Future of coal

Coal and a lower-carbon economy - what are the alternatives?

We're all agreed the world must transition from coal and fossil fuels, and must deal with the CO2 emissions from coal. What we don't know is how quickly a transition from coal can be achieved. Unintended consequences of a rapid transition are likely to be significant, as are the climate consequences of too slow a transition.

Governments face a multitude of priorities, and a key problem we face from an environmental perspective is that many Governments, particularly of developing countries, place a higher priority on energy / economic progress, than on the environment. Many of these Governments believe coal-fired electricity is the only current realistic option.

Yet the longer we use coal (and other fossil fuels), the greater the environmental risk. If the world is to stabilise the climate at a safe level for humanity, all coal mining and use must stop by 2030, "the grandfather of climate change awareness" James Hansen, of NASA and Columbia University has said.

Coal, and fossil fuels generally, are a conundrum: the world must transition from fossil fuels, but can't - and won't - do so without economically-viable alternatives, including capturing and storing the CO2 emissions from the burning of fossil fuels.

There is no one solution, and all of them come at a cost, or will require new technologies to be developed. Policy-makers will need to think carefully about the effect of the carbon price imposed on emitters, if the lower-carbon technologies do not yet exist, and if different carbon prices around the world favour some trading partners and competitors over others.

While the world is increasing its annual coal consumption, hopes are high that China's demand has peaked. Slackening demand over the last two years is owed to a "rebalancing" of the Chinese economy, following a period of over-investment in infrastructure, as well as low petroleum prices, the International Energy Agency reports. "In the peak case, Chinese coal demand in 2020 is 9.8% percent below the level in 2013 and more than 300 Mtce (metric tonnes coal equivalent) below the base-case forecast of nearly 2950 Mtce in 2020." 1

There is some controversy over these statistics, as to whether China's coal consumption is decreasing or increasing 2. Regardless, China will still be producing, importing and using a lot of coal, around 4 billion tonnes, every year.

In the US, demand for coal has reduced significantly because of a switch from coal-fired electricity generation to shale gas thanks to technology advances. Depressed petroleum prices have also encouraged a move away from coal, but have not helped the need to reduce emissions in the longer term. As a result, more US coal has been released onto global markets, also contributing to a prolonged price downturn for coal.

The transition to the lower-carbon economy will entail a multitude of actions.

Switch from coal to a less emissions-intensive fuel


In New Zealand, industrial energy consumers in the North Island use either coal or gas. For these businesses, gas is an option, with an operational cost similar or lower to that of coal per unit of energy produced. While still a fossil fuel, the emissions per unit of energy produced for gas are on average half that of coal, so the carbon price faced by businesses reduces accordingly. That said, businesses switching from coal to gas will have to pay for new boilers, the economics of which depend largely on scale.

In the South Island, gas is not available. A possibility here would be a substantial gas discovery in the South Island, onshore or offshore, followed by the required infrastructure development. (In such a case, there would be a strong temptation to convert the gas into liquid petroleum gas, LPG, and export it, so a gas discovery in the South Island would not lead inevitably to gas use there.)

Electricity generation is the most likely scenario for a switch from coal to gas in New Zealand, and globally, in places where there is gas.

Switching from coal to gas-fired electricity generation has occurred overseas, notably in the US, and in parts of Europe. For some countries, this is low-hanging fruit, is happening anyway, and will enable them to meet their Paris Agreement targets at a lower cost per tonne of emissions reduced than will be the case for New Zealand.

Dr Scott Tinker, University of Texas, is among proponents for increasing the use of gas and nuclear 3, if the world is to transition away from using coal in electricity generation by 2050. This is a more achievable and defendable target than Prof James Hansen's highly challenging 2030 goal - some would say wishful, or aspirational. The principal reason is that renewables (wind, solar, hydro, geothermal) can help, but the technology advances required for these, and other, options to replace coal at scale are not evident yet.

