The Net Zero Emissions by 2050 Scenarios by International Energy Agency anticipates a retirement of 100GW of coal-fired power each year
between 2020-2030. It is quite a lofty goal for the coal industry when the present is not even 25 GW primarily led by the advanced economies.
The above image-1 presents the historical data of the annual coal power plant retirements, their retirements as pledge by the countries (APS scenarios), and the ones required to meet the Net Zero Emissions by 2050 scenarios.
There are some serious concerns related to the retirement of the coal industry. The coal sector is here to stay longer than predicted in the emerging and developing countries due to the following five reasons, which encompasses all the social, technical, political, and commercial reasons.
Involvement of multiple stakeholders including labor unions.
Coal industries affects millions especially in emerging and developing economies where they are directly or indirectly related to the industry. A quote from the world energy outlook beautifully sums up the consequences of the abatement of the coal in the coal-dominated region.
The decision of the abatement of coal is a complex decision involving multiple stakeholders including labor unions, governments, industries, and communities dependent on coal for their livelihood, especially in the developing countries like India, Indonesia.
Closure of power plant causes a risk of stranded assets:
Most of the thermal power plants are relatively young in the developing countries. Developing countries are coming up with the thermal power plants to meet the increasing demands due to the industrial activities, changes in the lifestyle of their citizens, and other development activities. A lot of the thermal power projects are in planning stage and many other projects are in the different stages of development.
The above graph shows the relative average of the coal-power thermal power projects in the various regions of the world. While the Russia, USA, Europes have thermal power plants ranging above 30 years of the age, the thermal power plants in India, China, and Southeast Asia is largely less than 15 years of age.
Closure of these new power projects comes with some serious risk of estrangement of the assets leading to voice against the closure from the banking and industrial sectors.
Coal Industries serves as base load to electrical grid
Reliability of coal sector to provide a consistent electricity to the electricity grid has made the coal-based thermal power plants as supplier for the base load. Base load means it provide the minimum required power all the time, while the intermittent loads can be provided by the other non-coal-based sources of energy like wind, solar, or hydroelectric.
A few European countries have been able to successfully replace coal with the other reliable sources of electricity like nuclear power plants, hydro-electric plants, but the majority of the countries still depend on the coal to serve be the primary supplier of the energy.
Restructuring of power transmission line to meet the flexibility of new renewables.
The coal industries are being replaced with the alternative sources of industries like solar or wind industries. But this replacement comes with the additional strain on the electrical transmission infrastructure.
The power transmission infrastructure needs to cope with greater changes and swings in the variable and non-reliable power sources, the electricity grid needs to come. The current
Geopolitics causing energy crisis across countries.
The geopolitics has affected energy security of nations. Be it 1974 oil embargo, be it present Russia-Ukraine military conflict, the energy security has been compromised. So, the nation wants to ensure its energy security at any cost.
When it comes to the questions of the energy security, the developing countries would depend on the coal industries. Coal can be stored easily for long, it can be mined when locally available, and its production can be controlled by a nation. Most of the developing countries like India, China, Indonesia, South Africa comes with huge reservoirs of the coal.
To sum-up the above article, we have a few complications related to the abatement of the coal industry related not just to social complications (labor issues), but also technical (grid requiring a reliable source of base load and transmission line requiring greater flexibility) and commercial complications like stranded assets by retirement of the young industries.
The below infographic sums up the above article:
The above blog is authored by Pankaj Prasad.
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