Fact Check: Outlook for Coal Not Quite What it Used to Be

Coal pollution in China

This is a guest post by Benjamin Thibault and Andrew Read of the Pembina Institute

Coal Association of Canada (CAC) president, Robin Campbell is currently touring Alberta with a series of “ACT information meetings.” He is making a number of assertions about the province’s coal industry and Alberta’s Climate Leadership Plan. We feel that some of the points being raised by Campbell need to be addressed. This is the second blog post to address those claims and to reiterate the importance of Alberta’s pledge to phase out coal power pollution.
As our first fact check showed, the CAC has been disseminating some misinformation on coal’s contribution to air pollution in Alberta. Another bucket of inaccuracies centres around the long-term future of coal — both locally and internationally — and the potential for coal with carbon capture and storage (CCS) in particular.

The outlook for coal is not what it once was

According to an Edson Leader article reporting the kick-off of the CAC’s Alberta tour, “Campbell said the world will continue to burn coal and make steel and that's not going to stop.” He goes on to say that Alberta has “enough coal to employ four more generations of miners.”

In contrast to the flowery vision of a 21st century coal boom, the last few years have brought bad news for coal at every turn. Demand has collapsed across much of the developed world, as seen in the 45-year low for coal power production in the United States. According to the International Energy Agency, even in countries like China — oft-touted as coal’s hope for the future — “coal demand is sputtering” and renewables are “significantly curtailing coal power generation, driven not only by energy security and climate concerns but also by efforts to reduce local pollution.”

Analysts have predicted that coal consumption has peaked and the recent declines will only continue with environmental constraints and the renewed global commitment to address climate change.

Clearly, the global trends do not look kindly on the coal industry.

Clean coal myth redux 

“One of the biggest myths is that coal cannot be burned clean,” Campbell told the Leader. “We can burn it clean.” But the realities of so-called “clean coal” deeply undermine the concept, which has been championed strongly by the flagging U.S. coal industry.

Carbon capture and storage (CCS), for example, is very expensive technology used to burn some of the world’s fossil fuels for energy with much lower emissions. The process helps reduce both air pollution and greenhouse gas (GHG) emissions compared to installations that burn freely. But questions addressing how clean is “clean” and the associated costs continue to make the benefits of the technology uncertain.

CCS may play a critical role in the future in helping to decarbonize industrial processes that are GHG intensive; however, its usefulness in coal-fired electricity appears very limited. This is due to poor economic performance at a number of commercial-scale demonstration projects and the fact that low carbon alternatives for producing electricity are readily, and more economically, available.

Challenges with the deployment of CCS technology are evident from Canada’s flagship coal project, SaskPower’s Boundary Dam 3 refurbishment. The project received $240 million in federal subsidies and enjoys captive ratepayers who must absorb project costs and cost overruns through their electricity bills. The project has suffered from ongoing operational challenges, which have been linked to issues with the original design.

When operations began in 2014, SaskPower representatives — and even Premier Brad Wall — touted their successes. It was some time before it was revealed that the facility started by running at only 40 per cent of capacity, so SaskPower was made to pay penalties to Cenovus for failing to provide the CO2 that the oil company was promised to help get more oil out of the ground.

Difficulties are accumulating in other attempts at applying CCS to coal as well. In Mississippi, the Kemper County power plant has seen major cost overruns, bringing the latest total to US$6.6 billion — more than double initial projections. Much of this cost overrun will fall to electricity customers. Like the CAC, the coal industry has beenpointing to plants like Kemper to demonstrate the possibilities of these technologies. But with over two years in delays and more cost overruns possible, it is unclear how this remains a useful example.

Meanwhile, in the U.K. — which Campbell points to as an example of where CCS is being applied to power generation — government cancelled its nearly $2-billion competition for CCS technology back in November, just days after the U.K. announced that it would phase out dirty coal by 2025. Despite Campbell’s comments, the U.K. is actually offering a model for a coal phase-out rather than for “clean coal.”
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Even the coal industry appears to be conflicted on the likelihood that coal CCS will be viable anytime soon. Since 2012, Canadian coal plants have faced an obligation to reduce their emissions when they reach their 50-year useful-life limit. While they could keep operating if they deployed CCS, observers on all sides have assumed they would close instead.

Similarly, the Alberta government announced in its Climate Leadership Plan last November that there would be “no pollution from coal-fired electricity generation by 2030.” The province is allowing for “using technology to produce zero pollution.” Yet, according to Campbell’s comments, the “NDP government [is] planning to shut down all coal-fired [plants] by 2030.” Campbell may be inadvertently revealing that — like many observers and industry itself — “clean coal” technology is not on course to become economically feasible, even 15 years out. At least, not without massive government subsidy.

CCS subsidies for coal: been there, (not) done that

There is, of course, a potential solution to CCS’s costliness: public funding. “We would like the government to spend money on research and technology to reduce emissions then patent it and sell the technology worldwide,” Campbell said. “Canada can become a leader in clean burning coal technology.” 

Whatever the merits of government-owned patents for “clean coal” technology, Campbell knows very well that massive government subsidies for coal power CCS projects have not worked in Alberta.

The year after Campbell was first elected to government as a PC MLA, in 2008, the PC government committed $436 million to a group of companies to deploy CCS at TransAlta’s Keephills 3 coal facility. Called “Pioneer,” the project was promised another $343 million from the federal government. Despite more than three-quarters-of-a-billion dollars in pledges of public money — representing over half of the total estimated $1.4 billion project cost — the companies cancelled their plans for the project in 2012 because it was still not economic.

The only other plan for applying CCS to coal in Alberta — the Swan Hills in-situ coal gasification project, backed with a $285 million provincial pledge — was cancelled the following year.

Fool me once, Mr. Campbell.

Photo: Steel industry in Benxi, China, by Andreas Habich. 
Feature Summary: 
The last few years have brought bad news for coal at every turn. Demand has collapsed across much of the developed world and even in countries like China, coal demand is sputtering.