Wood/Plant waste (biomass)

Wood waste, also known as biomass, is a great idea, in principle, as a source of industrial process heat because this is renewable energy. It does come with challenges:

  • Price of biomass - similar to electricity as a source of heat, approximately 3x the cost of coal

  • Transport - biomass is bulky - approximately 3 truckloads of biomass for every truckload of coal to the equivalent energy value

  • Diffuse energy source - biomass is spread across the landscape, whereas coal in New Zealand comes from 17 mines, and, because of its low energy density biomass is best used near source

  • Quality - moisture content in wood waste can vary widely, affecting consistency of combustion and heat production

  • Dilute energy source - it would take 90,000 hectares of trees planted specifically for biomass harvesting to fuel South Island dairy production

  • Reliability and availability of supply - unproven at scale

  • Storage - similar issue as for transport

These challenges appear insurmountable at this stage, and it will take time, and research & development, to enable biomass as a viable option for industrial process heat at scale in New Zealand, and globally. The Bioenergy Association concedes that the wood-based industry could add only 3.5 MW a year to heat energy supply (which would fuel 3-4 commercial greenhouses).4 

Fonterra and Lincoln University 5 are trialling miscanthus 6, a type of grass related to sugar cane, as a biomass crop for use with coal in boilers.

Internationally, questions have been raised about how the demand for material to meet the needs of biomass-driven industrial plants will be met.

Nuclear power

The nuclear fission reactor has enormous potential to produce large amounts of 'zero' emissions electricity. Despite negative perceptions, nuclear power is the one technology that we have, today, that can substantially replace coal-fired generation. France is among countries that has successfully used nuclear for decades, generating 75% of its electricity from this source 7.

The IEA reports that 74 gigawatts of nuclear capacity was under construction around the world at the end of 2014, 28 GW of which are in China where most of the growth in nuclear is projected to occur over the medium to long term.

The IEA’s technology road map for nuclear energy 8, published in 2015, considered that nuclear energy has a vital role to play in stabilising global average temperatures at +2C. Global installed nuclear capacity would have to increase from 396 gigawatts in 2015 to 930 GW by 2050, at which time nuclear would account for 17% of global electricity generation.

Not all countries share France's and others' enthusiasm for nuclear, however.

New Zealand has declared ourselves "nuclear free". In any event, the size of our electricity market, and the availability of renewable and gas generation options means that nuclear power is not a consideration in the foreseeable future.

Japan, following the Fukishima tsunami in 2011 9, and Germany as part of its "Energiewende" policy 10, are moving away from nuclear, with the consequence that the use of coal for electricity generation in Japan increased from 23% of total generation pre-Fukishima to 31% in 2015. Even so, Japan still has 42 nuclear reactors.


Improve the efficiency of coal use

Making coal-fired electricity generation more efficient

Increasing the efficiency of coal-fired power stations worldwide from 34% to 40% could "save" 2 billion tonnes of CO2-e, (roughly 4% of global emissions, or the equivalent of India's total 2014 emissions), the World Coal Association has calculated. The WCA has an action plan named PACE (platform for accelerating coal efficiency) 11, to encourage the uptake of "clean coal" technologies, particularly in developing countries.

The 2bn tonnes saved is CO2 that would otherwise be emitted from poorer-quality power stations. While this is a measure that would slow emissions growth, rather than reduce global emissions from coal, this is still an important initiative to achieve the transition to a lower-carbon economy.

Improve coal-fired boiler efficiency

In New Zealand, CRL Energy is working with the Coal Association to improve the efficiency of coal-fired boilers 12. This reduces operators' direct fuel costs, and the carbon price to be paid. More energy is produced per unit of emissions, a decrease in the emissions intensity of industry. The field of application is aimed more but not exclusively at smaller-scale boilers.

Fonterra won an award at the Deloitte Energy Awards 2016 for halving the emissions intensity of its dairy processing plant at Edendale, in Southland. This was achieved through improvements to their process for generation and using heat and through economies of scale via plant expansion.


