Source: Carbon Brief
Benjamin Sporton has been the chief executive of the World Coal Association since June 2015. He became the organisation’s policy director in 2010. He also serves on the coal industry advisory board to the International Energy Agency.
Carbon Brief: What do you think, in your view, is the future for coal?
Benjamin Sporton: I think the future for coal is strong. I think coal has a role to play in the world’s energy mix for a long time to come. We see in the developing and emerging economies of Asia, in particular, that coal is playing a really important role in powering up those economies. It’s still going to be a really important part of the world’s electricity mix. Coal is also used to make steel and cement and many other products, so it’s got an important role in the world’s economy today, and I think that will continue for the foreseeable future.
The important thing is to make sure that we’re looking at the right technologies for using coal, to reduce the environmental impacts of using coal, to reduce emissions, and to make sure that we’re mining coal in a sustainable, responsible way.
CB: OK. Isn’t it the case that … I was looking back at BP statistics earlier, and global coal use fell by the largest recorded margin in 2015. It seems likely it also fell in 2016. Do you think that means global coal demand has peaked?
BS: I think global coal demand is probably at a peak, in a way. It’s probably not going to grow massively like it has done over the past couple of decades, but I think that we will continue to see some slow growth in coal. You look at the IEA [International Energy Agency] figures, they expect that coal will continue to grow over time, and will in fact continue to grow through to about 2040. But we’re not going to experience the same kind of significant growth that we’ve seen historically.
CB: OK, yeah. So you mentioned the IEA’s figures. In its last World Energy Outlook, it cut its forecast for coal demand growth in half compared to the previous outlook, and it’s expecting, as you mentioned, 5% growth over the next 25 years.
BS: Correct, yeah.
CB: The BP Energy Outlook from earlier this year just also cut its coal forecasts, and it’s now expecting coal demand to peak by around the middle of the next decade. Where do you see that? Do you think coal is genuinely still a growth industry? Isn’t there a chance that those outlooks will be trimmed again?
BS: Well, even in that scenario, coal is still a huge part of the world’s economy. It provides 40% of the world’s electricity today. That’s going to decrease as a share, perhaps, as the years come, but overall power generation from coal is going to continue to grow. It still provides 70% of the world’s steel and 90% of the world’s cement, so it’s still an incredibly important part of the world’s energy mix, and for making materials like steel and cement.
But we’re living in a world where the energy system is diversifying, so we’re having more renewables, we’re having more gas, different sources of electricity are playing different roles. That means that coal’s role will also change, but it doesn’t mean it’s going away. All the evidence shows that coal is going to be part of our energy mix for decades to come, and that’s why I think it’s really important that we focus on the role of coal generally, but also the role of low-emission coal technologies.
CB: OK. I’d like to move on to a slightly different topic. What do you think president Trump means for coal?
BS: Well, I think the positive thing that we’ve seen from president Trump is it’s the first time in a while that we’ve heard someone at the leadership level in the US talk about cleaner coal technologies, and I think that’s exciting and positive. It’s still early days in the administration in the US, and so we’re yet to see what policy measures might be put in place there.
The US is already a leader in cleaner coal technology. It’s had the Petra Nova facility open earlier this year, a new carbon capture and storage facility, the Kemper County facility will be coming online at some point this year. I think there’s lots of research going on in that carbon capture space in the US, and I think hopefully we’ll see a new US administration supporting that.
BS: Well, I think president Trump will probably provide a new boost of energy, I guess, in the US coal industry, given the positive message that he sent out about the role of coal. Obviously there are challenges that are beyond even the regulatory nature in the US. The role of gas, for example, is a major competitor to coal. But if you look at president Obama’s Clean Power Plan, for example, that said by 2030, coal would still be about 27% of the US electricity mix, and that’s only down from about 33 to 35%. Even in that scenario, coal would still play a really important role in the US for at least 15, 20 years, and possibly longer than that. I think that we need to recognise the fact that coal is going to be around in the US like it will be elsewhere for quite some time to come.
