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1. Domestic Coal: A Hindrance to Renewable Energy Development?

Author:
Margareth Sembiring
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Centre for Non-Traditional Security Studies, S. Rajaratnam School of International Studies
Abstract:
Low carbon transition is an important climate change mitigation measure. It entails a switch from fossil fuels to renewable sources. The presence of cost-competitive domestic coal in coal-producing countries like Indonesia is often cited as a major stumbling block to renewable energy development. This article aims to probe the cheap domestic coal argument. It does so by examining the changing share of renewable energy sources in electricity production over a certain timeframe. The study finds mixed observations across important coal-producing countries. It thus argues that there is a need to go beyond the low-cost domestic coal axiom and examine deeper underlying factors that support or hinder renewable energy development in coal-producing countries.
Topic:
Climate Change, Energy Policy, and Coal
Political Geography:
Asia and Southeast Asia

2. The Risk of Fiscal Collapse in Coal-Reliant Communities

Author:
Adele Morris, Noah Kaufman, and Siddhi Doshi
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
Center on Global Energy Policy
Abstract:
If the United States undertakes actions to address the risks of climate change, the use of coal in the power sector will decline rapidly. This presents major risks to the 53,000 US workers employed by the industry and their communities. 26 US counties are classified as “coal-mining dependent,” meaning the coal industry is a major employer. In these areas, the industry is also an important contributor to local government finances through a complex system of property, severance, sales, and income taxes; royalties and lease bonuses for production on state and federal lands; and intergovernmental transfers. While climate-related risks to corporations have received scrutiny in recent years, local governments—including coal-reliant counties—have yet to grapple with the implications of climate policies for their financial conditions. Importantly, the risks from the financial decline of coal-reliant counties extend beyond their borders, as these counties also have significant outstanding debts to the US municipal bond market that they may struggle to repay. To be sure, national climate policy in the United States is uncertain. Experts have long recommended strong policy action to reduce emissions, and for years, policy makers have largely ignored their advice. Nevertheless, with growing support by the public and policy makers, meaningful climate policy in the United States may be on the horizon, and those dependent on coal should be looking ahead to manage their risks. This paper examines the implications of a carbon-constrained future on coal-dependent local governments in the United States. It considers the outlook for US coal production over the next decade under such conditions and explores the risk this will pose for county finances. The paper also considers the responsibilities of jurisdictions to disclose these risks, particularly when they issue bonds, and the actions leaders can take to mitigate the risks. In short, the paper finds the following: ● Coal production in the United States fell by one-third between 2007 and 2017. Projections of the US energy system show this decline continuing gradually under current policies. However, even a moderately stringent climate policy could create existential risks for the coal industry, with potential declines in production of around 75 percent in the 2020s. ● A careful look at three illustrative counties shows that coal-related revenue may fund a third or more of their budgets. The exposure is compounded because school districts and other special districts within the counties also receive coal-dependent revenue. The complex system of local revenue instruments and intergovernmental transfers plus a lack of sufficiently detailed budget data makes it difficult to parse out just how reliant jurisdictions are on the coal industry. ● Estimates of the direct linkages between the coal industry and county budgets will almost certainly understate the risks because lost economic activity and jobs will have ripple effects across the economy. Case studies show that the rapid decline of a dominant industry has led to downward spirals and eventual collapses of local governments’ fiscal conditions, including the inability to raise revenue, repay debt, and/ or provide basic public services. ● Coal-dependent communities have a variety of outstanding bonds, and the risk of collapse of the coal industry threatens their ability to repay them. Despite regulations requiring disclosures to reflect risks to the financial health of municipalities, our review of the outstanding bonds indicates that municipalities are at best uneven and at worst misleading (by omission) in their characterizations of climate-related risks. Ratings reports are not much better than official statements in describing the risks associated with the exposure of some local governments to the coal industry. ● Climate policies can be combined with investments in coal-dependent communities to support their financial health. A logical source of funding for such investments would be the revenues from a price on carbon dioxide emissions, a necessary element of any cost-effective strategy for addressing the risks of climate change. A small fraction of revenue from a federal carbon price in the United States could fund billions of dollars in annual investments in the economic development of coal-dependent communities and direct assistance to coal industry workers. ● In considering reforms, several questions emerge for stakeholders. These include whether regulators should develop additional requirements for the disclosure of risks from future climate policies; whether ratings agencies should increase attention to the risks to local governments of climate policies; and whether stakeholders in the municipal bond market, such as borrowers, insurers, and underwriters, are appropriately accounting for risks to the coal industry.
Topic:
Climate Change, Energy Policy, Coal, and Domestic Policy
Political Geography:
United States

