Around 500kg of coal is required to produce one tonne of steel.
As Europe, and more broadly the OECD, moves away at different paces from coal for power generation, coal production and use is forecasted to remain significant especially in the East. Expanding economic growth has resulted in a rise of coal demand by 1% in 2017 according to the International Energy Agency, with this trend set to continue due to growth in India, China, Korea, Russia, and Indonesia.
The irony of a parallel growth in renewables and in coal consumption is not lost on producers who see that the drive for clean energy coupled with urbanization has led to somewhat of an Asian coal boom. This has two main reasons: firstly, developing and growing economies need to fulfil their promise for cheap and reliable access to energy for all and coal remains the short-term solution to this; secondly, urbanization has led to an increasing use of steel and cement, both of which require coal as part of their processing.
The media, politicians and environmental activists all seem polarized around the issue of coal for the generation of electricity and the emissions associated to that process. But rarely is coal discussed away from the emotionally charged conversation around climate change. And yet, it is essential to be able to take a step back and look at the realities of coal markets and the varied uses of coal. Yes, most of the coal mined is serving the electricity sector but the volumes of coal required for other activities are not negligible and neither are their carbon footprint.
Numbers vary slightly, but it is commonly agreed that approximately 10% of global coal production is destined to the steel manufacturing sector with around 500kg of coal required to produce one tonne of steel. Close to 73% of steel manufactured today is manufactured in such fashion. It also takes about 200kg of coal to produce one tonne of cement and about 300–400kg of cement is needed to produce one cubic metre of concrete.
The tension between climate change imperatives and the need for nations to pursue economic growth is being felt in Asia more than anywhere else in the world. Developing economies have a right to affordable and clean energy. Currently coal provides the bulk of this, and only with investment in technology will this energy be cleaner. Building infrastructure is critical to fostering economic growth, again without steel or cement this will be a challenge. We need to work on how to make the use of coal in these processes efficient and cleaner.
But climate change is not the be-all and end-all. Yes, there is an inevitable imperative for our planet to reduce carbon emissions. But is it as simple as that? We would argue that whilst the world tries to wean itself off coal, we still have a significant responsibility to ensure that what coal is being used comes from responsible producers, no matter what the end use of that coal. We have a duty to communities living around coal mining operations to ensure that those operations respect best environmental, social and governance (ESG) standards.
Other commodities are seeing growing scrutiny over their operations because of their link to a low carbon economy (such as cobalt, lithium and other rare earth metals) but coal seems to be less scrutinized as stakeholders want to ‘wash their hands clean’. By refusing to acknowledge the realities of coal usage, especially in Asia, we are doing a disservice to those communities impacted by coal mining.
It is high time that we started looking at coal holistically and accepting that coal for power generation, whilst declining, will not decline at a sufficiently rapid pace in some parts of the world to reverse the trend on climate change. Investors should be looking not at shunning coal and burying their head in the sand but using their power to ensure that what coal is being produced is produced responsibly. That influence can be used on companies sourcing coal for power generation, steel and cement manufacturing to find new technologies to significantly reduce their environmental impact.
Ultimately, pressure to source coal responsibly will only increase as end users of products using coal want to know more about the exact provenance of the raw materials. For instance, car manufacturers want to be able to tell their consumers that their entire supply chain — and this includes coal — is responsible, and that the product they are buying is free from human rights violations, or that the exact emissions associated to its manufacturing can be known. To do this they will start asking their own suppliers to demonstrate they have measured and monitored the performance of their coal suppliers.
To remain ahead of the game, to remain competitive in the market, sellers of coal need to be in a position to reassure buyers that the coal they are selling them came from a responsible mine.
Bettercoal is currently the only organization which measures the ESG performance of coal sites throughout the world with over 20 mining companies (more than 35 sites) having undergone a rigorous assessment process. Using our assessment process, Members of our organization can truly monitor the ESG performance of the companies they are sourcing coal from.
By Anne-Claire Howard, Executive Director, Bettercoal, UK