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The Kyoto implications for coal: the new challenges

By Ron Knapp - posted Saturday, 15 July 2000


Inclusion of clean coal technology projects under the Kyoto Protocol CDM would also open the way for infrastructure projects by foreign countries/companies and increase the efficiency of the coal sector within non-Annex B Parties such as China and India (two of the world's top coal consumers). This would mean more energy per tonne of coal consumed, less local pollution and foreign investors gaining credits for the reduction in emissions. Increasing coal combustion efficiency from 30% to 40% reduces CO2 emissions by 25% for the same amount of electricity.

The World Coal Institute encourages recognition of the benefits from coal efficiency enhancement and coal bed methane projects and support for coverage of such projects within the Kyoto CDM.

Coal has the capability to continue to supply a major share of the world’s energy needs and we have the technology available now to make early, major improvements in the critical areas of efficiency and environmental impacts, particularly in many developing countries.

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The risks for coal

Coal’s future is dependent upon a number of factors, including political risk and community acceptance. In the space of less than a decade we have seen the emergence of a carbon-constrained world – tentative steps, but clearly part of the mainstream international political agenda – a situation not perceived to be remotely possible at the start of the 1990s.

Carbon constraints will continue to emerge in a number of major global coal markets, particularly within the EU-15 and other developed Annex B countries such as Australia, Canada, Japan, Norway and USA. In some cases these "carbon constraints" will be in the form of reserved market shares or financial incentives for zero or low-carbon energy alternatives.

Countries with GHG emissions targets under the Kyoto Protocol (Annex B countries) account for about 65% of global coal imports – the EU-15 (around 30%) and Japan (27-28%) are taking significant policy interest in early action to introduce limits on GHG emissions; some have made political commitments to ratify the Kyoto Protocol.

Implications for the international coal trade

In 1998, the international hard coal trade was 524 Mt. The top seven coal export countries covered 85% of the global coal trade: Australia, RSA, Indonesia, USA, Canada, PRC and Colombia (Russia and Poland accounted for a further 10%).

About 36% (189 Mt) of coal exports are destined for the steel industry with the remainder for energy, principally for the generation of electricity, and other industrial energy requirements.

The thermal coal trade represents about 334 Mt (64%) of total traded coal – and Annex B destinations 2/3rds of this thermal coal trade.

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The RSA, Indonesia, China and Colombia are more exposed to the impact of the Kyoto Protocol than the three leading Annex B export countries due to coal type. These four leading developing country coal exporters have high exposure to thermal markets: Colombia 95+%, RSA 90%, Indonesia 90% and China 85%.

The RSA exports more than 60% of its thermal coal to the vulnerable EU-15 destinations. Colombia exports 70% to the EU-1 and has further Annex B exposure in the US market (10%). Almost all of Colombia’s export tonnage enters the more vulnerable thermal-coal market.

China has an overall Annex B coal exposure of 48% - but slightly lower (45%) in the thermal sector. Indonesia’s thermal/steam coal exports have achieved a stronger customer base with only about 40% being shipped to Annex B destinations.

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This is an edited extract of a paper resented to the ACA 2000 Conference, Gold Coast, Australia, June 2000.



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About the Author

Ron Knapp is chief executive of the World Coal Institute.

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