CB: In terms of whether Trump can revive the hopes of the coal industry, do you not think … As you mentioned, gas is also quite a significant part of this equation, so presumably his support for fracking will mean continued economic disadvantage for American coal-fired power stations. We’ve seen several announced plans to close even since Trump was inaugurated. Is that not a bigger factor in-
BS: I think whatever happens in the gas market, if we see more gas production, that obviously is a challenge to coal. But we see an environment that might be more conducive to coal in the US as well, and I know that people are quite interested in the US, for example, about exporting gas too, which is likely to lead to an increase in gas prices in the US, therefore making coal potentially more competitive in the future. I think there are a range of dynamics, but I think when we look at what’s happening with gas in the US, what’s happening with coal, coal is still going to be there. It’s still going to be a big part of the electricity mix in the US for decades to come.
CB: OK. Do you think that the Paris Agreement on climate change materially changes the outlook for coal?
BS: The thing that I found most encouraging about the Paris Agreement is in fact that at the time of Paris, 19 countries identified a role for high efficiency, low emissions coal-fired power plants as part of their climate commitments. The INDCs that they submitted at Paris, and since then another three countries, think it is, so up to 22 now, have identified a role for low emission coal technology. To me, the Paris Agreement actually recognises the role of low emission coal technologies as part of global action on climate change.
CB: You mentioned this high efficiency, low emissions coal technology…Is that not a bit of a misnomer because we’re still talking about hundreds of grammes of CO2 per kilowatt hour? It’s not really low emissions. In the UK, for instance, ministers were ridiculed a couple of years ago when they started referring to gas as low-carbon. Is it really fair to call, to describe it as low emissions coal?
BS: Well, this is the name the technology is given, I guess. It is important, because high efficiency, low emissions coal, HELE for short, actually reduces emissions of CO2 by between 25 and 30%. If you’re building a coal plant today, wouldn’t it be better that you’re building the best technology that does reduce emissions by 25 to 30%, rather than using the older, less efficient technology? That’s why we think that those technologies are incredibly important today. Of course it’s part of a longer continuum about reducing emissions from coal. You start today by building the commercially available HELE technologies, and then over time you look to move towards carbon capture and storage. In fact, those technologies, the HELE technologies, are important for future deployment of carbon capture and storage as well.
CB: What do you think it would mean for coal if we were to actually meet the goals of Paris, keeping warming well below 2C or even pushing for a 1.5C limit?
BS: Well we see coming out of the Paris Agreement an expectation that coal is going to continue to grow, have a role to play in the world’s electricity mix, so the IEA has done the analysis of what the Paris Agreement commitments themselves mean, and that’s now built into their analysis about the role of coal. Coal will continue to grow in absolute terms between now and 2040 according to the IEA’s analysis looking at the Paris Agreement commitments that have been made. I think it points towards a need to have much more investment and much more focus on carbon capture and storage, for example.
It’s the key takeaway, I guess, I took out of the Paris Agreement itself, was that if we’re going to target well below 2C and make all efforts to get to 1.5C, that just emphasises to me the importance of carbon capture and storage, because we have coal plants being built around the world today, gas plants being built around the world today, huge industrial application needed for CO2 capture and storage as well. That was the key takeaway for me from the Paris Agreement, was the need to work more on CCS and to do more in that space.
CB: You mentioned the INDCs. First of all, I guess 20 countries identifying a role for clean coal is not a huge proportion out of, whatever it is, 180 countries-
BS: Those countries represented, I think at the time, about 45% of global emissions, and I think it’s now up to about 50% of global emissions, so that-
BS: So it’s a small number of countries, but it’s quite a lot of emissions and, importantly, they are countries that are actually using coal. China, India, Indonesia, all of those countries that are major coal users are the ones that have recognised that technology.
CB: You mentioned the fact that under the IEA’s assessment of our current pathway, even including Paris commitments, there’s a growing role for coal. But isn’t it the case that under its 2C scenario, coal use will need to halve by 2040, and that’s including coal used with CCS [carbon capture and storage]? In other analysis, the IEA said that unabated coal would have to be phased out by 2050, worldwide, for a 2C future, and it’s actually becoming less and less optimistic about the potential of CCS, which it says is having a slow pace of progress. How do you square those findings with what you’ve said so far?
BS: Yeah, well if you’re looking at the IEA’s 450 scenario, the 2C scenario, obviously in that scenario, coal use does reduce substantially, but it’s still there. That’s why I think it is important that we focus on the technology solutions, because even in that scenario, I think coal is still about, is it 12% of global electricity. It’s still quite a lot of global electricity in that scenario. That’s why it’s important that we focus on the technology solutions for coal, because we have to have them.
