Part of the transition to renewables include phasing out coal to avoid the worst effects of climate change. Environmentalists are keen to see that the phasing out of coal move forward as quickly as possible. Already, over 40 banks worldwide have stopped financing new coal mines and/or coal plants directly, through project finance or dedicated finance in any part of the world.
Germany, the most coal-dependent country in Europe, plans to phase out all of its coal-fired power station by 2038. The country closed its remaining black coal mines last year, but its import of coal is on the rise. The country is expected to import 45 million tonnes of hard coal this year, up by 1.4 percent from 2018 as closure of domestic mines reduces domestic supply.
Across Europe, coal generation has dropped at a 5 percent average annual pace over the past 5 years. In US, coal-power generation decreased by about a third in the 7 years through 2017. South Africa’s coal production output are dropping too but it is more as a result of low investment in new coal mining capacity and older mines reaching the end of their lives.
But while the noise about phasing out coal keeps trending, Asian countries continue to build new coal-fired plants and expects coal-fired generation to keep rising up to 2027; 13 of the top 20 countries building new coal capacity are Asian, led by China, India, Vietnam, Indonesia and Bangladesh. India added 152 GW of coal power capacity from 2006 to 2017, second only to China. Vietnam is also considered a major coal hotspot, with large numbers of proposed projects in active development, largely financed by China, Japan and Korea.
Here in Nigeria, there are moves to build new coal-fired plants. Speaking recently at the 55th Annual International Conference and Exhibition of the Nigerian Mining and Geoscience Society (NMGS) in Enugu, Abubakar Bawa, Minister of Mines and Steel Development, said the Federal Government is committed to building coal-fired electricity by 2020 and plans to grow the coal-fired electricity generation to about 30 per cent of total energy generation in the country.
Experts say that diversifying the Nigeria’s energy mix to include coal-to-power projects can add an additional 4,300MW to its electricity power generation for 20 years with its proven coal deposits estimated at about 2.8 billion metric tons.
“At the calorific value of coal in the Anambra basin (Enugu, Anambra, Benue and Kogi), 3.2 million tonnes of coal is required to generate 1000MW per year. A typical coal fired power plant is designed to last for a minimum of 20 years. This means that 2.8 billion metric tonnes can sustain 4375 MW”, Bath Nnaji, former Minister of Power and Chairman, Geometric Power Limited told Businessday.
It is estimated that a-1,000MW coal-fired power plant costs about $1.7 million to $2 million to set up and it takes approximately 3 years to set up.
Elsewhere in Mexico, global trader, Glencore just won contracts worth around $520 million to supply 4.94 million tonnes of coal to Mexico, state-run power utility, the country’s Federal Electricity Commission (CFE) said. Glencore won all 12 auctions held to supply a CFE plant in the southwestern state of Guerrero with the coal, for delivery between May and December of this year.
And there is a new innovation. Royal Dutch Shell just signed a long-term deal with Tokyo Gas that partly uses coal-linked indexation for the pricing. Analysts say pricing an LNG contract to coal is a kind of a risk management strategy for companies competing with coal-fired power generation and would be attractive in markets with solid shares of coal generation, including the Asian markets Japan, China, and India.
FRANK UZUEGBUNAM
