November has been a very significant month for the coal industry. Perhaps the most high-profile news was the election of Donald Trump as President of the United States, who promised during his campaign to end ‘the war on coal’ by repealing President Obama’s environmental regulations. Supporters at his rallies carried placards saying ‘Trump digs coal’. Trump’s victory caused shares in major coal producer Peabody to rocket by 45% in one day. His advocacy of coal encapsulated his appeal to disaffected working class voters in America’s de-industrialised ‘rust belt’ states.
Economics of coal
But this event, while significant, is an aberration from the general trend. Coal is now firmly in retreat around the world. Stopping burning coal to generate electricity as soon as possible is essential for avoiding catastrophic climate change. Per unit of electricity, coal emits more than twice as much carbon as natural gas. In 2013, coal alone contributed 42% of global greenhouse gas emissions from fuel combustion – easily more than any other fossil fuel.
Figures from the International Energy Agency (IEA) show coal consumption fell by 2.6% last year. Crucially, the two biggest coal users, China and the US, have both seen their demand for coal power fall in recent years. Much of this is happening because of changing energy economics. Take the example of the US. The shale gas revolution and technology cost reductions for renewables have successfully outcompeted coal. Michael Liebreich, a member of the advisory board of our Green conservatism project, recently wrote in the Guardian that these rival fuel sources were more responsible for coal’s demise than government regulation.
UK coal phase-out
But government intervention can certainly speed the process up. And in this area, November 2016 has contained a lot of good news. Exactly a year ago, in November 2015, the Rt Hon Amber Rudd MP made the UK the first country to commit to a date for phasing out coal from electricity generation, something which Bright Blue had been calling for. On the same day as Trump’s victory was confirmed, the UK Government recommitted to the coal phase-out by publishing its plans for consultation.
Ministers are proposing to introduce an ‘Emissions Performance Standard’ by 2025, which will mandate coal-fired power stations to close unless their emissions can be reduced to below those of a gas-fired power station. The UK’s remaining plants are on average 47 years old, and so would be in line for retirement soon in any case. In 2012, there were 17 remaining coal plants, with a capacity of 23GW. That’s now fallen to just 7, with 14 GW of capacity. Analysis has revealed that this year, for the first time, there have been periods when coal has been wholly absent from the UK’s energy mix, and entire days when solar generation has surpassed coal.
In our report earlier this year, Keeping the lights on, we found that phasing out coal would not harm the UK’s energy security. Moreover, encouraging more renewables, energy efficiency, energy storage, and DSR, alongside phasing out coal, would have benefits for consumer bills, energy security, and carbon intensity, relative to scenarios with more gas. We also called for the coal phase-out date to be brought forward to 2023. An earlier date would give investors in gas more certainty and help bring the new capacity online sooner.
Global coal phase-out
The UK’s announcement was not the only one this month. In fact, several other countries have decided to follow the British example on coal. France has announced it will close its remaining 3GW of coal-fired capacity by 2023. Canada is now set to phase out the rest of its coal fleet, which has a total capacity of 10GW, by 2030. Finally, the Finnish government has also committed to shutting its 2GW of electricity generation from coal by 2030.
Bright Blue has in the past called for the UK Government to assume a leadership role in advocating an international coal phase-out. It is highly symbolic that the UK has become the first country to use coal for electricity generation and the first industrialised country to commit to phasing it out altogether. Strengthened by this achievement, the UK could utilise its moral and political leadership to push for an ambitious global deal on phasing out coal.
As our associate fellow Ben Caldecott argued in Green and responsible conservatism, sectoral deals, such as on the use of coal, could be a more effective approach to tackling climate change than broad UN agreements. This would require developed countries to take the lead and phase out their coal fleets first. It would also require some international aid funding to support developing countries undergoing the transition to cleaner technologies. But the result for the environment could be significant.
November 2016 has been an excellent month for the global environmental campaign to end coal-powered electricity. But the scale of the challenge is still immense: in 2014, coal still generated 41% of the world’s electricity. The UK Government should build on this month’s progress and lead the international campaign for more countries to make the coal phase-out commitment.
Sam Hall is a researcher at the Bright Blue