The 2018 Intergovernmental Panel on Climate Change Report has been the latest of many wake-up calls on the imperative to decarbonise our economies. In the fight against CO2 and climate change, coal for power generation has been the primary target. So much so that it has been impossible to give technologies like Carbon Capture and Storage (CCS) a real go because they have been branded as “coal-friendly”. Although the end of “King Coal” has been forecasted for decades yet in 2017 global coal demand grew by 1% to 7585 Mt according to the IEA with 2018 following quite closely.

 

    Coal has a future

The fight against coal has been focused on coal for power generation. But it still represents 37% of the energy mix. Coal is not only used by the energy companies that provide us all with electricity. Currently, over 74% of steel is manufactured using coal and whilst alternatives as well as recycling are reducing this percentage, coal still plays a crucial role in that value chain. Think about this: you cannot make a wind turbine without coal. Also, cement, a core component of industrial and urban development, is still consuming coal as part of the production process requiring 200kg of coal to produce 1 ton of cement.

 

Whilst Europe has a clear pathway to removing coal from power generation by 2040, we need to be realistic about coal and the significant role it still will play in other parts of the globe, with 24 countries responsible for 50% of CO2 emissions clearly highlighting the role of coal in their Nationally Determined Contributions (NDCs) during COP21. These agreements will be re-opened in 2020, but, in the meantime, coal remains very much part of the energy mix and of manufacturing. Whether we like it or not, coal has a significant role to play in the coming energy transition. As the world urbanises, people will need access to affordable energy and buildings made of steel and concrete will have to be built. None of these things can happen without coal yet.

 

    Stigmatising coal is dangerous

The stigma currently born by the coal industry is dangerous for three main reasons. Firstly, it means that there is insufficient investment in technology to reduce the carbon emissions coming from coal for power generation. Secondly, it has led to a decrease in scrutiny on the performance of coal mining operators. And thirdly, it has led to a fragmentation of the industry. All these factors are making the coal supply chain riskier and the possible negative externalities greater. 

 

    Responsible Coal Value Chain

So, in the context of a disengagement from coal, why does the coal value chain and responsibility across that chain matter? It matters for two crucial reasons: buyers need to shield themselves from risk by ensuring that the producers they purchase from have good practices; and suppliers will increasingly need to differentiate themselves by demonstrating these good practices: responsible business is good business.

 

You can hear more from Anne-Claire at The World Coal Leaders Network the taking place on 20-22 October in Lisbon.