President Obama wants to control the use of coal abroad for electricity generation, but he is meeting with opposition. From developed countries such as Japan and Germany to developing countries such as China and India, coal is being used for electricity generation at an increasing rate. Even Africa, with over 60 percent of its population without power, has told the U.S.-Africa Leaders Summit last week that it will use coal to provide its residents with power, just as the developed world used the fuel for industrialization. As Tanzanian Minister of Power Sospeter Muhongo said, “We in Africa, we should not be in the discussion of whether we should use coal or not. In my country of Tanzania, we are going to use our natural resources because we have reserves which go beyond 5 billion tons.”[i] His country currently uses so little coal that at present rates, its supplies would last 50,000 years.
Tanzania is a good example of an industrializing nation in Africa that is attempting to move its population forward, and provide the benefits that electrification brings. Currently, only 24 percent of the population is connected to the grid (and only 7 percent of rural residents), and in order to develop clean water systems, pumping capacity is needed.[ii] The government’s goal is to lift per capita income from its current $640 per annum to at least $3000. Electrical access is key to this goal.
Global Coal Use
According to the BP Statistical Review of World Energy, coal use grew 3 percent in 2013 and was the world’s fastest growing fossil fuel.[iii]Coal’s share of global primary energy consumption reached 30.1 percent, the highest since 1970 with China accounting for 67 percent of global growth in coal and India accounting for 21 percent. China is now consuming 4.2 times as much coal as the United States, using over half of all the coal consumed in the world. According to the Energy Information Administration (EIA), global coal consumption in 2020 is expected to be almost twice what it was in 2000, and it will continue to grow.[iv] In 2035, the International Energy Agency (IEA) is expecting coal to have a 47 percent share of the generation market, equivalent to its share in 2011, and to have a 29 percent share of total energy demand, the most of any fuel, surpassing oil which currently has the highest share.[v]
Africa’s Coal Demand
Both EIA and IEA are expecting Africa to increase its coal use between now and the end of their forecast horizon. EIA is expecting Africa to increase its coal use by 70 percent between 2010 and 2040 and the IEA is expecting Africa to increase its coal consumption by almost 50 percent between 2011 and 2035. Africa has 35 billion tons of recoverable coal reserves and at the current rate of consumption, it would last 122 years.[vi]
The African energy ministers indicated at the summit that their top priority was to get power to the 600 million people that lack access, regardless of the source of the new power. According to the International Energy Agency, Africa needs $400 billion over the next two decades to provide power to the population that is without it. And, countries are coming to the rescue despite the U.S. policy to discourage coal-fired power plants.
U.S. Policy vs. Foreign Country Aid
As part of his administration’s climate plan, President Obama announced last year that the U.S. Export-Import Bank would not fund overseas coal-fired power plant projects unless they have carbon emissions controls. In concert with that guidance, the Obama administration and its European allies have pledged to prevent international credit organizations like the World Bank from funding coal plants. Last year, for example, the World Bank decided to finance new coal projects in only rare circumstances. The Bank has a current proposal to “address project-level impacts on climate change” when reviewing loans although it has not explained what this means. While the size of any proposed plant in Africa would add infinitesimally to worldwide carbon dioxide emissions, it would add material benefit to the underserved residents of Africa.
In response to those restrictions, last month, the leaders of Brazil, Russia, India, China and South Africa launched the New Development Bank with $50 billion in subscribed capital and authorized capital of $100 billion as an opening bid to finance “infrastructure and sustainable development projects” in emerging economies and developing countries, including energy projects. The BRICS, as the five emerging nations are nicknamed, announced the bank and a $100 billion Contingent Reserve Arrangement — emergency supplies of foreign currency — at their sixth annual summit last month in Brazil. The bank will be based in Shanghai; each country will contribute $10 billion to start. The bank presidency will rotate between each country, beginning with India.[vii] These nations have made it clear that they intend to invest heavily in the development of critical infrastructure in Africa.
Japan Turns to Coal
Also, last month, Japan indicated it would increase its support for coal-fired power plants in developing nations, again challenging the U.S. policy. In the policy that Japan adopted last month, it contended that developing nations would have to use coal whether others liked it or not. On July 17, the government-owned Japan Bank for International Cooperation announced a $202 million credit line for Vietnam Electricity to purchase Japanese equipment for a coal-fired power plant. The credit line will be insured by state-backed Nippon Export and Investment Insurance. Japan expects to back overseas coal power-plant projects worth about $4 billion each year. The expectation is that the projects will have Japanese investors and use some Japanese equipment.[viii]
Several major projects have recently gotten under way. These include:
- A $1.1 billion coal power project in Chile, partly owned by Mitsubishi Corp and financed by a bank consortium led by the Japan Bank for International Cooperation. The loans are insured by Nippon Export and Investment Insurance.