You talk about the struggles with CCS, I guess we could say. That is true. We need to do more on CCS. We need to speed up action on CCS. In that regard, I look at the success story effectively of deployment of renewables, for example. We’ve had over about the last 10 years or so about $880bn worth of subsidies directed towards renewable technologies. Over that same period, we’ve had about $10bn worth of, sorry $20bn worth of subsidies directed towards CCS deployment. If you want to look at the success story of renewables, look at where the policy support’s being given. Look at what support governments have put in place, the encouragement that’s being given to investors to actually get involved in renewable technology. That same kind of policy encouragement hasn’t actually been put in place for carbon capture and storage.
That’s why I think it’s really important that coming out of Paris and looking at how we try and address climate change over time, we get the right policy signals put in place by governments to support investment in CCS and to support further research and development.
CB: What would your message be to the UK government, then, because they’ve just put out some new projections of energy and emissions over the next 20 years, and that showed them putting back deployment of CCS by something like 15 years. Obviously, they cancelled, about a year ago their £1bn support competition for CCS, though, they keep repeating the fact that they’re looking for a potential new approach to CCS. What do you think they should be doing?
BS: Well, I think it was really disappointing that their competition was cancelled, as you say, a year or so ago. I guess in some ways it’s no surprise that they’ve put back the expected deployment and use of CCS here. I actually thought that the competition and the policy that was set around that competition was really good policy. It had the up-front capital support that was available for the projects. It had the feed-in tariff to support those projects once they were connected to the grid. Even the carbon price floor I think had a role in encouraging those projects.
I think that was a really good policy design that could have worked here in the UK to encourage deployment of CCS, and actually two quite big and important research projects. That was really disappointing. I guess now we have to see what the government’s willing to do in the new environment, without that policy in place. I think there’s an interesting opportunity in the new department, Business, Energy and Industrial Strategy. It brings together energy, climate change, industrial strategy. It enables some opportunities for joined-up thinking around this. But as far as what they’re doing at the moment, what kind of policy options might be put in place, I guess we’ll have to wait and see.
CB: Returning to Paris, I hesitate to say complacent, but you’re sort of brushing off this difference between the current path that we’re on in meeting Paris commitments, and what would happen to the coal industry in the 2C world. It’s absolutely enormous. You say coal would still be supplying 12% of our electricity, but demand halving, that would be huge, wouldn’t it? Surely you’re-
BS: Oh, it would be, but we don’t seem to be on that trajectory at the moment. All the evidence shows that there are still vast numbers of coal plants being built around the world today. My concern is to try and make sure that we’re using the best technology, and that we do things like work more on carbon capture and storage, because with those plants being built today, we need to make sure that we’ve got the technology solutions for them to try and get ourselves to that Paris Agreement commitment.
CB: Do you actually think that the world will meet the Paris goals on temperature?
BS: I’m not a climate scientist or an expert on those things, so I don’t have the expertise to analyse that. But my interest is about making sure that we’re using the technologies that reduce emissions from coal today, and that’s why we’re focused on the high efficiency plants. I’m really interested in making sure that we do things like work more on carbon capture and storage, because with the plants that are being built today, the plants that are going to be operating into the future, it’s essential that we look at how we can deploy CCS on them in the future.
CB: But presumably, just from the coal side of things, you can see that there’s a huge difference between where we’re going and where we need to be. Do you not see a role for World Coal Association, if you’re supporting the goals of the Paris Agreement, to be advocating a shift away from coal in order to meet that 2C pathway?
BS: No, because I think we can eliminate the emissions from coal. That’s why we’re advocating for the role of carbon capture and storage. It’s not coal that’s the problem. It’s the emissions that are the problem. We need to address those emissions. If we can address those emissions, if we can get the technology solutions in place to remove those emissions from coal, then the solution is there.
CB: But just to return to what I said, actually, the IEA’s 2C scenario has coal use falling in half, not coal emissions. That’s including carbon capture technology …
BS: But that’s their analysis of how we end up in that world. Obviously they see a reduction of coal in their analysis. They see the deployment of CCS. My argument is that perhaps if we have a situation where we have CCS available commercially, then we can continue using coal, because we’re capturing and storing those emissions.
