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    IEA: Replacing coal as an energy source will cost US$6 trillion


    November 15, 2022 - CE Noticias Financieras

     

      Paris, Nov. 15. Replacing the use of coal to generate electricity will cost 6 trillion dollars and "will not be easy," as it will require a "rapid financial mobilization" to close old plants and implement alternative energies, said Tuesday the International Energy Agency (IEA).

      In a report on how to achieve zero carbon emissions by 2050 with the current use of coal, the agency details the extent of the use of this fossil fuel and the challenges of eliminating it to achieve the goal.

      Coal is the largest source of energy-related CO2 emissions (the main greenhouse culprit), at 15 billion tons in 2021, so "the world must act quickly" to reduce those emissions "significantly to avoid further climate impacts," the document warns.

      "Coal is both the largest source of CO2 emissions in the energy sector and also the largest source of electricity generation in the world," reminds IEA executive director Fatih Birol.

      And he insists that, although countries are expanding clean energy in the face of the current energy crisis, "what to do with the huge amount of coal-related assets is an unresolved problem."

      Global coal demand rose in 2021 (after the 2020 decline due to the pandemic) to 5.65 billion tons equivalent.

      The power sector is the main user of this fuel, 65 % of the total, with which 36 % of the world's electricity was produced in 2021, according to IEA data.

      In 2022 this use has increased (by 10 % in India and 15 % in the European Union, for example) due to high gas prices and in order to ensure energy security because of the war in Ukraine, although the agency believes that this will be a short-lived phenomenon.

      In developed countries, the use of coal to generate electricity will fall by 75 % by 2030, while in developing nations there will be a peak in 2025 and thereafter it will start to decline.

      In total, countries have announced commitments to reduce coal use for power generation by 20% by 2030, which is a "significant step forward," according to the IEA.

      The report insists that the transition away from coal (either by replacing it or by using technologies to reduce or capture emissions) can be achieved without significantly increasing costs to consumers.

      6 TRILLION INVESTMENTS

      "Investments of $6 trillion are needed to replace coal, but these costs are more than offset by lower energy bills" for operators, he adds.

      Much of that money will be needed to bring alternative energy sources into service, which are expected to be renewables (90%) and nuclear (8%).

      The IEA warns of two major obstacles to cutting coal use in power generation: many power plants in Asia are relatively new (13 years on average in China and Indonesia and only eight years in Vietnam) and their operators have not recovered their investment, and in some Asian countries coal mining has a significant weight in GDP and employment.

      For the closure or transformation of these plants, it proposes measures such as government regulation (used in China), increasing the price of emissions or financial incentives for closure or transformation to another less polluting fuel.

      The report also studies the elimination or substitution of coal in heavy industry (steel and cement, above all), which uses 30% of the world's coal.

      This is a sector in which emissions "must fall dramatically" to achieve the 2015 Paris Agreement targets, it notes.

      Greater efficiency, use of alternative fuels -such as hydrogen- and the use of new technologies not yet available on the market are some of the options open to this sector. EFE

      rcf/atc/psh

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