This concept describes the use of natural gas, coal and, perhaps, other solid fuels such as biomass, to generate both electricity and heat at the same time. The chief benefit is the higher efficiencies and reduced electricity costs, plus greater energy output per tonne of CO2 emissions produced 13.

Because New Zealand currently has a high renewables target and CCS is not currently provided for in our energy policy mix, the potential here is limited. Globally, co-generation or other advanced generation technologies (e.g., oxygen firing 14) could form a useful part of the mix of initiatives to reduce and otherwise address CO2 emissions.

Prevent emissions from coal use entering the atmosphere

Carbon capture and storage (CCS)

The concept of capturing CO2 emissions before they disperse into the atmosphere, and then storing that CO2 in a stable form, permanently, has attracted renewed interest after some years of stagnation. Given low global carbon prices, and uncertainty over the Paris Agreement, it is not surprising that interest has been flat; carbon capture and storage (CCS) does not come cheap.

In 2011 the international consultancy WorleyParsons reported on the feasibility of CCS in New Zealand 15.

As a rule of thumb, CCS is considered potentially viable when carbon dioxide emissions are above 0.8 - 1 million tonnes a year for coal-fired power stations and 0.4 - 0.5 MT a year for other applications. Examples in New Zealand where CCS might be considered include industrial sites such as the Glenbrook steel mill, the NZ Refinery, and Golden Bay Cement.

The take-home message is that for any new chemical or fuels manufacturing process based on natural gas or coal the cost of sequestering the emitted carbon is within reach of expected future carbon prices in New Zealand. The technology for doing so is readily available and well understood.

In southwest Victoria, Australia, a demonstration project has been injecting and storing CO2 underground, and monitoring the behaviour of the CO2 sub-surface. Over several years 80,000 tonnes of CO2 has been captured from a gas well at Otway and stored deep underground into saline aquifers that contain salty, unusable water. The CO2 Co-operative Research Centre (CO2CRC) 16 has taken the IEA's premise that CCS could account for as much as 17% of global emissions reductions by 2050, in marketing the global applicability of their technology.

In June 2016, BHP Billiton granted $US7.37 million to Peking University in China to carry out more research on CCS 17.  The focus is steel-making, relevant for BHP Billiton as an iron ore producer and exporter.

In Iceland, a trial of turning CO2 into chalk or limestone, a stable mineral under appropriate conditions, has been successful by injecting CO2 emissions into basalt volcanic rock under water.

Like any new technology, CCS comes with learning challenges, for example, a current Canadian pilot project, in Saskatchewan. Boundary Dam, a coal-fired electricity plant, was supposed to sequester emissions equating to 250,000 vehicles on the road, or 1 MT of CO2-e a year. The results to date are much less promising, with multiple shutdowns for repairs, and cost over-runs, largely because of the complexities of integrating carbon capture into the power station 18. Nonetheless, CCS is working in practice at this site, and the economics will  improve if Canada's carbon price climbs over time as the Justin Trudeau Government has foreshadowed 19.

The IEA has done a report on retro-fitting coal-fired infrastructure with CCS in China, which the World Coal Association reported on in June 2016 20.

China's coal-fired power stations increased in efficiency over the last 10 years by 6%, in any event. If the retro-fitting were carried out, 85% of 85 billion tonnes of CO2-e emissions a year would be captured, transported and stored. That would come from around 310 gigawatts of capacity, roughly half of China's electricity generation. The issue is cost, which the IEA considers to be tractable. That would depend on a number of assumptions holding, such as the availability of suitable sites for underground storage of COand the technical readiness of the CO2 capture plant.

In April 2017 the WCA posted an opinion piece on CCS 21, as an essential contribution to the global climate change response. 

Brad Page, CEO of the Global CCS Institute reports that industrial processes account for approximately 25% of global emissions: “Energy efficiency is relevant but the main, perhaps only, technology to address this problem is carbon capture and storage (CCS). Renewables offer very limited potential in this area.”