CB: Is it not the case that coal plants with CCS still have, say, 10%, 15% of the emissions of a normal coal plant?
BS: They do, but this is technology that is developing and emerging and being further explored. We can’t look at the technology that we have today and say that’s going to be the exact same technology that will be deployed 20, 30 years from now. That’s why it’s so important to keep on working on these technologies.
CB: You think there is a role for that, even if those residual emissions are quite hard to get rid of? You think there’s still a role in a world that has to get to net zero emissions overall?
BS: Because there are other ways of addressing those emissions. Whether we use other technologies, direct air capture or something, or we have planting of forests and whatever else. Those are options that are there, but then there is also the technology solution to drive towards getting to 100% in terms of carbon capture and storage technology as well.
CB: OK. Moving slightly away from whether we’ll meet the Paris goals, can I ask whether it would bother you personally if we bust through those warming limits? Do you fear for the future of the climate?
BS: I think it is important to look at the challenge of climate change. All the science tells us we need to be addressing that challenge of climate change. It’s important to focus on reducing emissions to keep global temperatures down. I think that is a challenge. That’s why I’m here, because I see the fact that we have a high use of coal around the world, coal has an important role in the world’s economy, and we need to focus on the technology solutions to make sure that we can reduce emissions. That’s why the World Coal Association is here. It’s why we’re talking about the role of low emissions coal technologies, because we care about the environment. We care about the future of the world’s economy. We think it’s important to focus on those technology solutions.
CB: OK. Which climate impacts particularly would you worry about in the future?
BS: Which particular climate impacts?
CB: Yeah. Because you talked just now really more about your role with the World Coal Association, rather than a more personal viewpoint.
BS: Oh well, any climate impact is important to address. It’s the entire system that we need to make sure we’re focused on improving. I wouldn’t actually pick any one issue out.
CB: OK. You mentioned the pipeline for new coal plants. I’m sure you would have seen this morning a new study from CoalSwarm saying that plans for new coal plants are in freefall. I think that was their wording.
BS: Their wording, yeah.
CB: Do you have any comments?
BS: Well I think that it’s interesting analysis to look at what’s happening. There are different interpretations on all of those numbers. I think the overall point is, though, that there are still vast numbers of coal plants being built around the world. Even their analysis recognises that. When you look at the IEA numbers about what is projected to be happening around the world, we are continuing to see an increased demand for coal. We’re continuing to see a growing coal role in absolute terms, in power generation. Numbers will change from time to time, but to my mind, coal is still playing a very important role in the world’s electricity mix, and that’s not going to change substantially for a long time to come.
CB: OK. Looking more at today’s situation, one of the most consequential findings, in my opinion, was their analysis showing how coal plant utilisation is falling around the world. In Europe, in the US, in China, even in India they’re getting down towards running coal plants just 50 or 60% of all hours. What’s going on there?
BS: I think in different countries, different scenarios are actually happening. Probably in China, I think there probably has been a degree of overbuild in new coal-fired power plants. I think many of the provinces have used construction to actually encourage economic growth in their region. I think in India we’ve seen a situation where power demand growth actually hasn’t grown as much as it has been expected, which is surprising in many ways, given the huge energy challenges that exist in India. That’s been partly due to the financial difficulties of many of the distribution companies. I think in different countries there are different factors at play.
One of the interesting things about that level of utilisation at the moment, is that if we don’t see the degree of deployment of renewables or connectivity of renewables in some of those countries, particularly in India and China, actually be achieved, so the really ambitious levels that they have planned for, then that points to those coal plants actually having the capacity to pick up the slack in many scenarios too.
CB: OK. I noticed in one of the articles covering this new analysis, you were quoted, in regards to China, saying that it wasn’t transitioning away from coal, and I just wondered if you’d like to elaborate, because as far as I know, China’s coal use has fallen for three years in a row.
