Interview with Alexey Danilov, Director of Carbo One
01.03.2021 by Carbo One
In your speeches at Coaltrans Conferences, in particular in 2015 and 2019, you noted several times that given the growth of electricity usage across the world, especially in developing countries, coal will continue to play an important role in the global energy balance, despite strengthening pressure on the coal industry. What has changed in recent years? What new challenges will the global coal industry have to face?
It goes without saying that it’s impossible not to mention the COVID-19 pandemic, which had a negative effect on the world economy, and, naturally, didn’t spare the coal industry. In 2020, coal prices fell to historical lows, and supply and demand diminished during lockdowns and quarantine measures across the world. Nevertheless, the situation is gradually turning to the better, and I hope that starting in 2021 and onward, global coal indices will increase in comparison with 2020. This hope is already being borne out by the growth in coal demand and increase in global prices at the end of 2020 and the beginning of 2021. Our position regarding the importance of coal’s future role in the global energy balance is still unchanged. Nowadays, in terms of fuels used in global energy consumption, coal is second only to crude oil. According to the most recent forecast of the International Energy Agency (IEA), coal is predicted to still generate 25% of the world’s electricity in 2040.
The EU plans to become the first climate-neutral union of countries in the world by 2050. The European Green Deal is aimed at the decarbonization of the economy, and all European countries have announced their intentions to renounce coal-fired electricity generation by 2035-2038. How will this affect the global coal trade in the near future?
Definitely, we are seeing a decrease in coal consumption in Europe, and this decline will continue, as Europe strives to achieve so-called climate neutrality and to stop the usage of coal power. Still, right now, 75% of the global coal trade is concentrated in Asian countries, where there are large populations, and the power usage per person is still fairly low. Power usage per person will continue to grow, which will accordingly support a stable growth both of total electricity generation and of coal-fired electricity generation in particular. For the majority of Asian countries, coal is the cheapest power source, while renewable energy sources for power generation are still and will long stay a very expensive alternative. In addition, the decrease in coal consumption in the EU will also be compensated by the growth of demand in the Mediterranean and the Middle East.
In that case, what about the popular opinion that coal is the strongest polluter of the atmosphere in the modern world, and, accordingly, that it is the main enemy of climate initiatives such as the Paris Agreement?
Any idea can be taken to an absolute, just as any idea can be misrepresented and turned into a target for the local, regional, or even global public, if there’s desire, benefiting parties, and the needed financing.
I remember that at the Coaltrans conference in 2015, with a joint effort we managed to save the world’s cow population from the threat of extermination when we laughed off the polemics of some of the most frenzied and zealous advocates of environmental defense, who were arguing that animal husbandry, particularly of cattle, produces methane during the digestive cycle, which in the US amounts to 1/3 of farming emissions. For some, accusing cows of being the cause of global warming might seem absurd and grotesque. Unfortunately, in the current paradigm of world-wide resistance to so-called global warming, much is often built on absurd ideas and sometimes this resistance takes on the form of a Quixotean battle with windmills, and sometimes, unfortunately, turns into a witch-hunt.
The development of clean technologies for coal burning and the introduction of these innovations at coal power plants and in the metallurgical industry allow for the minimization of coal’s impact on the environment. In addition, the use of ecologically clean coal should not be overlooked. For example, at the Coaltrans Virtual World Coal Leaders Network 2020 conference, one of the event’s headliners was EcoCarbon Ltd. (https://ecocarbonltd.com/2020/09/eco-coal-as-ecofriendly-product/), a global trader of high-quality multi-origin steam and metallurgical coal. The company offers only eco-grade coals to the international market, which stand out for their unique quality characteristics. The low sulphur content of the coal supplied by EcoCarbon results in lower CO2 emissions, while the coal’s low ash levels limit emissions of toxic elements and metals both in slag and in fly ash, which are carried along with smoke into the atmosphere. The coal also has a low level of radioactive elements, such as uranium and thorium, which ensures the safe use of coal. Unfortunately, not all coal companies act responsibly in their business and our shared task is to switch to the most advanced standards and technologies in the coal supply chain, from producer to end user. All parts of the coal supply chain must promote the conservative and effective use of natural resources, prevent pollution, ensure emission control, and provide for the rehabilitation of land on mining sites. Eco-friendly companies are dedicated to the principles of ethical coal, strive to minimize any negative environmental impact, and comply with applicable laws, regulations, and other environmental protections applicable in different countries in accordance with the local communities.
We have to admit that the main propaganda and attacks from eco-activists are directed against coal, as it is their most evident opponent, given that it provides cheap access to electricity, especially in developing countries. Undoubtedly, the accessibility of coal and its low electricity usage costs, as well as its significant share in the global energy balance, are not in line with programs of huge, multi-billion dollar investments into renewable energy sources, taking into account the compensatory instruments for collecting return on investments through the so-called carbon border adjustment mechanism – a tax on goods from countries that do not share the EU’s goals and do not take similar measures to combat CO2 emissions, and where the production chain includes the generation of electricity through fossil fuels.
