NUSA DUA, Indonesia- There’s no doubt that the global coal industry has been a major beneficiary of Russia’s invasion of Ukraine and the subsequent energy crisis.
But now the industry is starting to think beyond the current short-term exuberance and work out ways they can remain in the global energy mix, rather than fade away and die in an increasingly carbon-constrained world.
Asia’s coal players gathered this week at the Indonesian resort island of Bali for the Coaltrans Asia conference, and the mood was far more upbeat than in past events in recent years.
That’s hardly surprising given that thermal coal prices have surged since Moscow’s Feb. 24 attack on Ukraine, with futures linked to the Australian benchmark Newcastle price hitting a record high of $457.80 a ton in early September, having more than doubled over the past 12 months.
The Australian benchmark is for a high-energy coal mainly used by Japan, South Korea and utilities in Europe, but even lower-rank Australian and Indonesian coal has performed strongly amid a surge in demand as Europe seeks to end imports of coal, crude oil and natural gas from Russia.
Representatives of coal miners in Indonesia and Australia, the world’s two largest exporters of thermal coal, were ebullient at the Coaltrans event, but also cautious that the current windfall is unlikely to last beyond 2023 or 2024.
They were also cautious about the outlook for investment in new coal mines, especially in Australia given higher levels of environmental activism and a reluctance of banks and financial institutions to back more coal.
The discussion kept returning to the theme of how can coal exporters remain in the energy mix, especially as their main customers have committed to net-zero emissions, most of them by 2050.
Two main streams of thought were present, to boost the development and implementation of carbon capture and storage (CCS) solutions, and to increase the use of carbon offsets.
In theory both of these solutions do offer some hope for coal miners, but then the main problem comes in. Who pays?
The coal mining industry has known for some time that it is widely viewed as the global bogeyman when it comes to carbon pollution, but it has yet to put any significant investment of its own money into CCS.
It rather seems that the coal industry hopes that governments or end-users such as utilities will fund the development of scalable CCS, but this is likely to be a forlorn hope.
If you leave the decision-making to governments or your customers you run the risk of getting decisions you don’t like.
Why would a utility invest heavily in CCS if it can implement cheaper alternatives to reduce carbon, such as renewables and battery storage, or pumped hydro or even importing hydrogen or ammonia from countries with an excess of renewable power, such as Australia is planning on becoming?
CCS is also widely dismissed by many environmentalists as unworkable and of having largely failed where it has been trialled. – Reuters