BS: All of the analysis shows, and indeed China’s plans show, that coal is going to play a very important role in the power generation mix in China for decades to come through to about 2040. When you’re looking at the analysis for 2040, coal will still be about half of China’s electricity mix. Now that’s sure a reduction in where it is today, but it’s still a very big chunk of their power generation mix. The government in China has plans to get to about 1.1, I’m sorry, 1,100 gigawatts (GW) of coal-fired power generation capacity, which is still about 200GW more than it is today [A recent IEA analysis said it made “no economic sense” to build additional coal plants in China]. Coal is playing a big role there, and in fact their Paris Agreement commitment, their INDC, actually put low emission coal technologies front and centre of their low emissions energy plan. For China, they’re trying to diversify their power generation mix, entirely sensible thing to do, but they’re very much focused on the low emissions coal technologies because they see coal being such a critical part of their power generation mix for decades.
CB: OK. Late last year, we covered some research that said far from helping the poor, coal has actually tended in the past to entrench poverty because large new coal plants tend to favour larger industrial customers rather than the little guy. What’s your view?
BS: To me, coal has a role to play in ensuring sustainable development and energy access. I think China is actually a really good example of that. China is a country that’s driven its electrification strategy based on coal. 600 million people in China have been lifted out of poverty over that time frame. I think it’s not necessarily sensible to say that coal doesn’t have a role to play in energy access and development of the economy. Now, in different scenarios, different technologies are going to have a role to play. Coal-fired power generation is particularly good for business and industry, but that’s important because it provides jobs that people can actually go and get and supports economic growth.
Now, in different scenarios, different technologies have a role to play. I think in rural locations, renewable technologies, mini and off-grid solutions are important, because they’re easy to build, you can build them quickly, they provide a degree of electricity immediately. I think over time, grid-based electricity becomes important, particularly in a world of very much increasing urbanisation, 1.1 billion people moving into cities over the next 15 years or so. Grid-based systems are much more important in cities. Coal has a role to play there alongside renewables and other technologies as well.
CB: You mentioned renewables. We’ve had comments from people like Piyush Goyal, India’s energy minister, saying that solar’s now cheaper than coal. We’ve talked already about low utilisation rates, which can only make coal more expensive to run. Do you think coal is the cheapest way to bring power to people without?
BS: Well Piyush Goyal was also talking recently about $25bn worth of investment in high efficiency, low emissions plants in India, so he’s been very clear that no economy has developed based on intermittent power [See this May 2015 Bloomberg article]. He’s talked about how important coal-based power actually is to India. We’ve seen some very low bids for solar generation in particular in India in recent months, and I think it will be interesting to see if those projects actually do come to fruition at such low bids. As I said, I think coal has a role to play in different scenarios. I think renewables have a role to play in different scenarios. Even Kofi Annan, who is chair of the Africa Progress Panel, was talking just recently about the fact that coal is really important in African economies as well for economic development and energy access [You can read Annan’s remarks in full].
To me, it’s not an either/or, it’s not trying to say that renewables don’t have a role to play and that coal is the only part of the solution. It’s about saying that many countries need a mix, and different technologies have a role to play in different circumstances.
CB: If you think coal is important for the development of poor countries, developing rapidly over the coming decades, do you think it will be the role, or should be the role, of the World Coal Association to lobby for environmental controls comparable to those in countries like Japan or the EU?
BS: Well that’s where we’ve actually been really very much focused on the role of the low emission coal technologies, and saying that development banks and others should be encouraging the uptake of the most advanced coal technologies, high efficiency, low emissions coal, good emissions control technologies in place, because actually where development banks and other international financiers get involved, they can help encourage the switch.
For example, the World Bank policy enacted a couple of years ago to get out of coal, effectively, even the International Energy Agency there raised the concern to say that they understood why perhaps the World Bank might not want to finance coal, but they raised the concern that said by the World Bank and other development banks not being involved in coal, there is the risk of countries saying, “Well, we’ll go down a cheaper coal path using older, less efficient technology with higher emissions.”
I think that’s a legitimate concern. I think that’s the role that development banks and other organisations can play, is actually helping make sure, where countries are actually using coal, because they’ve got the domestic resources, they want to use it, that we can encourage and help them to use the best technologies.
CB: It seems like encouraging is one thing, but I guess I was asking whether you-
BS: Encourage or help.
