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Can an Economy Develop Without Coal?

David Hone's picture
Chief Climate Change Adviser, Shell International Ltd.

David Hone serves as the Chief Climate Change Advisor for Royal Dutch Shell. He combines his work with his responsibilities as a board member of the International Emissions Trading Association...

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  • Aug 5, 2014

While all fossil fuels are contributing to the accumulation of carbon dioxide in the atmosphere, coal stands apart as really problematic, not just because of its CO2 emissions today (see chart, global emissions in millions of tonnes CO2 vs. time), but because of the vast reserves waiting to be used and the tendency for an emerging economy to lock its energy system into it.

Global energy emissions

Global emissions, million tonnes CO2 from 1971 to 2010

I recently came across data relating to the potential coal resource base in just one country, Botswana, which is estimated at some 200 billion tonnes. Current recoverable reserves are of course a fraction of this amount, but just for some perspective, 200 billion tonnes of coal once used would add well over 100 billion tonnes of carbon to the atmosphere and therefore shift the cumulative total from the current 580 billion tonnes carbon to nearly 700 billion tonnes carbon; and that is just from Botswana. Fortunately Botswana has quite a small population and a relatively high GDP per capita so it is unlikely to use vast amounts of this coal for itself, but its emerging neighbours, countries like Zimbabwe, may certainly benefit. This much coal would also take a very long time to extract – even on a global basis it represents over 25 years of use at current levels of production.

This raises the question of whether a country can develop without an accessible resource base of some description, but particularly an energy resource base. A few have done so, notably Japan and perhaps the Netherlands, but many economies have developed by themselves on the back of coal or developed when others arrived and extracted more difficult resources for them, notably oil, gas and minerals. The coal examples are numerous, but start with the likes of Germany, Great Britain, the United States and Australia and include more recent examples such as China, South Africa and India. Of course strong governance and institutional capacity are also required to ensure widespread societal benefit as the resource is extracted.

Coal is a relatively easy resource to tap into and make use of. It requires little technology to get going but offers a great deal, such as electricity, railways (in the early days), heating, industry and very importantly, smelting (e.g. steel making). In the case of Great Britain and the United States coal provided the impetus for the Industrial Revolution. In the case of the latter, very easy to access oil soon followed and mobility flourished, which added enormously to the development of the continent.

But the legacy that this leaves, apart from a wealthy society, is a lock-in of the resource on which the society was built. So much infrastructure is constructed on the back of the resource that it becomes almost impossible to replace or do without, particularly if the resource is still providing value.

As developing economies emerge they too look at resources such as coal. Although natural gas is cleaner and may offer many environmental benefits over coal (including lower CO2 emissions), it requires a much higher level of infrastructure and technology to access and use, so it may not be a natural starting point. It often comes later, but in many instances it has been as well as the coal rather than instead of it. Even in the USA, the recent natural gas boom has not displaced its energy equivalent in coal extraction, rather some of the coal has shifted to the export market.

Enter the Clean Development Mechanism (CDM). The idea here was to jump the coal era and move directly to cleaner fuels or renewable energy by providing the value that the coal would have delivered as a subsidy for more advanced infrastructure. But it hasn’t quite worked that way. With limited buyers of CERs (Certified Emission Reduction units) and therefore limited provision of the necessary subsidy, the focus shifted to smaller scale projects such as rural electricity provision. These are laudable projects, but this doesn’t represent the necessary investment in large scale industrial infrastructure that the country actually needs to develop. Rooftop solar PV won’t build roads, bridges and hospitals or run steel mills and cement plants. So the economy turns to coal anyway.

This is one of the puzzles that will need to be solved for a Paris 2015 agreement to actually start to make a difference. If we can rescue a mechanism such as the CDM and have it feature in a future international agreement, it’s focus, or at least a major part of it, has to shift from small scale development projects to large scale industrial and power generation projects, but still with an emphasis on least developed economies where coal lock-in has yet to occur or is just starting.

Ed Dodge's picture
Ed Dodge on Aug 5, 2014

David, you aptly describe the challenge of attempting to move beyond fossil fuels. Coal in particularly is, and remains, the backbone of the industrial revolution. For all the effort being put forth from various corners no one has been to adequately describe how any country is able to leapfrog the use of coal in the development of industry. Going straight to wind turbines and solar panels may be adequate for home lighting but it is not a recipe for developing heavy industry, manufacturing or any serious energy intensive activities. Natural gas offers certain advantages but requires much more elaborate infrastructure. When starting from scratch coal is the natural starting point because it is relatively easy to work with.

You mention Japan and the Netherlands who developed despite having large resource bases, they made up for their lack of resources through aggressive imperialism. Sending their militaries, colonists and traders to bring resources back from foreign locations. Hardly a recipe for modern development, particularly if you don’t have anything of value to trade but do posess coal. 

donough shanahan's picture
donough shanahan on Aug 6, 2014

These are laudable projects, but this doesn’t represent the necessary investment in large scale industrial infrastructure that the country actually needs to develop.”

This is a key point that most if not all environmental groups and parties have not grasped. Despite the exciting growth rate of renewables, countries still have a large gap to fill. This means people cannot see the gaps. Recently the guardian essentiually asked why we need fracked gas. The simpliest answer of course is domestic space heating (30-40% of UK gas use). Eelctric heating is far more expensive. 
However that in itself ignores what renewables were for. Most renewables never really had a vision of providing more than electricity (except for biofuel arm perhaps; lets not talk about pie in the sky hydrogen until it produces something meaningful). The fact that renewable organisations have perscribed a far bigger challenge meaning changes in distribution can hardly be lumped on the industry itself though it should perhaps have had the nouse not to scramble to zealously.

and that is just from Botswana”

Another comparison you could do is look at the steel industry and its coal use. Currently the world steel association estimates that 14% of the worlds coal production goes into steel making. One does wonder that if this amount stays constant or contracts by 50%, where will we be in regard to CO2? China of course is still expanding but currently nearly all economies have an overcapacity in the steel sector so contraction has to be coming (but when?).

Joris van Dorp's picture
Joris van Dorp on Aug 6, 2014

Any system of trading things having no intrinsic value (co2, renewable energy certificates, offsets, etc.) has little hope of success at scale and through time.The CDM in particular is so rife with inherent problems that it is hard to see how anything good could ever come from it. Some might say this is precisely the reason why the CDM has been pushed so intensively.

David Hone's picture
Thank David for the Post!
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