Coal is here to stay and protagonists on both sides of the coal debate should work together to reduce carbon emissions, FutureCoal’s chairman July Ndlovu told the 19th McCloskey Southern African Coal Conference in Cape Town yesterday.
Electricity Minister Kgosientso Ramokgopa had to bail out of giving the keynote address at the conference due to an emergency Cabinet meeting. Silas Zimu from the Presidency gave the government's view.
Ndlovu, whom is also the CEO of Thungela Resources, while presenting Industry Perspective from FutureCoal, said the rebranding of the World Coal Association into FutureCoal was an acknowledgement that coal was here to stay and that what was needed was to chart a pathway to the future that involved mining responsibly and minimising coal’s impact on the environment.
“When I was preparing my speech I looked back and saw that in 2013 the experts were predicting that peak coal would be reached in 2014. 2014 came and went without coal reaching its peak and then roughly every second year we would have a prediction that coal would reach its peak the following year. That gap between reaching peak year has now narrowed to every six months or so,” he said.
The International Energy Agency (IEA) in its December 2023 Coal Report predicted that the peak coal demand was in 2023, although it acknowledged that coal remained the largest energy source for electricity generation, steel-making and cement production – maintaining a central role in the world economy.
At the same time, coal was the largest source of man-made carbon dioxide emissions, and curbing consumption is essential to meeting international climate targets.
The IEA forecasts declining coal demand as a result of the structural decline in coal use in developed economies and a weaker economic outlook for China, which has also pledged to reach a peak in carbon dioxide emissions before 2030.
The IEA expects global demand for coal to have risen by 1.4% in 2023, surpassing 8.5 billion tonnes for the first time, but expects coal demand to remain above 8 billion tonnes for the foreseeable future.
The global increase in 2023 masks stark differences among regions. Consumption is on course to decline sharply in most advanced economies in 2023, including record drops in the European Union and US of around 20% each. Demand in emerging and developing economies, meanwhile, remained very strong, increasing by 8% in India and by 5% in China in 2023 due to rising demand for electricity and weak hydropower output.
The IEA said the shift in coal demand and production to Asia was accelerating with China, India and south-east Asia set to account for three-quarters of global consumption in 2023 compared with only about one-quarter in 1990.
Consumption in south-east Asia is expected to exceed for the first time that of the United States and that of the European Union in 2023. Through 2026, India and south-east Asia are the only regions where coal consumption is expected to grow significantly. In advanced economies, the expansion of renewables amid weak electricity demand growth is set to continue driving the structural decline of coal consumption.
The IEA said China, India and Indonesia – the three largest coal producers globally – are expected to break output records in 2023, pushing global production to a new high in 2023. These three countries now account for more than 70% of the world’s coal production. Global coal trade on the other hand is expected to contract as demand declines in the years ahead.
“What we seek to do as FutureCoal is to do what is right for future generations and we are working hard to do just that. When I was in Beijing in October I was told that just a 1% improvement in boiler efficiency in China would reduce carbon dioxide emissions by 2% to 3%, so when we work together we can achieve much,” Ndlovu said.
The coal conference also comes at a time 145 countries, covering close to 90% of global emissions, have announced or are considering net-zero targets by 2050.
Last year at COP 27, South Africa launched its Just Energy Transition Investment Plan, setting out the scale of need and investments required for the five-year period 2023–2027 to support its decarbonisation commitments — almost $100 billion (R1.9 trillion).
However, coal is an abundant resource in South Africa and, as the country struggles to keep its lights on amid a power crisis that it is struggling to resolve, the commodity is seen as important to energy security.
And despite the country’s COP 27 commitment, last month Minister of Mineral Resources and Energy, Gwede Mantashe, published a draft Integrated Resource Plan (IRP 2023) for public comment.
The IRP 2023 proposed increased fossil fuel usage compared to the IRP 2019 and reduced renewable energy usage, as part of the energy mix to retain dispatchable capacity on the back of South Africa’s electricity supply deficit.