of fossil fuels and biomass, and, most importantly in the medium term, the replacement of coal at scale by technologies that do what coal does – address energy poverty – but better.

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