The marketing campaign for the thermal coal industry is in full swing ahead of the Paris climate conference, with even governments such as Australia’s conservative Coalition picking up some lines from the chorus, on the “moral case” for mining coal to save the world’s poor.
The Paris climate talks, beginning in less than four weeks, will seek to create a Universal Climate Agreement which will, for the first time, include targets and actions from most of the world’s economies, both developed and developing.
So far, the pledges from more than 150 governments are enough to lower the expected level of warming to around 2.7°C. But this needs to be ramped up considerably to meet the 2°C that the science calls for.
This stunning graph, produced in the most recent report from investment bank HSBC, shows why the global thermal coal industry is terrified of the consequences of a strong Paris agreement, and why it is so intent on peddling the “coal is good for humanity” mantra so favoured by Tony Abbott.
Basically, if the world holds on to their current pledges, there is not a lot of change, for the thermal coal industry or any other fossil fuel. Indeed, under the “INDC scenarios”, where the world keeps to its current pledges but takes no further action, the overall consumption of coal actually increases out to 2030.
But, if the world agrees to lock in a mechanism that requires nations to ramp up their pledges to meet their 2°C target, as agreed overnight by France and China, then coal is in big trouble.
Th 2°C target is the only scenario where the consumption of coal is actually lower in 2030, but by 2050 the impact on coal is devastating, and the share of coal in power generation is almost completely gone. Even the share of metallurgical coal in industrial process is reduced.
Power generation is where HSBC, and its energy modelling from University College London’s Energy Institute, achieves the cheapest and most effective emission reductions.
These next graphs show an even more unexpected picture about the role of coal in power generation in the world’s three biggest emitters – China, the US and India – should the world set the path of a 2°C outcome.
According to the modelling, thermal coal disappears from the energy mix by 2050 in China …
is gone in the US ….
and gone from India too …
Now, many would disagree with some of the details of the UCL Energy Institute analysis.
It assumes, for instance, a fairly heroic view of the cost and deployment of nuclear energy, particularly for the US, where more than 10 per cent of the current plants are considered likely to close in coming years because they are uneconomic, and there are no new plants on the horizon. But it assumes a big lift in nuclear output by 2030 and rapidly increasing by 2050.
It also assumes that carbon capture and storage will become economic, justifying a big increase in its forecasts for gas generation.
It also assumes a minor role for decentralised energy, which seems strange given that the modelling is based on rapid cost falls in solar, wind energy and battery storage. But it sees only a minor role in behind-the-meter generation (between 3 and 3.8 per cent), compared to forecasts of up to 50 per cent by other analysts and many utilities.
Part of the problem is that the modelling by UCL Energy Institute uses extremely conservative prices, particularly for solar. Some of it, it says, are sourced from the International Energy Agency, which is often criticised for its conservative view of renewable technologies, and optimistic assumptions around coal, gas and solar.
Indeed, the modelling’s estimate for solar PV by 2020 ($US2.10/watt) is actually higher than current experience (around $US1.60/watt, with forecasts – and a US government goal – of $US1/watt by 2020).
Even the research admits this: “Shorter term projections for intermittent renewable technologies through to 2015 and to 2020 …. have been surpassed by some distance by the actual numbers seen to date.”
Then why use them? It is also suggesting that electric vehicles may cost – on average – $US58,000 in 2020. Which suggests that those “intermittent” renewable technologies, and along with battery storage, may have even more than an impact than this research gives them credit for.
In any case, HSBC says the most cost-effective means of reaching the 2°C target is by decarbonising the power industry. And given its prediction for coal under this scenario with inflated renewable energy costs, imagine the impact if the “actual” costs of wind and solar are dialled in to this modelling.
It says the accelerated growth in solar and wind – and the falling costs in its “technology accelerated” scenario leads to lower contributions from other low or zero carbon electricity sources, particularly nuclear.
“This suggests the increased cost-competitiveness of renewables would reduce the role of fossil fuels and other low-carbon sources, to some extent moderating the cost of decarbonisation of electricity,” it says.
Either way, HSBC says that investment levels in decarbonisation reach almost $US2.5 trillion in 2050 under the 2°C scenario, which is between 35 and 47 per cent higher than either of the INDC-based scenarios. And thermal coal generation is in big trouble.