With the COP28 summit behind us, the world’s climate leaders have targeted the coal industry as their latest mark in the global energy transition. A joint effort report paints a bleak picture of the international goal to limit the temperature increase to 1.5 degrees Celsius by 2030.
Coal being a primary emphasis of the COP28 talks, the report indicates that the coal industry is in for a major upheaval. The World Resources Institute (WRI) calls for coal to be phased out in electricity production. Is such a drastic, rapid cessation of coal production a viable option for the economy? Energy-aware investors must pay close attention to this historic conference in Dubai to find out.
COP28 Demands Coal Usage Must be Cut Seven Times Over
The recent report presents lofty demands for accelerating climate efforts. Most prominent among these enormous efforts is to phase out coal seven times faster than the current rate. In order to meet the target emissions goal, the WRI report indicates that roughly 240 coal-fired power plants would need to be shut down per year until 2030. However, this projection does not account for new power plants being built, which would demand a greater number of plants being shut down per year to accommodate the growth.
This dramatic shutdown of coal-fueled power plants would be devastating to the coal industry and the power supply. Climate leaders are naturally pushing for a hasty expansion of renewable energy sources like solar, wind, and hydroelectric electricity generation to replace the energy loss.
As an alternative option to combat the economic devastation caused by coal’s early retirement, the WRI suggests that solar and wind power must increase by 24% annually to remain on track for the 2030 carbon emissions goal. The WRI report indicates that these two alternative energy sources have steadily grown at 14% on average in recent years, falling short of the necessary growth rate.
The Paris Agreement: a Key Talking Point at COP28
The Paris Agreement of COP21, adopted by 196 parties in 2015, Remains the pivotal point of conversation throughout the COP28 talks this year. In the original agreement, nations and entities across the globe agreed to take drastic measures to limit global temperatures to an increase of 1.5 degrees Celsius by 2030. This goal has been the linchpin of conversations during this year’s climate summit in Dubai.
The historic agreement in 2015 has set a swift pace for nations to get on board with environmental efforts and make drastic changes in energy production. However, climate leaders are now saying the changes will not be sufficient to meet the looming 2030 deadline.
The challenges facing policymakers are both vast and innumerable. First and foremost, the vast majority of electricity generated in the United States alone comes from fossil fuels. Fossil fuels make up roughly 79% of American Energy, according to the Center for Sustainable Systems.
The coal industry alone represents a massive portion of the energy generated within the United States. Rapidly shutting down power plants suggested by the WRI could cripple America’s power supply and leave thousands upon thousands out of work.
UN Gives a Stern Warning
The same day the WRI report was released, the United Nations released its own analysis of climate change progress. The UN climate report similarly claims climate change progress is insufficient and must drastically ramp up to remain on track for the 2030 goal set by the Paris Agreement. The UN report claims drastic and immediate action must be taken to advance the global energy transition in time.
Executive Secretary of UN Climate Change Simon Stiell said, “Today’s report shows that governments combined are taking baby steps to avert the climate crisis. And it shows why governments must make bold strides forward at COP28 in Dubai to get on track.”
In a staggering statement, the UN report indicates that greenhouse gas emissions must be cut by 43% compared to 2019. The United Nations climate panel states these measures will be critical to reaching the limitations goals by 2030, with coal being a primary concern.
Pope Francis II Calls Climate Change an “Offense Against God.”
Adding the voice of the Vatican into the mix, Pope Francis II called for an immediate end to fossil fuels at COP28. While the Pope was prevented from joining the conference in person due to health concerns, a cardinal read his heated statements in proxy. The head of the Catholic Church called for a sweeping to coal, oil, and gas to change the life of the planet.
“The destruction of the valuable environment is an offense against God,” said the papal representation. This statement is the first time in the church’s history that the Pope has joined the Conference of the Parties in speaking via Cardinal Pietro Parolin.
The heart of the papal statement calls for a lifestyle change and indicates the need for major political intervention.
This unprecedented statement by the 86-year-old Catholic leader certainly makes this year’s COP summit one for the record books.
The Coal Industry
Having been the Cornerstone of the global economy and energy production for more than a century, the coal industry represents more than just Energy production. Because of its abundant supply and relatively low processing cost, coal mining and production have been a staple for thousands of communities worldwide.
Despite its historical relevance and economic significance, the coal industry has become increasingly unpopular due to its relation to greenhouse gas emissions, like carbon dioxide (CO2). Additionally, coal mining boasts notoriously hazardous working conditions, leading to some of the most tragic disasters in industrial history.
Regardless of its challenges, the coal industry remains a massive industry, encompassing countless occupations, communities, and economic growth across the nations.
Immediate Action Will Have Massive Economic Impact
If the coal industry were to and at the rate the WRI report requires, it has the potential to destabilize energy production. Naturally, rapid change in any sector faces a number of challenges, particularly to the communities that rely on coal production for their livelihood.
A few of the challenges policymakers would potentially face are:
- Economic dangers: Because coal represents a massive portion of the workforce, countless people would be out of a job or forced into a new occupation requiring months or years of training. The economic impact could have untold ramifications, leading to widespread economic instability.
- The power grid: In the United States, coal generated 18% of the electricity used in 2022, according to the Energy Information Administration. Removing that significant portion of the power supply could lead to an unstable grid.
- Transition issues: While great leaps and bounds have been made in renewable energy technology, the current system is insufficient to maintain the world’s energy demands.
These are just a few of the challenges policymakers are open to addressing at the COP28 conference this year.
Is Coal the Culprit?
Earlier in the conference, Senator John Kerry deemed coal the world’s “dirtiest fuel.” The long-time climate advocate claims Cole leads to twice as many deaths as other airborne pollutants. He further called for the cessation of any further permits for coal power plants in the world, claiming it makes a significant change for global health.
Coal-fueled power plants the carbonate for 35% of dangerous Mercury emissions in the United States, according to the National Resource Defense Council. Additionally, burning coal releases a number of pollutants said to contribute to climate change.
Of course, fossil fuels like oil, coal, and natural gas have been on the chopping block for climate activists for decades. As the world transitions to renewable energy, alternative sources, and new power-generating technologies, the climate leaders at COP28 would argue that coal is among the most dangerous energy sources.
US Commits to Cease Coal Production During COP28
As part of their response to the climate summit talks, the U.S. has agreed to spend $450 million to help coal mining communities transition to cleaner energy. These funds would help establish renewable energy infrastructure on current coal mining lands and areas, in an effort to stimulate economic stability and provide a much-needed replacement for coal-powered electricity.
While this pledge by President Biden sounds promising, it could be years or even decades before coal mining towns can recover economically. The truth is new renewable energy facilities take time to build, require intensive labor to sustain, and have exorbitant costs to train the workforce. This timeline could fall short of the requests the WRI report suggests are necessary.
Rockafeller Foundation Stands Behind Cutting Coal Early to Meet Target Emissions
In the private sector, the Rockefeller Foundation throws in its hat with the bed to end coal production early. Although the world’s most famous family foundation recognizes the challenges of rapid transition, the Rockefeller Foundation wholeheartedly agrees with its necessity.
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