At issue is the IEA forecast that fossil fuels will still meet 75% of primary energy demand in 2040, and that most existing coal-fired electricity plants will still be operating in 30 years’ time. Carbon Tracker has reported more than 2000 new plants planned for construction by 2030.

Given that, the Paris Agreement target of +2C is unachievable unless the highest-efficiency electricity generation plants are deployed, and CCS. 

Fifteen large-scale CCS projects are operating around the world, capturing and storing 28 Mt of CO2 every year. A further 7 CCS projects are under construction, and when operating, will raise CCS to 40 Mt a year. Small beginnings but the potential is clear.

Carbon fixation

This technology refers to the use of CO2 as a feedstock in the chemicals industry. In New Zealand, an area of application is the use of CO2 along with natural gas in the manufacture of methyl alcohol or methanol 22. Depending on the particular chemical process adopted, CO2 forms around 16% of the feed. 

Methanol is used internationally as an industrial solvent, and as an input, for example into the plastics industry, and as an additive to improve the octane rating of petrol. In the latter case, the CO2 is released again into the atmosphere, and, so, is an example of the recycling of carbon.

Another example is the manufacture of urea (for fertiliser) which is produced from the reaction of ammonia with CO2.


  1. http://www.iea.org/newsroomandevents/pressreleases/2015/december/global-coal-demand-stalls-after-more-than-a-decade-of-relentless-growth.html
  2. https://www.chinadialogue.net/article/show/single/en/8780-China-s-coal-consumption-and-CO2-emissions-What-do-we-really-know-
  3. http://www.switchenergyproject.com/
  4. http://www.radionz.co.nz/news/business/317177/bioenergy-sector-concedes-heat-still-left-in-coal-industry
  5. https://www.fonterra.com/nz/en/About/Our+Strategy/Fonterra+and+energy+use
  6. http://www.miscanthus.co.nz/ 
  7. http://www.world-nuclear.org/information-library/country-profiles/countries-a-f/france.aspx
  8. http://www.iea.org/publications/freepublications/publication/technology-roadmap-nuclear-energy-2015-.html
  9. http://www.globalconstructionreview.com/markets/japan-plans-dash-co7al-43-statio7ns-12-yea7rs/
  10. https://cna.ca/news/germany-replaces-nuclear-coal-ghgs-skyrocket/
  11. http://www.worldcoal.org/reducing-co2-emissions/platform-accelerating-coal-efficiency
  12. http://www.crl.co.nz/services/technology/technology.htm
  13. https://www.iea.org/publications/freepublications/publication/CoGeneration_RenewablesSolutionsforaLowCarbonEnergyFuture.pdf
  14. http://alstomenergy.gepower.com/products-services/product-catalogue/power-generation/coal-and-oil-power/co2-capture-systems-ccs/co2-capture-oxy-combustion-technology/
  15. http://www.mbie.govt.nz/info-services/sectors-industries/energy/energy-efficiency-environment/documents-library/ccs-docs/ccs-nz-carbon-capture-summary-report-2011%20-PDF%20510%20KB.pdf
  16. http://www.co2crc.com.au/otway-research-facility/
  17. http://www.miningweekly.com/article/bhp-billiton-funds-carbon-capture-and-storage-research-in-china-2016-06-06
  18. http://www.nytimes.com/2016/03/30/business/energy-environment/technology-to-make-clean-energy-from-coal-is-stumbling-in-practice.html
  19. http://www/cbc.ca/news/canada/saskatchewan/saskatchewan-canada-reach-equivalency-deal-on-coal-fired-power-plants-1.3870843

  20. https://www.iea.org/publications/insights/insightpublications/ReadyforCCSRetrofit.pdf
  21. https://www.worldcoal.org/beyond-hele-why-ccsimperative-now
  22. https://www.methanex.com/location/new-zealand

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