Coal industry urged to meet tougher environmental standards

The world’s coal industry needs to sharpen up its act in order to meet tougher environmental standards amid increasing global concern over rising greenhouse gas emissions, experts said.

The call at an industry conference in Singapore came as top experts under the UN Intergovernmental Panel on Climate Change (IPCC) gathered in Paris to carry out a massive review of the evidence of global warming.

In a 2001 report, the IPCC declared that carbon pollution from burning oil, gas and coal had helped drive atmospheric levels of CO2 to their highest in 420,000 years.

CO2 is the principal “greenhouse gas,” a term that applies to half a dozen gases that linger invisibly in the atmosphere, trapping the Sun’s heat instead of letting it bounce back into space.

“Coal will remain the main source of power at least for the next two decades,” said Fatih Birol, the chief economist of the Paris-based International Energy Agency (IEA).

“However, the pressure from the environmental side is going to increase and the coal industry has to respond to those challenges and the questions coming from the environmental front,” he told the coal industry conference here.

Birol told delegates he had just come from Davos, Switzerland and never had he seen climate change discussed so thoroughly at the
World Economic Forum of national leaders and top business executives.

“The coal industry cannot simply watch what’s going on in the world,” said Jeffrey Mulyono, chairman of the Indonesian Coal Mining Association.

“If the industry does not increase its efficiency, from the mining perspective and in the power plants, it will have tremendous implications for the industry itself.”

Coal currently powers 40 percent of the world’s electricity needs, and this share is expected to rise to 45 percent by 2030. Production growth in the last three years equalled the output in the previous 23 years, Birol said.

Unlike oil in which a majority of the reserves are concentrated in the politically volatile Middle East region, coal reserves are evenly distributed across continents, insulating prices from the shockwaves of geopolitical tensions, Birol added.

This and relatively lower costs have made coal an attractive electricity source, especially in developing countries such as China and India despite environmental concerns.

Some conference delegates voiced concerns that coal-mining and coal-fired power plants were not getting more efficient, and that low-grade coal is still being marketed.

Birol said in response to one question that the industry must learn from the lessons in the natural gas sector, where demand has slowed down from two years ago due to high prices.

“The coal market is a bit different, I know. But one should not take it for granted that if the efficiency goes down, if it is coupled with a lot of concerns coming throughout the world, this may well have implications on the coal industry,” he said.

Indonesia’s Mulyono called for more investments in technology in order to improve efficiency.

“There are a number of opportunities for improving the situation,” Mulyono said, noting however that there is general reluctance among investors because of the cost and the risks.

He said that a process in which coal is converted into liquid would need an investment of more than three billion US dollars.

“People are still worried to put the investments for making the liquefaction. There is no guarantee for the future risk, and the investment is huge,” he said.

Mulyono added it was “unavoidable” for Indonesia, a major coal producer and exporter, to market low-grade coal because of domestic and international demand.