3. Direction of Energy Strategy for the Sustainable Development of China’s Economy — Clean Utilization of Coal

Author:
Bai Yunfeng, Yi Peng, Du Shaozhong, and Wang Ying
Publication Date:
12-2019
Content Type:
Special Report
Institution:
Pangoal Institution
Abstract:
China is at the stage of urbanization and industrialization. The Chinese economy, which is mainly based on a large consumption of energy and resources, is growing extensively with an increasing demand for energy. Resources are exhausted, and a series of environmental problems occur with the rapid development of the economy. At present, China has surpassed the United States as the country with the highest carbon dioxide emission. As the world’s second largest economy, China is under a considerable amount of pressure to save energy and reduce its carbon emission. The persistent and severe large-scale smog in the country deeply affects people’s daily lives. Coal is the main source of air pollution. The extensive development and utilization of coal has largely caused pressure on the ecological environment and has directly influenced the socioeconomic development of the country. China is the world’s largest coal producer and consumer. Coal accounts for 68% of China’s energy consumption structure. The characteristics of resource endowment and the current industrial structure of China indicate that the dominant role of coal in China’s energy structure will not change for a quite a long time. Therefore, clean and efficient methods of energy utilization should be adopted to promote the sustainable development of China’s economy. The clean utilization of coal will be the strategic choice and landing point of the sustainable development of China’s economy.
Topic:
Climate Change, Development, Economy, Coal, and Sustainability
Political Geography:
China and Asia

4. Brown Coal Mining in the Czech Republic – Lessons on the Coal Phase-out

Author:
Lukas Lehotsky and Mikulas Cernik
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
International Issues: Slovak Foreign Policy Affairs
Institution:
Slovak Foreign Policy Association
Abstract:
The article offers an overview of coal production policies in the Czech Republic – the third-largest coal consumer in the EU and a post-communist country struggling to take decisions over the future of the coal phase-out. It developed its phase- out policy in the early 1990s to address the destruction of the local environment. However, since then no steps have been taken in relation to phase-out. Instead, coal production stakeholders have attempted to maintain the coal lock-in and to reverse phase-out. The article begins by discussing the factors that have led to the ambiguity. It then places the discussion over the future of phase-out within the wider context of a just transition, and offers insights into the Czech case which may prove useful to other countries considering transitioning away from coal.
Topic:
Energy Policy, Natural Resources, Mining, Renewable Energy, and Coal
Political Geography:
Europe and Czech Republic

