Coal Power Plant

The Coal Conundrum: Diverging Paths for Developing and Developed Economies

Date: May 31, 2024.
Audio Reading Time:

The global energy landscape is witnessing a stark divide between developing and developed economies when it comes to the future of coal-fired power generation. While Europe has made significant strides in phasing out coal to meet climate goals, countries like China are doubling down on this fossil fuel, driven by energy security concerns and economic interests.

China, the world's largest consumer and producer of coal, continues to embrace this abundant and affordable energy source, despite global efforts to reduce greenhouse gas emissions.

In 2022, China's coal-fired power generation grew by around 2%, and the country added 11 gigawatts (GW) of new coal-fired capacity to its grid. This trend is driven by a combination of factors, including energy security concerns, local economic interests, and the need for dispatchable power sources to complement the growing share of variable renewable energy.

India, another major developing economy, has also witnessed a surge in coal-fired power generation. Extreme heatwaves in the summer of 2022 led to a significant year-on-year increase of more than 8.5%, with a 20% increase in coal-fired generation from April through July compared to the same period in the previous year.

The country's reliance on coal is deeply rooted in its pursuit of economic growth and the need to provide affordable and reliable energy to its vast population.

China's coal growth

These developing economies argue that their primary responsibility is to lift millions of people out of poverty and ensure access to affordable energy, even if it means a temporary increase in greenhouse gas emissions.

They contend that developed nations, which have historically contributed the most to global emissions, should bear the brunt of the burden in transitioning to cleaner energy sources.

The European Union has expressed concern over the expansion of China's coal industry

The European Union's climate chief Frans Timmermans has expressed concern over the expansion of China's coal industry, with the building of new coal-fired power plants in recent years.

According to the Associated Press report, Timmermans said the following: "And that seems to be in a contradiction and it is in contradiction," referring to China's plans to expand renewable energy sources like wind and solar while also constructing more coal-fired plants. He acknowledged China's "anxiety caused by potential blackouts" but highlighted the contradictory nature of increasing coal capacity.

The report does not mention specific statements from Europe's national governments criticizing China's coal growth. However, it notes that some European and American officials have called on China to adopt more ambitious emissions reduction targets, as China accounts for over 26% of global emissions.

EU's coal phase-out

In stark contrast to the developing world's embrace of coal, developed economies, particularly in Europe, are accelerating their efforts to phase out this polluting energy source. The EU has set ambitious targets to reduce greenhouse gas emissions and transition to a more sustainable energy mix.

In 2023, coal generation in the EU fell by a record 26%, accounting for just 12% of the bloc's electricity mix. This decline was driven by a combination of factors, including the rise of renewable energy sources, such as wind and solar, and the closure of aging coal-fired power plants.

Germany, once a major consumer of coal, has brought forward its coal phase-out date from 2038 to 2030 for plants in the western state of North Rhine-Westphalia.

The EU's coal phase-out has been a gradual process

The United Kingdom and several other EU countries have also taken measures to enhance security of electricity supply amid low nuclear availability and tight gas markets, while simultaneously phasing out coal.

The Netherlands, for instance, has removed the 35% production cap on coal-fired plants, adding another 3.8 GW of capacity.

However, it is important to note that the EU's coal phase-out has been a gradual process, and some countries have temporarily resorted to coal to address energy security concerns amid Russia's invasion of Ukraine and the ongoing energy crisis.

The coal conundrum

The diverging paths of developing and developed economies regarding coal-fired power generation highlight the complex dilemma of balancing energy needs with climate goals.

Developing economies, driven by the imperative of economic growth and poverty alleviation, view coal as a reliable and affordable energy source, at least in the short term. They argue that their emissions should be viewed through the lens of their development needs and historical contributions to global emissions.

On the other hand, developed economies, with their higher economic capabilities and greater historical responsibility for emissions, are leading the charge in phasing out coal and transitioning to cleaner energy sources.

Coal Mine
Developing economies, driven by the imperative of economic growth and poverty alleviation, view coal as a reliable and affordable energy source, at least in the short term

However, they face challenges in ensuring energy security and affordability during this transition, as evidenced by the temporary resurgence of coal in some European countries during the recent energy crisis.

The way forward lies in finding a delicate balance between meeting the energy needs of developing economies and achieving global climate goals. This requires a concerted effort from all stakeholders, including the following initiatives:

--Developed economies providing financial and technological support to developing nations to accelerate their transition to renewable energy sources.

--Developing economies embracing a more ambitious and accelerated timeline for transitioning away from coal, while ensuring energy access and affordability for their populations.

--Global collaboration and knowledge-sharing to develop and deploy clean energy technologies, such as carbon capture and storage, advanced nuclear power, and green hydrogen.

--Implementing effective carbon pricing mechanisms and market-based incentives to make renewable energy more competitive and discourage the use of coal.

Ultimately, the coal conundrum highlights the interconnectedness of energy, economic development, and climate change.

Addressing this challenge requires a global effort, with both developing and developed economies recognizing their shared responsibility in securing a sustainable energy future for all.

Source TA, Photo: Shutterstock