- A $3.3 billion coal power project in Malaysia, partly owned by Mitsui & Co.
The Japan government issued a report stating, “In theory, replacing all coal power capacity in China, India and the U.S. with the Japanese up-to-date technology would bring about a cut of 1.5 billion tons a year of CO2 emissions, more than Japan’s total.” Japan plans to use its development assistance as a means to perfect and showcase their technology.
Japan is itself using more coal to replace the generation from its 48 nuclear reactors that were shut down due to the March 2011 Fukushima Daiichi nuclear accident caused by a tsunami. Since the accident, Japan’s coal imports have increased 6 percent and its spending on coal has increased 17 percent to almost $12 billion annually. The Japanese Cabinet earlier this year approved an energy plan that positions coal and nuclear power as long-term power sources without setting specific targets for renewable energy.[ix]
TEPCO, one of Japan’s utility companies along with a partner, plan to build two 500-megawatt integrated gasification combined cycle (IGCC) plants, which the company calls “the world’s most efficient coal plants.” Each plant will provide about 2,000 temporary jobs. The plants will not use carbon capture and storage technology although Japan expects the two units will reduce carbon emissions 15 percent compared to existing pulverized coal facilities, which are less expensive to construct than IGCC units.
TEPCO’s project highlights a national push to promote and export “clean coal” technology around the world. Japanese officials believe they can reduce greenhouse gas emissions by exporting technology to burn coal more efficiently. Japan believes that, without access to highly efficient coal gasification technologies, developing countries will build less efficient coal technologies. Moreover, Japan will benefit from the sale and support of their technologies to others.
Germany Turns to Coal
Germany’s Energiewende policy to phase out its nuclear units due to the Fukushima accident in Japan and replace them with renewable energy has also made the country turn toward coal power. Because solar and wind cannot generate power when the sun is not shining and the wind is not blowing, a technology is needed to back-up the intermittent renewable technologies and to provide reliable base load power. Because Germany has increased its coal consumption, it has also increased its carbon dioxide emissions.
The Obama Administration wants the world to adhere to its doctrine of destroying the coal industry, but the world is not buying into that plan. Developed countries believe that it is their turn to industrialize and to provide their residents with electricity that the developed countries have had for close to a century, regardless of whether the Obama Administration considers the technology dirty or clean. And, we know clearly that China is not reducing its coal consumption, which is already over 4 times larger than that of the United States. China is building coal-fired power plants at breakneck speed and is building 50 coal-to-gas plants, first producing synthetic gas that it will pipe to demand centers, reducing the smog from burning coal directly in populated areas, but clearly increasing greenhouse gas emissions.[x] Judging by the reaction of other countries that are willing to invest in the construction and deployment of coal-fired generating units in Africa, the Administration’s plans regarding the use of coal in the rest of the world are being unceremoniously ignored.
[i] Climate Wire, Africa, where 60% are without power, sees fossil fuels as a bridge, August 5, 2014, http://www.eenews.net/climatewire/2014/08/05/stories/1060004061
[ii] Oil Price, Tanzania To Use More Natural Gas and Coal To Combat Energy Poverty, August 11, 2014, http://oilprice.com/Energy/Energy-General/Tanzania-To-Use-More-Natural-Gas-And-Coal-To-Combat-Energy-Poverty.html
[iii] BP, Statistical Review of World Energy, June 2014,http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014-full-report.pdf
[iv] Energy Information Administration, International Energy Outlook 2013, May 2013, http://www.eia.gov/forecasts/ieo/coal.cfm
[v] International Energy Agency, World Energy Outlook 2013, November 2013, http://www.worldenergyoutlook.org/publications/weo-2013/
[vi] Energy Information Administration, International Energy Outlook, May 2013, Table 12, http://www.eia.gov/forecasts/ieo/table12.cfm
[vii] EE News, Developing countries establish bank that might pay to build coal plants, July 31, 2014, http://www.eenews.net/greenwire/2014/07/31/stories/1060003884
[viii] Wall Street Journal, Japan to Step Up Support for Overseas Use of Coal, July 23, 2014, http://online.wsj.com/articles/japan-to-step-up-support-for-overseas-use-of-coal-1406114037
[ix] Greenwire, Japan bets on ‘clean coal’ to revive Fukushima, August 5, 2014, http://www.eenews.net/greenwire/stories/1060004084
[x] Institute for Energy Research, China to Build 50 Coal Gasification Facilities, August 6, 2014, https://www.instituteforenergyresearch.org/analysis/china-build-50-coal-gasification-facilities/