Global Analysis from the European Perspective. Preparing for the world of tomorrow

Coal is not going to give up easily

The agreement reached at the Paris Climate Summit CO P21 at the beginning of December has been regarded as groundbreaking as it announced the end of the era of coal and other fossil fuels. Will, however, the proposed and inconsistent political declarations overcome the real circumstances that have greatly favored coal mining and use?

Coal, or rather the energy derived from it in coal power plants, has become almost a public enemy in many places in the world. The pressure applied by the ecologists and politicians, the resultant climate agreement as well as the ceremonial closures of mining pits in Germany and Great Britain, and the transformation of China’s economy make an impression that there is no future for coal in the modern world.

The first 13 years of the ongoing millennium have been a golden age for coal mining and exploitation. The end of prosperity does not, however, entail the end of the whole economic branch. The coal industry may still be developed in Asia, a continent that will be a new home to this fossil fuel; also the new technology may greatly contribute to its use if new applications of this black gold are developed, applications that do not negatively affect the environment.

The golden age for coal is not ended yet.

The demand for energy is on the increase and this trend will continue in the foreseeable future in proportion as the number of people is rising; the expanding middle class in China, India and South-East Asia will increase the demand for coal. Western politicians have set themselves the task of satisfying the demand for energy from renewable sources, which still has to be proved feasible. At present China is producing 24% of the world’s electric energy, holding first place in this respect, and dwarfing the USA that comes second.

In America energy production has slowed down since the peak that it reached in the year 2007; a correspondent peak in China is not to be expected in this decade. The demand for energy is growing rapidly also in other countries of the region such as India, Bangladesh, Vietnam or Indonesia.


electricity producersSource: BP

Since 2010 the European Union rather than produce more energy has enhanced the effectiveness of its use, without negatively impacting users need. The energy production in Europe ranks among the cleanest in the world: the EU is responsible for 10,4% of CO2 emissions producing 13,5% of the world energy supply. China, on the other hand, produces 24% of the world energy supply and is responsible for 27,5% CO2 emissions.

It is due to, among others, China that coal has become in the 21st century the second most important source of primary energy, like oil. The year 2014 was the first since 1999 when the global production of coal dropped, largely due to China, where less coal was mined and imported. The fall in the production affected all kinds of coal except for coking coal.

coal production FINAL

Source: IEA

The fall in the extraction of coal is not expected to negatively affect the market because there was an oversupply of this fossil fuel that caused the prices to fall. The Chinese producers attempted to resort to the strategy used by the OPEC countries: they defended their share on the market by lowering the prices. As a result of it, a number of coal producers had to reckon with losses.

Wood Mackenzie, the research and consultancy group, assesses that, taking into consideration the present prices, over 65% of the world’s coal extraction is not profitable1. In the aftermath of which and due to environmental pollution, the Axa Fund2 as well as Credit Agricole3 and ING4 banks have withdrawn from the investment in the coal industry.

A hope in the energetic poverty

Coal is not having a good press. The fall in the demand for it in the European Union and in the United States is unavoidable. The latest IEA anticipations foresee also the end of the golden era for coal in China, where half the global supply of this commodity is being produced and being consumed.

The global decrease in the coal demand in Europe and Africa may be compensated for by its increase in India and in South-Eastern Asia. The Indian government intends to make electricity available for 240 million people: as for now, a lion’s share of the world’s energy poverty. This is almost half the number of the European population. The demand will be satisfied mainly by coal-fired power stations (60% according to IEA), because this is the cheapest solution.

Thus, coal is not going to be dispensable overnight; it is going to slowly lose its dominant position among energy sources (in 2013 some 41% of the world’s electricity production derived from coal, twice as much as from gas). According to IEA, till the year 2020 it will remain one of the pillars of the global ‘energetic mix’.

Will economy prevail?

In Germany, where popular pressure to reduce co2 emission is enormous (Germany account for 20% of the said emissions in the EU), coal has long been regarded as an energy source to be parted with. And yet, in 2014 it made up 43% of the production of electric energy, with the renewable sources constituting 26%. Brown coal (with Germany ranking as the largest producer of it) that enjoyed much interest, since this fossil fuel has turned out to be the best replacement for nuclear energy that is being gradually phasing out, notwithstanding the fact that brown coal is even more detrimental to the environment than hard coal.

Even under adverse political circumstances, it is pragmatism and the market mechanism that prevail. The industry making use of coal has still a few years ahead to convince the world opinion that black coal may be clean and harmless. At present coal combustion accounts for 50% of the world’s co2 emissions, which puts in a very unfavorable light those who do not opt for decarbonization. The scientists connected with the coal industry may set themselves the important task of looking for low-emissions or near-zero emissions coal. Or find another application for the fossil.

Is clean coal a dream?

How about coal gasification? The process is said to be more effective and cleaner as compared to coal burning, and allows for obtaining a gas that might be used in energy production (IGCC technology). Gasification, known since the 18th century, is advanced first and foremost by China and USA. The problem remains, though: during this process, co2 emissions are twice as large as those generated by coal combustion in a power plant; a solution to this may be provided by underground gasification, a operation taking place where coal is mined.

This, in turn, calls for the technology of carbon capture and storage (CCS). The development and the possible use of this technology on a large scale appears to be hazardous. The stored co2 can get out of control and work its way onto the ground surface, leading to a disaster like the one that occurred in 1986 on Nyos Lake, Cameroon, where during one night the gas claimed 1700 victims. That disaster was caused by natural processes; still, it fosters the awareness of the danger arising from underground co2 storage.

Great store may be set by the use of modern and more effective power plant block-units and by the technologies that allow for the emission of a stream of clean co2, which in turn will make easier its capture and storage. The profitability of it is another question. If the R&D engineers are up to the mark, and clean coal can be used on a commercial scale, then the black gold will have its great comeback. If, however, science fails to solve the problem, mankind will gradually give up on coal as a source of energy.


1. Two thirds of world’s coal output is loss-making, Wood Mackenzie estimates Source: SMH 10-12-2015
More than 65 per cent of world coal production operates at a loss, according to a new report.

2. Axa to divest from high-risk coal funds due to threat of climate change Source: Guardian 22-05-2015
Insurance company to move £350m out of coal companies and triple investments in green technologies

3. Credit Agricole stops financing coal mining Source: Reuters 20-05-2015
French bank Credit Agricole said on Wednesday it would no longer finance coal mining or miners as lenders grow increasingly uneasy about funding coal due to environmental concerns.

4. ING Bank ends financing, credit to new coal plants Source: NLTimes 27-11-2015
Dutch bank ING decided to stop financing new coal plants with immediate effect. The bank will also no longer provide credit to new clients in the energy industry that rely on coal more than 50 percent.


Medium-Term Coal Market Report 2015, Source: IEA 18-12-2015

Coal Information 2015, Source: IEA 2015

World Energy Outlook Special Report on Southeast Asia 2015, Source: IEA 2015

Coal gasification: The clean energy of the future?, Source: BBC 14-04-2014,
Dirty it may be, but coal is cheap.

What is coal gasification?, Source: Science: How stuff works 2015,
Coal is best known for its role supplying electricity throughout the United States—nearly half of the country’s electricity comes from coal.

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