CB: Sure. Sure, but I guess I was asking more about a role for World Coal Association in terms of lobbying for actual regulations which we do have in the UK-
BS: Well, for example, that’s where … We held a workshop last year with the Indonesian government talking about their plans for coal-fired power generation. About 20GW of new coal-fired power generation is planned in Indonesia, and we’re going back there in a couple of months time. One of the things that we were talking about there with the government, with financiers, technology providers, is what can be done in Indonesia to try and make sure that they do build high efficiency, low emissions plants, and plants with modern emission control technologies. Part of that will be the regulatory approach that is taken in Indonesia, and I think that’s important. So…
CB: But you’re lobbying for them to introduce such controls?
BS: Well I think that they should, as part of their overall energy mix focus on what are they going to use coal for, what technologies are they going to use, what things can they encourage. I think it is sensible to make sure that we’re using coal in the most sustainable way possible.
CB: OK. Many cities across India and China and so on are facing deadly air pollution because of coal and among other factors. Would you be happy to bring up children under those conditions?
BS: I think the challenges that you’re talking about are brought about partly by coal, partly by other things. My interest is in making sure that we’re building plants with the best emission control technologies, because no, I wouldn’t be happy to raise a child in those scenarios. I think it is important that we actually do have the technology in place to reduce emissions. I wouldn’t want to live in that kind of environment if I couldn’t. That’s why I’d be focused on trying to deploy those technologies.
CB: OK. For instance, in China, they’ve taken the approach in Beijing of simply closing all their coal plants and replacing them with gas. You think you could achieve equally good-
BS: One of the things that China is actually working on with its coal plants is what they call zero-emissions coal plants, which is actually eliminating all the emissions of SOx, NOx, and particulate matter other than the CO2. They are very much focused on what they call zero-emissions coal plants. In fact, I’m going to see a couple of them just outside of Beijing next week. That’s the technology solution that I think we should be trying to apply.
CB: OK. Returning to carbon capture, you talked about the need for public support, effectively, to support research and development of the technology. Wouldn’t it arguably be more credible, your position on the need for CCS, if members of World Coal Association actually were putting money into this?
BS: In fact they do. Members of the World Coal Association in Australia, China, in the US, are all investing in research on carbon capture and storage. In Australia, there’s the COAL21 Fund, which is a fund that’s been set up by the Australian coal industry. Many of those people are members of the World Coal Association. They’ve targeted, I think it’s a billion dollars, to be raised for low emission coal technology research and projects, and in fact some of that money is already being spent. I think about $300m worth has been spent on various research projects for carbon capture and storage in Australia.
In the US, Peabody Energy has invested into the National Carbon Capture Centre. In fact, they’re the only private investor in China’s GreenGen project, which is a gasification and CCS project. They’ve done that with companies like Shenhua, which are a member of the World Coal Association as well. In fact, Shenhua is a major power producer as well as a major coal producer in China, and they’re putting a lot of money into research into CCS and high efficiency coal as well. So many members of the World Coal Association are very actively involved in investing in CCS projects.
CB: Given what you say, we’re in the situation where the IEA is saying there’s a slow pace of progress on CCS. We talked about the UK already. If there’s all of this investment and activity going on with CCS, what’s the problem? Why is it still so far behind where it was supposed to be?
BS: Comes back to that policy support, that policy consistency in treating all low emission technologies in the same way, effectively. We haven’t had governments put the same sort of support, the same consistency and reliability of support, into carbon capture and storage as we have for renewable technologies. The UK competition is a perfect example of that. We’ve had that competition run twice, effectively, with a number of really good projects, and two looked like they were going to go ahead in the second round of that competition. That hasn’t come through. Much the same story with the FutureGen project in the US: government support put up, offered up, and then taken away.
We haven’t had governments treat CCS in the same way as they’ve treated other low emission technologies. If they’d actually given the right policy signals, I think that’s where we would have seen some action. Strong policy, as we’ve learnt from renewables, drives strong action, and we haven’t seen that in carbon capture and storage.
CB: It strikes me that that’s a little bit … That’s kind of deflecting the blame a little bit because with renewables, not only has there been policy support, but there have been incredible reductions in the costs of producing those wind and solar-
BS: That’s because the policy support has helped drive the deployment of that technology, has helped encourage initial level of deployment, and then said, right, we’ve got more policy mechanisms in place, so developing that technology and deploying it further and more rapidly. If we had that for carbon capture and storage, I think we would see more progress on it.
