Via E&E TV

Wednesday, October 7, 2015

What is the global coal industry seeking from governments at this December’s United Nations climate meeting in Paris? During today’s OnPoint, Benjamin Sporton, chief executive of the World Coal Association, explains why he believes developing nations will continue to rely on coal, even as they bring more clean energy online. He also discusses the challenging market dynamics facing the U.S. coal industry and talks about the viability of commercial-scale carbon capture and storage technology.

Monica Trauzzi: Hello, and welcome to OnPoint. I’m Monica Trauzzi. With me today is Benjamin Sporton, chief executive of the World Coal Association. Benjamin, thanks for joining me.

Benjamin Sporton: Oh, no, thanks for having me.

Monica Trauzzi: Benjamin, such a wide range of interests and political dynamics represented by your organization. What is the one message you’re hoping to deliver at the U.N. Paris meeting in December?

Benjamin Sporton: What we’re really focused on messaging is that coal is playing a really important role in powering up the developing and emerging economies through Asia, that coal has a really important role to play there, but in fact, elsewhere around the world, and that we can do with the fact that coal is in demand and being used by looking at a role for high-efficiency, low-emissions coal-fire technology moving towards carbon capture and storage in the future and that we can meet both our development and our climate obligations and ambitions as integrated priorities by using those technologies.

Monica Trauzzi: But there is that big question mark about whether those developing countries should be focused on coal or whether they should be leapfrogging to newer, cleaner technologies.

Benjamin Sporton: A lot of those countries need a lot of energy, and so they’re actually looking at both sides of that equation. Take, for example, India’s INDC that they released earlier this week. That’s sort of very big ambition there for growing renewables in India, but at the same time, they’re looking at building about 290 gigawatts of coal-fired power stations. So these countries need so much energy that they’re looking at renewables, they’re looking at gas, they’re looking at nuclear, some of them, and many of them are looking at a very significant role for coal, which is why I think we need to have a big focus on helping them use the best coal technology.

Monica Trauzzi: So overall, does your organization support efforts to reduce global greenhouse gas emissions?

Benjamin Sporton: Yeah, absolutely. I think it’s important to focus on how we can reduce emissions, but recognize the fact that many developing and emerging economies are looking for affordable, reliable energy. In many cases, they get that from coal. So what we need to do is help them use that coal in the most efficient, the cleanest way possible by using modern high-efficiency, low-emissions coal-fire power stations. These plants, which are in operation around the world at the moment, can reduce emissions from coal by about — CO2 emissions from coal by about 35 to 40 percent, depending on the technology. The other really important thing for them is that they reduce the non-CO2 emissions as well, the particulate matter — SOx, NOx and those kind of things — can almost eliminate those emissions. So you get big CO2 benefits, but you also get big clean air benefits as well.

Monica Trauzzi: So what does this all translate to in terms of financing? Are you looking for specific commitments from the international community, from governments to continue the development of coal, and specifically clean coal technologies?

Benjamin Sporton: Yeah. Well, I think it’s really important to do is that we have financing in the international sphere for helping countries move away from the less efficient subcritical coal technologies and help them to deploy the high-efficiency, low-emission technologies. The World Coal Association, earlier this year, launched a paper — a concept paper called “A Global Platform for Accelerating Coal Efficiency.” The idea behind that is to try and help those countries that are using coal to move away from the less efficient, subcritical technologies and help them go down a pathway of high-efficiency, low-emissions coal to overcome the technological barriers — not all of them have access to this technology — to help them actually get that technology, and obviously, to help them finance it as well. We think it’s an important role that the international community can play — development banks and others — to help finance just the added capital costs that some of these plants do have.

Monica Trauzzi: So we’ve been at this conversation about carbon and capture and storage technology for quite some time. I had many guests on the show discussing it. Why aren’t we at commercial viability yet, and what’s the timeline for commercially scalable CCS?