5. A Tale of Three Coal Markets Common Challenges and Unique Attributes of U.S., Chinese, and Indian Markets

Author:
Jane Nakano and Sarah Ladislaw
Publication Date:
03-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The United States, China, and India together constitute about 70 percent of global coal consumption and 64 percent of global coal production. Each country is an important contributor to the global coal supply and demand picture and yet each stands at a very different stage in its relationship with coal. The history of coal in the United States is predicated on a long-term decline in its share of the electricity fuel mix, but deep regional socioeconomic ties give the fuel an outsized role in national energy politics. Coal makes up 15 percent of the total U.S. energy mix and 30 percent of the electric power mix while the power sector accounts for about 90 percent of coal use in the United States. Over the years, electricity demand has flattened thanks to strong efficiency gains. Moreover, the abundance of inexpensive natural gas and rapid decline in renewable energy costs have significantly diminished the competitiveness of coal-fired power generation. Unlike in China and India, the U.S. coal fleet is in contraction as a wave of retirements is underway, with little evidence of reversal, indicating that the current downturn appears structural and not cyclical. After a recent period of decline and bankruptcy for the U.S. industry, a political movement to revitalize the coal sector has emerged from the current presidential administration. Notwithstanding the renewed political support, however, the regulatory uncertainty clouds a future pathway for a coal power resurgence. The notion of economic and energy security benefits long associated with the use of coal has effectively disappeared in one of the largest producer and consumer markets for coal in the world. China is far and away the largest coal consumer and has built coal-fired power generation capacity at an unprecedented rate over the past couple of decades. As it enters a new phase of development, China seeks to reduce the role of coal in its economy both to mitigate the environmental impacts of coal production and use but also to harness its domestic power consumption to drive its competitive advantage in things like solar, wind, and nuclear power generation. China has concrete targets to reduce greenhouse gas emissions and ambitious plans, such as a nationwide emissions trading system, that can influence the pace and scope of shift in its power supply mix. Despite these government targets and the ongoing industrial structural reform that can reduce coal’s dominance in the electric power sector, the trajectory for coal use remains significantly subject to the future of state-owned enterprises and economic liberalization. In contrast to the United States and China, India is a fast-growing market for coal where economic development and universal energy access goals often override concerns about environmental pollution and climate change. India also sees enormous opportunity in renewable energy development—for the positive environmental attributes, the potential commercial opportunities, and the ability to lessen reliance on imported sources of energy like oil, gas, and coal. The Indian central and state governments have set up ambitious policies to foster a greater share of renewable energy in the electric power mix. The growth in renewable power-generation capacity shows early indications that renewables as an indigenous resource have the potential to challenge not only coal’s economic advantage but also its energy security value propositions as an indigenous resource, warranting close attention for some potentially valuable lessons for power-sector management in other developing economies where renewables increasingly beat out coal. How India will calibrate its desire to phase out coal imports despite the quantitative and qualitative issues its domestic supply has is another issue with major implications for both global coal markets and the future of its power supply mix, particularly solar and wind. Even as each market navigates a unique set of circumstances surrounding the role of coal-fired power generation, the availability of midstream infrastructure looms large as a universally important determinant of the competitiveness of coal resources, and thus the fuel hierarchy. Railways are the dominant mode for transporting coal in China and the capacity constraints continue to intensify, disadvantaging domestic resources to imports. Midstream is also a major topic in the United States, where a lack of west coast export terminals limits the U.S. ability to take advantage of continued demand growth in Asia. Low utilization rates also reflect the headwinds facing coal-fired power generation in all three countries. For example, U.S. coal-fired power generation experienced a 20 percent decrease in coal fleet utilization rates and a 12 percent decrease in the generation capacity from 2015 to 2016. Also, while China is expected to add another 200 GW of new coal-power capacity by 2020, the utilization rate of 47.5 percent for the thermal power fleet in 2016 indicates a complex nexus between capacity investment and power demand in the country, where the capacity growth does not give a solid indication of electric power output or fuel consumption. The local air pollution and climate implications of coal-fired power generation in each country also depend on the age of their fleet and capital stock turnover. The perceived future direction of coal in each country impacts the willingness of investors to upgrade or build new, more efficient plants. Whereas the ever-weakening coal-power demand in the United States is diminishing investor appetite for new coal plants with higher efficiency, lower emissions (HELE) technology, the capacity expansion in China is enabling the modernization of its fleet that includes more HELE plants. The pace and scope of modernization for India’s coal fleet, which is much younger yet remains low efficiency and high emissions today, will be an important indicator for its future emissions profile. Lastly, various noneconomic forces at play can generate a tension between the needs of a changing electricity market and the political-economic pressures of expanding coal-power capacity. The coal sector enjoys a powerful narrative on its socioeconomic benefits like jobs and tax revenues for coal-mining communities, but enabled by technology advancements, the emerging focus on values like flexibility in the power sector has elevated attributes of many alternative sources of electricity, including renewables and natural gas in the United States. Likewise, the Chinese expansion of coal capacity appears to be misaligned not only with the projected level of power demand growth but also with government efforts to expand alternative sources of electricity, thus raising the risk of stranded or severely underutilized coal plant assets.
Topic:
Energy Policy, Natural Resources, Renewable Energy, and Coal
Political Geography:
United States, China, India, and Asia