With all the attacks on coal, it’s rare that we see the issues associated with the downsides of renewable energy sources widely covered. Despite that, everyone is aware that the use of any type of power source, whether nuclear, wind, solar, or hydro, cannot be without impact on the environment, and every power source has its own certain threats or dangers. There are no universal solutions, and all technologies have their downsides.
What negative effects on the environment could come from solar or wind generated power? It seems like the most natural energy sources possible are used: the sun and the wind. There are no CO2 emissions into the atmosphere, and, thus, no harm is done to nature, just as when using electric vehicles.
Actually, this is a superficial look from the point of view of an average layman of a developed country, a user, let’s say, of some certain services, who, for example, heats his home with solar panels, drives an electric car, eats vegan food, wears clothes made from recycled fabrics, and goes to protests to close local coal plants, and who thus thinks that he is contributing to the protection of the planet. Which is true, at least in principle, from his own perspective. But if you look at the same story from the perspective of the residents of certain third world countries across the globe, who simply cannot afford all of these undoubted benefits of civilization, but instead are forced to face the side effects of green energy in the form of environmental disasters where lithium is mined for electric vehicles, poisoned water reservoirs, child labor in cobalt mines, and so on, then we are faced with a completely different picture. Then, the idea of a cozy paradise, where clean energy reigns, is revealed to be one-sided at the very least, and created exclusively for select countries, regions, and groups of people. There are a number of significant problems, far from the level of our given layman, which, nevertheless, he or his children will sooner or later have to face. Thus, for example, the usage of solar panels brings with it serious problems with which humanity might have to face in the next 10-20 years. Many of the materials used to make them are difficult to reprocess, and the recycling process itself requires a lot of power. Despite the ecological harmlessness of the usage of solar panels, their production and recycling can be harmful to the environment and to human health. Solar panels contain metals such as lead, copper, gallium, arsenic, cadmium, and synthetic materials, which are released into the soil and the atmosphere. The panel bases are made out of aluminum. All of this requires thoughtful disposal. Located across large swaths of land, they can affect the climate by disrupting the natural temperature rhythm. The production of solar cells and panels themselves is chemically dirty. Waste and waste gases have a pernicious effect on the environment. It’s also rare to talk about the damage caused by wind turbines to bird populations, migrating animals, as well as soil and groundwater, or about the damage caused by infrasonic waves, which are harmful to local communities and fauna.
Nonetheless, could you give specific examples to explain how exactly electric vehicles can negatively affect the environment?
While the trend towards electric vehicles is a result of ongoing efforts to reduce the dependence of global development on fossil fuels, the UN warns that the resources used to produce batteries for electric vehicles are mostly concentrated in a few countries, and that the extraction of these batteries poses a serious threat to the surrounding environment. More than half of the world’s lithium, a key component of lithium-ion batteries, comes from the salt marshes of Chile, Bolivia, and Argentina, where lithium mining has already led to ecological disasters. According to a UN report, the production of these raw materials is often associated with undesirable consequences for the environment and violations of workers’ rights. For example, in Chile, pumping brine from wells during lithium mining uses almost 65% of the water reserves of the Salar de Atamaca salt flat. The Atacama Desert is one of the driest places on Earth and lithium extraction has a direct impact on the water reserves in the region, as it takes a million liters of water to produce one ton of lithium. Groundwater levels are sinking and drying up, while rivers, streams, and wetlands are home to vulnerable wildlife. This has facilitated a degradation of the environment, landscape disruption, soil pollution, and a pollution and depletion of groundwater and drinking water.
Several years ago, there were massive protests in the Tibetan city of Tagonga, when a leak from a lithium mine into the Liki River led to mass fish deaths. Eyewitnesses claim to have seen cow and yak carcasses poisoned by the contaminated water lying in the river. This was the third such incident in the past seven years. After the second leak the authorities closed the mine, but it was later reopened, and the fish began to die again.
Lithium-ion batteries are considered to be a key element in the struggle for a cleaner planet. The Tesla Model S battery contains approximately 12 kg of lithium, and even more of it is necessary for renewable energy storage devices. UNCTAD estimates that electric vehicles sales will grow to 23 million in the next decade, thus in just a few short years the battery market should grow by more than 8 times its current level of $7 billion dollars to $58 billion dollars by 2024. At the same time, the production of energy-intensive batteries for these vehicles invariable contributes to significant CO2 emissions through the burning of fossil fuels, such that when an electric vehicle first hits the road it needs to drive 60 thousand km before it can begin to make up for the emissions accumulated during the course of its production cycle. Moreover, according to an IEA report, if the share of electric vehicles in the world were to grow 15 times, it would only reduce global CO2 emissions by 1%.
Alongside lithium, cobalt is another key component for the batteries of electric vehicles. Two thirds of all cobalt is mined in the Democratic Republic of the Congo. The United Nations Children’s Fund (UNICEF) reports that about 20% of the cobalt supplied from the Congo is extracted in a crude fashion at mines where there are constant human rights violations and 40,000 children are employed in extremely hazardous conditions, without protective equipment, and for paltry wages.
