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Global coal report suggests big challenges for COP28
6/9/2023
4 min read
Feature
Hosted in the oil and gas rich United Arab Emirates (UAE) and presided over by the CEO of the country’s national oil company, COP28 already holds controversy. But with global coal consumption still rising, in Asia at least, the event in November faces considerable fossil fuel challenges, writes Nick Cottam.
In the run-up to COP28, the UN’s annual climate change conference, the issue of coal will likely present itself as a sticking point. Committing to the phase-out of coal remains a bone of contention, notably for the behemoth economies of China and India, but also elsewhere. Delegates will come to the conference knowing that demand for the black stuff is as high as ever and is set to reach record levels in 2023, according to International Energy Agency (IEA) research.
Coal won’t be the only energy conundrum at this year’s COP. The process of transitioning to a low-carbon, clean energy, global economy is undoubtedly in train – witness the dramatic growth of wind and solar – but progress in different parts of the world is at best uneven and at worst both muddled and confusing. COP28 may help to clarify targets and galvanise further action, but don’t hold your breath.
More coal, poor grid connections and inefficient, sometimes corrupt, energy systems are among the major challenges to the ideal of what has become known as a just transition.
Add to this the lack of finance, which thus far has been made available to poor countries to develop clean energy and protect themselves from the most devastating impacts of climate change, and you get an idea of how hard it is to make progress and cut carbon to acceptable levels – ie towards a 1.5°C global warming trajectory which was the target set at the Paris COP21 event in 2015.
Record demand
Coal is a prime example of the energy incumbent that will take some stopping. According to the latest IEA Coal Market Report, demand for the fuel that powered Britain’s industrial revolution in the late eighteenth and early nineteenth centuries reached record levels in 2022 and is still rising. In 2022, notes the report, coal demand rose above 8.3bn tonnes for the first time, despite a weaker global economy.
While the report predicts a decrease in coal-fired power generation over the second half of 2023, demand momentum from China and other parts of Asia is expected to continue, growing in China by 3.5% to 4,679mn tonnes over the whole of 2023.
Is this significant as China seeks to ratchet up production and keep the economy stimulated and spending after the COVID-19 shocks? In the short term perhaps not, but beyond that China will be expected to move more decisively away from coal if it is to stay connected to the global economy.
Coal is a prime example of the energy incumbent that will take some stopping. According to the IEA, demand for the fuel that powered Britain’s industrial revolution reached record levels in 2022, and is still rising.
The same IEA report notes that after an energy shock blip, coal demand is again on a downward trajectory in the European Union (EU) and Japan, as well as South Korea – and in the EU was down by about 16% over the first half of the year. Inevitably the EU’s Green Deal, like the US Inflation Reduction Act, links in to trade and the prospect of tariffs on a growing number of energy intensive imported goods.
This would include goods made by coal-fired power generation, bringing further impetus to the development of hydrogen and, for example, electric steel making from renewable sources. ‘Demand for coal remains stubbornly high in Asia, even as many of those economies have significantly ramped up renewable energy sources,’ says IEA Director of Energy Markets and Security Keisuke Sadamori. ‘We need greater policy efforts and investments – backed by stronger international cooperation.’
Into the lion’s den
COP28 then will be an important forum, both for calling countries to account over their commitment to coal, and also for getting new, more substantive climate change agreements in place for the future. Agreements to double energy efficiency and hydrogen production will both be on the agenda and, while coal itself may be in the firing line, there is some scepticism about the appointment of Sultan Al Jaber, the Chief Executive of the UAE’s national oil and gas company ADNOC, as this year’s COP President.
This stems, in part at least, from the fact that the host nation is planning a big hike in its oil and gas production – amounting to around $150bn of investment. At the same time, Al Jaber says he wants the biggest oil and gas producers to come together and formulate a plan to reduce their greenhouse gas emissions in line with 1.5°C of global warming.
ADNOC, says Al Jaber, who is also the UAE’s Climate Change Envoy, will remain a responsible supplier of energy, laser-focused on reducing the carbon intensity of every barrel it produces. It will also continue to contribute to global emissions reduction, runs the PR, through its expansion into new energies, financed in the short term at least by its expansion in oil and gas production.
Nils Bartsch of the German NGO Urgewald says that the appointment of Sultan Al Jaber is a mockery of COP as an institution. ‘Appointing an oil and gas executive as COP President displays a complete lack of awareness of the problems at hand. It is a fatal political signal to the world.’ Given that it’s the UAE playing host to COP28, this criticism might be deemed a little unrealistic, but this is all part of a polarised transition as the coming COP will surely demonstrate.
The journey towards cleaner oil and gas production as an alternative to coal, in conjunction with the development of more renewables and a commitment to hydrogen, are all potential positives from the incoming COP President Al Jaber – who will have to put his money where his mouth is if there are to be any significant resolutions at the coming COP.
Being part of the climate solution
In fact, says Bob Ward, Policy Director at the Grantham Institute for Climate Change, the incoming President has shown ‘...detailed ambitions for progress on the major issues, including a need for oil companies to be part of the solution. If COP28 does deliver all the ambitions outlined, it would be one of the most important summits in history.’
Another olive branch that COP President Al Jaber can hold up is his role as the founding CEO of Masdar, a government-owned renewable energy company. Masdar claims to be one of the largest developers of renewable energy projects in the world and has invested more than $30bn in mainly solar and wind power projects since 2006. While oil and gas will continue to underpin UAE growth (and wealth) in the short term, energy diversification, claims the country, is very much on the agenda.
The dividing line between what has to be done in the short term to ensure energy security and some form of energy access for those who need it most is more pronounced than ever. While Nordic countries excel in areas such as wind, hydro and geothermal power, a country such as South Africa, technologically advanced in so many areas, struggles to keep the power on over a 24-hour period.
Power outages have become a way of life in the rainbow nation and coal is still the predominant backstop for electricity generation. South Africa remains in the top 10 global users of coal, just ahead of Australia and South Korea, with China and India leading the pack.
Geothermal to the rescue?
A key issue for poor countries, eg sub-Saharan Africa, is energy access and how to balance the alleviation of energy poverty with sustainable development. Some countries are doing better than others.
Kenya, for example, is now generating some 50% of its electricity from geothermal, thanks to an abundance of cheap, close-to-surface supplies in the Rift Valley. Thus far the country has exploited close to 950 MW of geothermal energy, enough to power about 3.8 million homes, while the government estimates there is 10,000 MW still untapped.
Despite its short-term supply issues, South Africa is making reasonable progress with renewable energy deployment – although access and connection remain major problems. The same challenges exist in many of the world’s poorest nations where inadequate infrastructure and grid connection restrict access, not only to clean energy, but to any kind of energy.
Small wonder then that rich countries, including the UK, balk at commitments to phase out all fossil fuels in the short term. No new exploration licences in the North Sea is a powerful slogan for those publicly and politically committed to reverse global warming, but energy security, for time being at least, holds sway. Whatever the achievements at COP28, getting a commitment to phase out coal may be just as difficult.