South Africa, the world’s seventh-largest coal producer, faces a climate challenge that has largely flown under the radar: methane emissions from coal mines. (Delwyn Verasamy/M&G)
What a difference a year makes. Twelve months ago, coal miners might not have been able to make the case for their survival, what with the green energy transition pushing them further into irrelevance.
After a year of energy market volatility lit a fire under demand for coal, lobbyists of the commodity were able to attend this year’s Mining Indaba a little more bullish. However, with coal demand set to ease, their recent popularity is likely short-lived.
Speaking at the conference on Wednesday, Thungela chief executive July Ndlovu was firm in his belief that coal would continue to play an important role in the global energy mix.
“Do not underestimate that in the face of insecure energy supply, any rational government and policymaker needing to supply security of energy and affordability to their nations realise the tenant that was articulated in Paris, which says that you need more fuels. And coal has to be a part of that,” said Ndlovu, who is the chair of the World Coal Association (WCA).
This is after Russia’s war against Ukraine severely disrupted Europe’s energy supply, and saw some countries in the region return to coal fired generation. Higher demand for coal resulted in prices soaring to record levels. Future demand, according to coal lobbyists attending the conference, will be driven by energy security concerns rather than by the green energy transition alone.
Michelle Manook, chief executive of the WCA, said watching Europe bring coal back underlines the need for affordability and reliability in the energy mix. “I feel that what we have had over the last three and a half years is really an ambition versus a reality. And that gap now, we just can’t ignore,” she said.
“We’re all affected by it … Something like the Russia-Ukraine crisis has stress tested our resolve on the energy transition and our actual assumptions. So the time now is really for pragmatism and returning to the basics.”
Ndlovu and Manook’s remarks came a day after outgoing Eskom chief executive André de Ruyter assured Mining Indaba attendees that the power utility is not anti-coal.
“There is this narrative that Eskom management and my leadership has been anti-coal, that we want to move away from coal. And the fact of the matter is that it is devoid of all truth,” he said in a discussion with Minerals Council chief executive Roger Baxter.
“We will remain a large consumer of coal for a very long period of time to come.”
That said, the green energy transition is unavoidable — and South Africa should not be left behind, De Ruyter suggested. “Again, you can rail about some evil global North conspiracy against South Africa. I think the world doesn’t really care about entering into conspiracies of this nature,” he said.
“It is all about how does the world decarbonise responsibly. And you can try and resist it or you can try and embrace it.”
After a protracted surge, coal prices have eased significantly at the start of this month. According to Henk Langenhoven, chief economist at the Minerals Council South Africa, coal demand will stabilise and disappear over time.
Asia, however, will continue to be an important market for South Africa’s coal miners, like Thungela. Last year, the International Energy Agency forecast that the largest increases in coal burn from 2022 to 2025 will be by China, India and Southeast Asia.
To hold onto their relevance in the green energy future, coal bulls have touted the importance of investing in so-called clean coal technologies, like carbon capture and storage (CCS).
In an interview with the Mail & Guardian earlier this week, Ndlovu said the challenge for policymakers going forward will be finding ways to make coal cleaner. “And for that reason, we actually think there is a compelling business case for coal in those markets.”
But according to Robyn Hugo, director of climate change engagement at shareholder activism organisation Just Share, “clean coal” is an “extremely broad and nebulous phrase is used to create the false impression that the most unacceptable risks of coal can be appropriately mitigated so that coal can continue to be relied on as an energy source for the foreseeable future”.
Hugo noted that, despite decades of experimentation, none of the many so-called pilot projects have been successful in the development of commercially viable CCS at scale.
Even if these were commercially viable, clean coal technologies would make coal-fired power generation significantly more expensive than it is now — and it is already more expensive than other power generation options, Hugo added. “Power generation is the easiest and cheapest sector to decarbonise,” she said.
“It doesn’t make sense — economic or otherwise — to support the expenditure of millions of dollars of capital on further CCS experimentation, when the solutions to our energy challenges are clear. The need to act is urgent and the funding being pumped into CCS could be transformational in supporting workers and communities in Mpumalanga as we transition to a low-carbon economy.”
Hugo cited the Institute for Energy Economics & Financial Analysis, which has pointed out that “High thermal coal prices will kill long-term demand faster as it makes coal-fired power even more expensive compared with ever-cheaper renewable energy.”
Even if coal demand remains quite strong, the trajectory is downwards, she said.
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