“Come to think of it, it is to coal that we are making the transition.” Tease, Amin Nasser, the boss of Saudi Aramco, the Saudi national oil company, who did not mince his words during the OPEC meeting in early October? The numbers are there: the world consumed 8 billion tonnes of coal last year, the highest amount in the last decade. And the International Energy Agency estimates that 2023 could see demand for coal hit a new record, after a small increase in 2022 due to the Chinese real estate crisis and Beijing’s pursuit of the zero Covid policy.
This trend is not temporary. The German NGO Urgewald, which has just published its Global Coal Exit List, an annual survey of 1,000 companies in the sector, reveals that 46% of them continue to develop new projects, with China at the top of the list. Financial flows confirm this enthusiasm: in the first nine months of 2022, banks financed more than $26 billion in projects, i.e. a jump of 36% compared to 2021! Let us add that, according to the Rocky Mountain Institute, 93% of installed coal capacities are covered by long-term contracts, thus protected from market fluctuations and guaranteed a guaranteed income. The picture that emerges is bleak. A charcoal blackboard…
In reality, there is nothing surprising in this observation for those who remember the painful conclusion of the Glasgow COP, almost a year ago: it was at the cost of a compromise on the “reduction” (phase down) and not the “output” (phase-out) coal, demanded in extremis by China and India, that an agreement had been reached. A compromise which actually signed the failure of international climate negotiations to act on the energy source that scientists put at the top of their list of technologies incompatible with carbon neutrality.
Two promising avenues
What to do, when, with the next COP taking place at the beginning of November in Egypt, the return of coal to Europe invalidates in advance any attempt to put a global coal exit proposal back on the table? Two promising avenues have been put forward. The first, initiated in Glasgow last year, consists in having developed countries finance the exit from coal in the most dependent countries: thus, France, Germany, the United Kingdom, the United States and Europe. European Union have pledged to pay over the next three to five years 8.5 billion dollars to South Africa, of which 87% of the electricity is produced from coal. The G7 is ready to multiply this type of partnership; Indonesia and Vietnam are in the running. Another avenue: the mothballing of recent coal-fired power plants, their replacement with clean energy sources and the monetization of emissions avoided over the theoretical life of the power plants, sold in the form of carbon credits to developed countries or companies. international. Not only would the immediate reduction in emissions be easily quantifiable, but, in addition, part of the revenue generated could be directly allocated to the regions and workers in the sector affected by the closure of the power stations.
Alongside these multilateral actions that they support, the United States is also launching an interesting initiative based on a simple observation: to avoid the dramatic scenario of the deindustrialization of the coal-mining regions of the 1980s, which, for the most part, have never recovered, the industrial infrastructure must be replaced by… another industrial infrastructure. The US Department of Energy has just proposed replacing coal-fired power stations with nuclear power stations, in this case small modular reactors (SMR). The project is smart: it avoids the long procedures associated with the installation of sensitive infrastructure on territories untouched by any construction of this type, and it creates a market for SMRs.
At a time when everyone is witnessing the sudden return of geopolitics in the energy field, this local approach to transition also deserves to be followed with attention, particularly in Europe. The great coal-mining regions of Poland have already shown their enthusiasm for these projects, which have a revolutionary taste for anyone who knows the coal sector’s atavistic hostility to nuclear power… Yet it is a lot of revolutions that we need to get rid of the coal king, otherwise we are preparing, for a long time yet, to proclaim, resigned: “The king is dead… Long live the king!”