Studies in South Korea have identified a high level of fire hazard associated with lithium-ion batteries when used in energy storage systems. These batteries have caused a series of fires over the last two years. From August, 2017 to October, 2019, there were 28 fires at backup power systems in Korean solar and other power plants. These incidents raised many questions about the dangers of backup power system batteries in connection with power plants based on renewable energy sources.
Many energy sources that are now considered “green” in fact pollute nature no less than traditional technologies, if we consider the entire production cycle and subsequent disposal of equipment, which may require many times more electricity than it will produce.
What do you think about natural gas, which many promote as a transitional fuel, considering it the least harmful of fossil fuels?
Natural gas and LNG are under less pressure from strong lobbies in Europe and the United States, but gas is not as harmless as it is sometimes thought to be. If we study the whole chain of production all the way to the end user, we see that gas brings about methane emissions, which are have an even worse effect on the environment than CO2. In addition, CO2 stimulates the development of vegetation through photosynthesis, which in and of itself contributes to an accumulation of CO2 and a release of significant amounts of oxygen, something which cannot be said about methane, which does not have such properties.
What, then, about global warming, and attempts to lower the planet’s temperature by reducing CO2 emissions into the atmosphere?
As the world’s leading scientists have proven, global warming, as well as global cooling, are cyclical processes that have occurred throughout the entire existence of our planet. According to cyclical projections, we are now experiencing the last stages of a period of global warming which should be replaced by global cooling in a few decades. Frederick Seitz, former president of the US National Academy of Sciences, once published a petition that garnered the signatures of 15,000 scientists arguing that there was no conclusive scientific evidence that human emissions of carbon dioxide, methane, or other greenhouse gases cause or will cause catastrophic heating of the Earth’s atmosphere and a disturbance of the Earth’s climate in the foreseeable future. There is strong evidence based on scientific studies that the world’s oceans, which make up more than 70% of the planet’s surface, each year release almost one hundred times more carbon into the atmosphere than all industrial emissions on Earth combined, simply due to temperature changes. As the temperature decreases, the amount of CO2 falls. In other words, global warming is a part of natural cycles that do not depend on man and his activities.
What do you see as the best direction to take: how should the energy sector develop so as to minimize the risks associated with environmental pollution?
It goes without saying that problems of air and soil pollution, harmful emissions, damage to flora and fauna, and natural disasters are the most important challenges facing mankind today. We, as members of the energy market, must, first of all, unite in our efforts to develop and implement
new solutions and technologies that can cope with these threats, instead of recklessly following the doctrines of particular countries, who are pursuing their own economic and political gain while simultaneously trying to completely destroy competing industries, and are thereby depriving entire regions of the planet access to affordable and efficient sources of electricity.
When it comes to coal, I will say that coal has been and will remain a reliable source of energy both for developing and developed countries. Developing countries, which require more and more energy due to population growth, simply do not have enough funds to invest in expensive green technologies, but they still nonetheless need to achieve high economic growth. Developed countries need a reliable backup in case renewables cannot carry the load of demand, as occurred this winter in Europe, particularly in Germany, when solar and wind power failed to cope with snowfalls and freezing temperatures. Thousands of square kilometres of solar panels, covered in snow and ice, stopped generating energy, while windless, frosty weather led to the stoppage of 30 thousand wind turbines. It was only due to coal and gas generated power that the country managed to avoid an energy collapse. In February 2021, a similar incident also happened in several US states such as Texas, Virginia and Oregon, owing to a sharp drop in temperatures, which, combined with high humidity, led to icing of the blades of wind farms and their temporary failure. At the same time, a sudden cold snap caused an increased consumption of electricity. As a result, the renewable energy sources, that Texas has relied on in recent years, could neither withstand the weather disasters nor meet the increased demand. For that reason, about 2 million people were left without electricity in Texas alone. Using the foremost coal combustion technologies and eco-grades of thermal and metallurgical coals from companies such as EcoCarbon, we can take care of the environment and help ensure the smooth operation of global energy networks that are able to withstand serious natural and economic disasters at any time, in any place on Earth.
Let’s keep coal eco-friendly!
TagsEurope Covid-19 South East Asia India Indonesia China Japan USA
Coaltrans Asia 2022
18-20 September 2022
Indonesia, Bali, Indonesia
World Coal Leaders Network 2022
23-25 October 2022
From the Archives: Interview with Yahdian Falah, Senior Manager Coal Market Analysis, EnBW
26.03.2018 | Insights
From the archives: India's long term coal consumption dynamics
03.10.2018 | Blog
From the archives: Global Sulphur Cap
14.10.2018 | Insights
From the archives: A dramatic year for metallurgical coal
16.10.2018 | Insights
From the archives: Indonesian government tightens regulatory screws in the coal industry
23.10.2018 | Blog
From the archives: Jeremy Sussman, Clarksons Platou Securities
20.11.2018 | Blog
From the archives:Fastmarkets AMM Editor, Thorsten Schier
26.11.2018 | Blog