Benjamin Sporton: I think the big thing we need to recognize is that in the last 10 years or so, there’s been something like $2 trillion invested in renewable technologies. Only 1 percent of that has been in carbon capture and storage, and we need to ask ourselves why. I think one of the main reasons for that is that we haven’t seen the same sort of policies … directed towards renewables as — directed towards carbon capture and storage as we have seen directed towards renewables. We don’t get the same sort of policy positions put in favor; we don’t hear politicians talk about carbon capture and storage as much. Renewable technology often gets, for example, feed-in tariffs or contracts for difference, things like that. Very rarely, if ever, is that directed towards carbon capture and storage. I think we need more consistent policy support for CCS. We need to recognize that all our emission technologies have a role to play and we need more government support for that.

Monica Trauzzi: There really does seem to be sort of this two-pronged conversation on coal. Here in the U.S., for example, there is this push to clean up coal, but also for diversification in the electric power sector. When you consider a country like Turkey, though, they’re rapidly growing and expanding their use of coal. Is there sort of a global disconnect on coal and what its future should be?

Benjamin Sporton: I think we’re seeing countries in North America and in Europe, they’ve had very big focus on pushing towards renewables and other technologies. That has had an impact in terms of economic competitiveness and the cost of that. The energy vendor in Germany has been a very expensive exercise, and I’m based in the U.K., and we’ve seen electricity prices increase as we’ve had a push towards renewables there. Here in the United States, the Clean Power Plan is, I think, expected to move the kind of mix of coal — coal’s contribution to the mix — from about 33 to 35 percent today to about 27 percent of the mix in 2030 at huge economic cost, and I think that’s just — it’s interesting.

Monica Trauzzi: Which is up for debate.

Benjamin Sporton: Oh, it’s up for debate, maybe, but I think the evidence shows that it will be very expensive to do that, and that leads to an impression, I think, that we can move away from coal, but economies, particularly in developing and emerging Asia, are still growing, they’re industrializing, they’re urbanizing, and they’re looking for affordable, reliable energy. For them, renewables will have a role to play, but they don’t necessarily meet the huge demand for electricity that exists in those countries. Gas might not be an option for some of those countries because it is more expensive, needs more infrastructure, and things like that. So a lot of these countries are looking to coal because they’ve either got it domestically or they can access it easily on the seaborne market, and I think that is why they’re looking at coal, and many of them want to use it in an affordable, reliable, accessible, but also clean way. India in their INDC this week really made it clear that coal is the backbone of their electricity mix even while they’re pushing towards renewables, but they’re really focused on trying to use it in the cleanest way possible.

Monica Trauzzi: In the U.S., the shift away from coal is not just about policy; market conditions don’t really support the growth of coal as an industry. So do you ultimately consider the U.S. a lost market and not necessarily an area where you’ll see growth?

Benjamin Sporton: Well, the market conditions here, I think, have been driven by the emergence of shale gas technology, and I think that obviously has had an impact. Obviously, the regulations that have been put on coal have also had an impact, but I don’t see coal going away here in the United States at all. As I mentioned, the Clean Power Plan looks towards 2030, when coal will still be 27 percent of the electricity mix here in the U.S. So it’s still playing a very big role in providing affordable and reliable energy here in the United States and I think it will continue to do so for a long time. The mix will change, obviously, but coal is not going away here in the U.S. as it’s not going away in Europe and in many other countries as well. It’s just playing a — perhaps a different role, but it’s playing a very big role throughout the emerging and developing economies in Asia.

Monica Trauzzi: What do you make of the growing global trend around fossil fuel divestments?

Benjamin Sporton: What concerns me, I guess, about fossil fuel divestment is the fact that it can risk investment in cleaner technologies. So the International Energy Agency has really made clear for their 2 degrees scenario that we need $1.9 trillion of investment in cleaner coal technology. That includes high-efficiency, low-emissions coal and carbon capture and storage. If we have companies and businesses divesting from coal, I think that threatens the investment that we need in that cleaner coal technology to meet our 2 degree target.

Monica Trauzzi: We’ll end it right there. Very interesting conversation.

Benjamin Sporton: Thanks very much.

Monica Trauzzi: Thank you for coming on the show, I appreciate it.

Benjamin Sporton: Thank you.

Monica Trauzzi: And thanks for watching. We’ll see you back here tomorrow.

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