The coal habit is hard to kick – Valerie Karplus

MIT Sloan Asst. Prof. Valerie Karplus

MIT Sloan Asst. Prof. Valerie Karplus

From The Hill

Much has been made of the fact that growth in coal use around the world is stalling, but coal will not disappear anytime soon. While a wave of firms is exiting the coal-fired electricity sector across the global, coal is still poised to contribute to the fuel mix for a long time to come. This means that careful management of its remaining uses is more important than ever. Coal will remain important for two reasons.

First, it is still in high demand. The International Energy Agency projects that coal in power generation may drop to 36 percent by 2021, down from 41 percent in 2014, largely due to renewables and energy efficiency in China and the United States. However, this amounts to at best a flatlining, not a reduction, in demand. Second, coal has a role outside the power sector, in industrial and household demand. In developing countries, power and heat account for only 50 percent of coal use. The other 50 percent is directly burned by households or industries.

Statistics from the World Coal Association paint a clear picture of coal’s role in industrial activities, especially in construction industries that support infrastructure development. According to that group, the cement industry uses 200 kilograms of coal to produce one ton of cement, with 300 kilograms to 400 kilograms of cement needed to produce one cubic meter of concrete. Coal is also used in as an input to production of 70 percent of the world’s steel, as a raw material to make chemicals, and to make liquid fuel for transportation.

These industrial uses of coal aren’t likely to change because coal is one of the most storable and transportable fuels, and the cost of using coal does not reflect its adverse impacts. In fact, a reduction in coal use in electricity means there is even more coal available, putting downward pressure on prices and incentivizing increased use by households and industry.The side effects in terms of environment, health and worker safety of our reliance on coal are numerous, and require serious effort to manage. While mining is becoming safer, it still incurs a large number of casualties every year, many of which may go unreported. It pollutes ground water, leaches heavy metals in the soil, and its processing and combustion contributes to local air pollution and global climate change.

To the extent that policy initiatives to reduce pollution focus on air pollutants and carbon dioxide emissions from electric power, we’re ignoring a very big part of the problem. Instead of being sector specific, we need more comprehensive policy approaches to manage coal use and its environmental and health impacts. But this is easier said than done. The most cost-effective “ideal” approaches are not always the most politically workable approaches.

Ideally, the first step would be to add a surcharge on purchases of coal that account for adverse side effects caused by its extraction, processing, and use. The goal would not be to go to zero usage overnight, but we could expect to see levels that are more compatible with local and global sustainability objectives.

Read the full post at The Hill

Valerie J. Karplus is the Class of 1943 Career Development Professor and an Assistant Professor of Global Economics and Management at the MIT Sloan School of Management.

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