6. Coal Exit or Coal Expansion? A Review of Coal Market Trends and Policies in 2017

Author:
Sylvie Cornot-Gandolphe
Publication Date:
05-2018
Content Type:
Special Report
Institution:
Institut français des relations internationales (IFRI)
Abstract:
Coal in the power sector is the principal focus of climate-related policies due to its high carbon intensity, making CO2 emissions from coal a leading contributor to climate change. While 38% of global power generation come from coal (in 2017), coal-related CO2 emissions represent more than 70% of power sector emissions. Coal-fired power plants are also the leading source of all primary air pollutants within the power sector, causing respiratory diseases and premature deaths. Structural changes are fast sweeping through global electricity markets. A key driver is the fast deployment of renewable energy sources and their falling costs, making renewables increasingly competitive with coal. Coal is also becoming less competitive than other sources of electricity in several regions, due to the fall in gas prices, the rising cost of the carbon price and higher coal import prices. Pressures against investment in coal activities increasingly create challenges for financing coal projects. Global coal power investment has passed an all-time peak and has contracted over the past two years. Investment in greenfield coal mines is also at a standstill in all major coal exporting countries. Nevertheless, while the future of coal is dark, 2017 has been a good year for the sector. World coal production increased after three consecutive years of decline. Global coal demand and international trade rose again, and high coal prices (above $80/tonne since summer 2016) boosted the financial results of coal-mining companies. As a result of growing fossil fuel demand, global energy-related CO2 emissions rose again in 2017. These short-term results do not call into question global decarbonization trends but demonstrate that current efforts are insufficient to meet the objectives of the Paris Agreement. The world is still divided about the future role of coal. A major change came in 2015 with the Paris Agreement, which prompted many nations across the world to accelerate their efforts to reduce coal consumption. Since then, several governments and power utilities have decided to phase out coal from their electricity mixes and joined the “Powering Past Coal Alliance”. Coal reduction or phase-out policies are being adopted or considered by more and more countries, and the reduction in the share of coal power generation goes faster than expected in several coal-consuming countries. But South and Southeast Asia remains a region for short to medium term growth in coal demand and Africa is a potential area for new growth. In this, new coal markets can also develop thanks to the support of countries eager to export their coal combustion technologies, led by China and Japan, and by the desire of coal exporters to find new outlets. Despite this growth, the sustainability of the relative good performance of the coal sector in 2017 is far from being ensured.
Topic:
Climate Change, Energy Policy, Markets, Treaties and Agreements, Electricity, Renewable Energy, and Coal
Political Geography:
Global Focus

7. The Trump-led Trade War with China: Energy Dominance Self-destructed?

Author:
Sylvie Cornot-Gandolphe and Jean-François Boittin
Publication Date:
09-2018
Content Type:
Special Report
Institution:
Institut français des relations internationales (IFRI)
Abstract:
Under particular US legal rationale, such as calling foreign imports a “national security threat”, President Donald Trump has started imposing tariffs and/or quotas and has launched national security investigations on a growing number of imported goods from US allies and others alike.In March and June 2018, the US imposed tariffs or quotas on steel and aluminium on all trading partners, but Australia. In July and August 2018, the US began imposing tariffs on $50 billion in Chinese industrial goods on the ground of unfair trade practices. As China has retaliated with tit-for-tat measures, President Trump has imposed tariffs on $200 billion in Chinese goods from 24 September 2018 onwards, and in an unprecedented escalation of his trade war with China, he has also threatened to impose tariffs on an additional $267 billion in Chinese goods. If eventually carried out, Trump’s latest threat could result in tariffs on all Chinese goods entering the US. China has retaliated and imposed tariffs on $60 billion in US goods, including a 10% duty on liquefied natural gas (LNG). For the time being, trade tensions have had a limited impact on the energy market. But the new round of US tariffs and retaliation measures by China suggest that this is going to change.
Topic:
Climate Change, Energy Policy, International Trade and Finance, Gas, Renewable Energy, and Coal
Political Geography:
China, Asia, North America, and United States of America

8. Let Them Eat Coal: Why the G7 must stop burning coal to tackle climate change and fight hunger

Author:
Kiri Hanks and Julie-Anne Richards
Publication Date:
06-2015
Content Type:
Working Paper
Institution:
Oxfam Publishing
Abstract:
Climate change is already the biggest threat to winning the fight against hunger. Coal is the biggest single cause of climate change, yet the G7 countries are still burning huge amounts, despite efficient, affordable, renewable alternatives being available. G7 coal power stations emit twice as much fossil fuel CO2 as the whole of Africa, and their contribution to global warming will cost Africa alone more than $43bn per year by the 2080s and $84bn by 2100, and lead to several million tonnes of staple crops lost worldwide. This year will see crucial new UN climate talks in Paris. To set the tone for a successful climate agreement at the UN talks in December, the G7 must lead the world in setting out clear plans for a just transition away from coal. This Oxfam briefing paper shows how with the right mix of regulatory and policy measures, some countries can move to coal-free electricity grids within the next decade. Oxfam commissioned the think-tank E3G to review the current coal situation in all G7 countries.
Topic:
Climate Change, Environment, United Nations, Hunger, and Coal
Political Geography:
Africa