JULY NDLOVU: Agility key to coal industry securing a spot in energy mix

Coal presents the modern world with a paradox that it cannot escape just yet: it is a fossil fuel that affects the environment, but is also a pre-eminent driver of economic growth, particularly for emerging economies. It is simply not yet possible to keep the lights on without coal. 

Governments, particularly those from the more developed North American and European  nations, are adjusting policies in favour of a mix of fossil fuels and renewable energies. As a result, the coal industry has reached a point where it needs to adapt to a new energy future. One way of doing this is to make coal safe for consumption to ensure it remains a vital  part of the energy mix while trying to meet increasing demand from populous developing countries. 

Coal’s future is reliant on the increasing demand in energy from developing countries, which, according to the IMF, make up a staggering 85% of the global  population. Asia, a continent that increasingly relies on coal, makes up more than half of that figure. Industrialised countries may hastily be phasing out coal and opting for renewable energies and natural gas, but Asia’s influence as a coal-centric energy hub continues to grow. This is why coal will remain a dominant energy source over the next two decades or more.

The International Energy Agency’s (IEA) World Energy Outlook report for 2023 foresees an 18% increase in Central and Southern Asian energy consumption between 2020 and 2040. Coal will represent 35% of the energy mix in Southeast Asia by 2030 and will increase to 49% 10 years hence. Coal imports to Asian countries from the Organisation for Economic Co-operation & Development (OECD) will remain an important component of energy for the foreseeable future as Japan, Korea and Taiwan lack domestic energy reserves. 

The report’s most astonishing projection sees China and India accounting for more than 70% of  global coal consumption by 2026. Globally, coal will be the world’s primary source of electricity until 2040. By FutureCoal’s estimate, that would be about 27% of total generation. These statistics indicate that coal’s place in the energy mix remains vital for countries with an  upward economic trajectory. For a government looking to ensure unabated economic growth, coal would need to be the backbone of its energy strategy. 

Investors agree with these sentiments. In December 2023 the largest investment firm in the world, BlackRock, acknowledged that the growing world population would remain heavily  dependent on fossil fuels. This is an indication that while a gradual energy transition is under way, fossil fuels like coal will remain strong performers. 

For developing countries, the path to socioeconomic progress requires consistent power output, which coal provides. This is due in large part to its affordability and reliability compared with other energy solutions. It can provide energy security because it is a domestic source for numerous developing nations. Furthermore, the coal industry is a significant contributor to job  creation and a catalyst to manufacturing and transportation infrastructure development.

Southeast Asia is a great case in point. In the past few decades it has shifted from hydropower and gas to coal. The region was then able to fast-track its socioeconomic development because it created a more resilient energy system. Efficiency improvements and innovations that drove baseload power and energy security made energy more affordable in bulk. 

Governments that want to become fully industrialised would be prudent to follow in Southeast Asia’s footsteps and include coal as part of their energy transition. Dismissing coal risks a socioeconomic tremor on a global scale. 

In this unpredictable economic climate, agility in the form of incentives is key for an easy transition. Governments, investors and the coal industry must work together to incentivise clean coal technologies that can aid growth while also meeting their carbon emission targets.

Progress in clean coal technologies and carbon capture, utilisation and storage research has already unearthed novel solutions for mitigating environmental impacts and meeting high demand.

In the US, the Great Plains Synfuels Plant got a multimillion-dollar cash injection to expand its carbon capture, utilisation and storage operations in 2021 and has since demonstrated how proven technologies can reduce coal emissions by 90%-99%. 

German-based biomass materials production start-up, Sustainable Carbon Cycle Industries is looking at introducing sustainable, zero-waste and low-carbon emission charcoal by replacing traditional production methods that damage the environment. Their signature asset in Tanzania can remove about 33,000 tonnes of carbon per annum by 2030. 

However, when it comes to sheer scale China is in front. Its clean coal-to-hydrogen facility in Yulin, Shaanxi, is the largest in the world, producing 350,000 tonnes of hydrogen annually and  reducing CO₂ emissions by about 220,000 tonnes each year. 

There are innovations that promise to be the go-to solutions of the future. Hybrid power systems combining coal and renewables can optimise energy supply. Advances in coal  gasification and liquefaction can provide cleaner and more efficient energy solutions. And integrating clean coal technologies and carbon capture, utilisation and storage technologies into existing coal-fired power plants can help them reduce their carbon footprint.

These examples point to a robust start to the clean coal revolution that can directly plug into the circular economy. Coal is a versatile commodity and every part of it can be reused. 

Through its philosophy of sustainable coal stewardship, which embraces a new way of looking at the coal value chain, FutureCoal supports initiatives that focus on innovative coal  utilisation and emissions reduction technologies. We also encourage companies to partner academic institutions and industry leaders to drive breakthroughs in clean energy.

In 2023 the World Coal Association rebranded itself to FutureCoal not only to demonstrate our agility as an industry but to also announce that it is prepared to be a part of the new energy future with cleaner, more sustainable products.

• Ndlovu chairs FutureCoal, a global alliance for sustainable coal.