CB: You don’t think it’s simply the … You look at something like the Kemper Project in the US that you mentioned. That’s one of the most expensive power generation projects in the world. It keeps being late and over budget.
BS: There have been particular challenges with the Kemper Project. It’s not actually solely a power generation project or a CCS project. It’s in fact a polygeneration project, so it’s much more complex technology. Take, for example, the Petra Nova plant that was built on time and on budget. The Boundary Dam facility in Canada, in Saskatchewan. Actually now that they’ve got that plant built and up and running, they know they can reduce the costs of that plant by 30% the next time they do it, and in fact they’re examining whether or not they do the next stage of that plant. I think that if we actually see those technologies have the opportunity for large-scale demonstration, we will get the costs benefits, the costs downturns over time.
CB: You mentioned Petra Nova. Isn’t it true that it needs a quite high oil price in order for it to work, the project to work out?
BS: This is because they’re using enhanced oil recovery as a mechanism of actually selling that CO2 to actually create a revenue stream for that project. I think that this is interesting, because it points towards the fact that if they can commodify that CO2, actually use it for something, then that helps pay for the technology. That’s the same as what’s happening with the Kemper County facility and the Boundary Dam facility. I think getting your revenue stream for that CO2 actually helps pay for the development of the technology so that we can bring the costs down over time.
CB: Do you see a world … Because what seems to have happened over the last, say, five years, is that the costs for CCS if anything, have increased, whereas alternative forms of low carbon power have seen big cost reductions. You’re saying that with the right policy support those costs could come down, but where is the place for CCS in the power sector? We can talk about industry separately, but specifically on the power sector, isn’t there a risk that all of these other alternatives, cheap already and becoming cheaper over time, are just going to create a situation where there’s absolutely no room for, where there’s no need for CCS in power?
BS: The longer-term projections that have been done by the International Energy Agency, our own research, and other organisations have said that CCS costs are going to come down over time. They look at by 2030, 2035, levelized cost of electricity studies show that coal with CCS, gas with CCS, will be roughly equivalent with other low emission forms of energy, depending on your fuel source and where you are.
In some cases, renewable technology might be the smart choice. In some cases, gas with CCS, and in others, coal with CCS, will be the smart, economic choice. I don’t think it’s a scenario where we will say that renewable costs are going to come down so much, and that the system integration issues and the storage issues for renewables are going to be addressed so easily that we’re not going to need baseload coal and gas and nuclear, even, and have carbon capture and storage.
It’s just none of the analysis actually shows that. In fact, even the Intergovernmental Panel on Climate Change points to the significance and importance of carbon capture and storage. In fact, they say without carbon capture and storage, the global costs of trying to address climate change, to get to the 2C scenario, is about 2% more of global GDP, which is a huge cost to go down that pathway. When you look at where fossil fuels are being used, coal and gas are being used, for electricity, there is absolutely a need for CCS, and I don’t see that those other technologies are going to displace that.
CB: OK. I think we’ve got a little bit more time, so I’d just like to change tack slightly. Companies like Peabody Coal in the US, and some other players in the coal industry, have used fairly aggressive tactics in lobbying against climate policy. Peabody, for instance, sponsoring or leading even litigation against the use of federal social cost of carbon, for instance, and so on. What’s your view from the World Coal Association about those tactics?
BS: Well Peabody’s a member of the World Coal Association. I was just actually meeting with Peabody a few weeks ago. When I was meeting with them, we were talking about technology solutions. That is what we’re focused on with Peabody, with them internationally and in the US and elsewhere, is the technology solutions. That’s where our focus is. I don’t get involved in what happens in domestic policies in the US in that regard, but internationally, they’re focused on low-emission coal technologies, they’re investing in carbon capture and storage, they’re working to try and encourage and get the right policy mechanisms in place to support that. That’s what they’re working on with us.
CB: But what it looks like from outside is that they’re doing their best to stall, delay, or get rid of climate policy in the US-
BS: I think Peabody recognises the challenge. We’ve seen them only recently talk about the challenge of reducing emissions. We’ve seen them talk about the need to progress high efficiency, low emissions coal technology, to progress on CCS. They’re investing in CCS. That’s how I interact with them, and that’s what I see from them.
CB: It’s just you’re telling a story about coal’s role in meeting the Paris Agreement, and it seems more like they’re taking a much more aggressive approach compared to what the World Coal Association is doing. Do you disagree about that approach?
BS: They support us in the work that we’re doing on the Paris Agreement, in talking about the role of high efficiency, low emissions technology, in talking about the role of carbon capture and storage, and in talking about those things at the international level.
CB: OK. Another development that’s happened recently in the US is the legal case against Exxon Mobil for allegedly misleading investors with regards to the risks posed by climate change on their investments. Do you think that there’s a risk of coal companies facing similar litigation?
BS: Don’t know. [Laughs] I don’t really have any comment on that.
CB: Isn’t it the case that some coal companies have used, have selectively chosen forecasts for coal demand that don’t take into account climate policies, for instance, in order to make a case for further investment in coal?
BS: I’m not an expert on what different coal companies have forecast, so I couldn’t really comment on that.
CB: OK. Last question, I guess, on the carbon capture space. Given how slowly things progressed, and the physical limitations on the amount, the availability of space to store stuff, and just the practical limitations in terms of scaling up an industry-
BS: The IPCC, the Intergovernmental Panel on Climate Change … in fact, I think the report is behind me somewhere … has actually talked about CCS and done a lot of analysis looking at the availability of storage space and the technologies available for storage, and all the evidence shows that there is ample storage space for CO2 to be injected underground.
CB: In terms of the practical limitations, there’s only so many plants that can be built per year, and so on. Do you think that it would be better to make use of that carbon capture and storage, and capacity that is limited in how quickly it can be brought on, to do things like decarbonizing heavy industry, potentially in future working towards negative emissions, which is probably required to meet some of those temperature goals?
BS: I think all of them are important. Look at the major projects that are being operated for CCS around the world today. A good chunk of them are on industrial applications. A number of them are on coal and a few on gas production. I think all of them are important. In fact, investment across all of them helps drive knowledge, development, new learnings, across all of the other different types of applications of CCS. I think it’s actually quite important to encourage investment across all sectors of CCS, because all sectors of CCS will have a role to play. You talk about bio-energy with CCS in the future as well. Actually, one of the good ways of co-firing biomass is with coal, and then using that for negative emissions. I think that’s one of the options to be used in the future as well.
CB: OK. Final question, which I had forgotten, which was, the UK obviously has a plan to phase out unabated coal by 2025. Latest projections, I mentioned, show it could happen easily several years before that. The UK is one of a growing list of countries setting phase-out timelines. Is that a development you support, and if not, why not?
BS: Well, I think different countries will take different approaches, and the UK has made a decision that it’s got a number of old, coal-fired power plants. Most of the power plants that are operating in the UK are pretty old now. That’s effectively their natural lifetime anyway for most of them, I understand. Different countries will take different approaches. For those countries that have said we’re going to phase out or reduce use of coal, we have others that are increasing the use of coal, particularly across the developing and emerging economies in Asia. Different countries will take a different approach. Here in the UK, I think there is still the option potentially to build coal with CCS or look at that as some sort of an option in the future, but given the plants that we have at the moment, it’s probably not surprising that it’s at that sort of a time frame.
CB: …Because you mentioned the vulnerable developing countries that are developing, that have big plans to expand coal. Actually, quite a long list of those countries signed up to the Climate Vulnerable Forum pledge on going 100% renewable. It was a relatively vague pledge, but that includes countries like Vietnam that has relatively big plans for coal. Which do you see winning out in that? Do you think their 100% renewable pledge is not credible?
BS: Well, I think that those countries probably are looking to try and balance the needs of climate policy with sustainable and economic development. In my mind, those things can be treated as integrated priorities. A country like Vietnam or the Philippines, these are economies that are looking to build coal and looking to build the right technology for coal. I think that they have the option to use all of that technology [Vietnam and the Philippines are members of the Climate Vulnerable Forum, which pledged to “strive to meet 100% domestic renewable energy production as rapidly as possible”].
CB: But they’re saying 100% renewable. That’s no coal. Not clean coal, not any coal.
BS: Well, they’ve said that. Some people from those countries have said that. Other people have said we’re going to have a significant role of coal in the mix. I guess it’s, the proof will be in the pudding, in the end.
CB: Right. OK, well, thanks very much.
BS: Thanks very much.