As the chairperson of the World Coal Association and the CEO of Thungela, I am often asked about the future of coal. At this juncture of the global energy crisis, it is the ideal time to look at the future of coal and its role in this time of turmoil.  

This month marks one year since the tragic outbreak of the Russia-Ukraine war and the worldwide energy tailspin that resulted from this global disruption that shifted market conditions in a dramatic fashion.  

Cynical commentators would say that the coal industry benefited because of rising coal prices driven by renewed demand from Europe and around the world. It is true that in South Africa, benchmark coal prices averaged $276.57 per tonne for 2022, compared with $124.11 per tonne a year before. 

While that may sound like a real windfall to exporters, the reality is more complicated and there are truly no winners in this situation.  

South Africa missed a real opportunity to boost its GDP and inject much-needed foreign currency into the economy because of the ongoing challenges with Transnet Freight Rail. The rail and port operator continued to operate below capacity due to shortages of locomotives, spare parts, derailment and crippling strikes, as well as cable theft and vandalised infrastructure.

The onslaught of organised crime was especially prevalent on the transport routes between the coal belt in Mpumalanga and coastal ports. As a result of all this disruption, coal producers saw a decrease in export saleable production.  

The pertinency of coal to the here and now  

Almost a year to the day, coal’s global journey took a new and dramatic turn. Europe was confronted by a plethora of unprecedented energy challenges, including chronic gas supply shortages that reverberated around the world.

There were supply chain problems and energy price surges, the likes of which had not been seen in decades. There were transportation bottlenecks that affected coal shipments into Germany due to low river levels resulting from a drought that also affected the availability of cooling water and safe nuclear operations. This drought also manifested a failure by renewables to deliver the continuous supply of energy that was promised.  

This is what happens when the sun doesn’t shine, when the wind doesn’t blow, when the water doesn’t flow — and when affordable gas does not flow either. 

Meanwhile, in South Africa, we are faced with worsening rolling blackouts that are likely to continue unabated for some time. When energy instability is added to an already dire mix of food scarcity, rising unemployment and unpredictable political, environmental, economic and social circumstances in South Africa, the poor are hardest hit.  

The global energy U-turn 

Countries including Austria, Finland, France, Germany, Italy, the Netherlands and the United Kingdom which previously vowed to eradicate coal, suddenly did a U-turn and restarted coal plants to help citizens through a painful energy catastrophe amidst an icy winter. 

The about-turn was joined by German Greens Vice-Chancellor Robert Habeck and by November, the headlines read: “Germany Is Dismantling A Wind Farm To Make Way For A Coal Mine”.

In the United States, Energy Secretary Jennifer Granholm urged fossil fuel companies to “cut to the chase” to help stabilise the market — this despite, or perhaps in addition to, the Biden administration’s continued advocacy for a swift just transition.  

Meanwhile, Japan avoided blackouts over the summer by relying on output from its coal-fired power fleet, which has become more important since the Fukushima disaster. Europe, with a few exceptions, let its coal fleet age and wither. 

But this was only the beginning of our global energy headache. It was exacerbated by a raft of geopolitical issues and the threat of another global recession, inflation, unemployment, and shortages of fertilisers and fuel sources of all kinds.  

The UN’s dire predictions 

These circumstances are culminating in a situation that the United Nations Development Programme’s Sustainable Energy Hub believes, in 2023, will lead to three potential outcomes:  

• Greater hardships for the poor, considering that an estimated 670 million people are now likely to remain without electricity by 2030 and 75 million are likely to face starvation;
• The world is likely to add as much renewable energy to the mix in the next five years as it did in the past 20, potentially leading to coal for the first time being overtaken as the largest source of electricity generation by as soon as 2025; and
• More governments needing to reduce their emissions at scale to meet their earlier targets in the face of the current reality. 

The two simple words “energy security” lie at the heart of so many of the world’s current problems. World events tell us that the need for energy affordability, reliability and security (the so-called Energy Trilemma) has never been stronger.  

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So, where to from here for coal?  

I am no climate change denialist, and I truly support the just transition, although I prefer to use the term “responsible transition”. I am also a realist about the important role that coal can play in averting many of the potential disasters of the Trilemma, especially during this decade of “permacrisis”.  

Coal continues to play a pivotal role in parts of the world where fuel choices are few. This includes Asia and a large part of Africa — including South Africa — where millions of people still depend on coal for light, heat, food, employment, and transport, essentially the basics of life. Especially considering the skyrocketing costs of running diesel-powered generators right now.  

Coal remains essential to the electricity supply in more than 80 countries. By 2040, the International Energy Agency (IEA) predicts it will be the largest single source of electricity for 22% of the world’s population. 

We say no to global double standards 

So how can the Global North tell poorer countries that they must abandon coal? Well, we would argue they can’t.  

It’s every country’s sovereign right to do what is in the best interest of its people. The reality is that singular energy solutions are not going to get us out of the mess we are in. We need a diversified energy mix, including renewables, natural gas, hydrogen and coal.  

Within this mix, it is vital that we consider coal’s multiple attributes and practicalities.  

Let us not forget: coal is the raw product which creates the steel, cement, and aluminium which are the lifeblood of a constantly transforming society. According to the IEA, demand for steel alone is set to grow by one-third by 2050. Where is that steel coming from? This is the same steel that is also needed to produce wind turbines, solar panels and batteries. Is it coming from renewable energy? Not yet. The volumes needed are too astronomical. It’s got to come from coal. 

But that’s not all. Coal still delivers electricity to the masses. Coal still creates the building blocks to modernisation. Coal still delivers economic development and social capacity — foreign revenues, royalties, jobs and lifelines to communities.  

The World Coal Association’s members — including those in Japan, China and India — are early adopters of the Paris Agreement and we all subscribe to the “all fuels/all technologies” caveats enshrined in Article 10.2 of the agreement.  

Our mission now is to create a reliable, resilient energy system which uses coal in the short to medium term to deliver economic development and help us reach our climate change goals and truly sustainable development outcomes (not just the “S” in ESG).  

First, clean coal before we can go no-coal 

According to experts, up to 99% of coal emissions can be eliminated through current and available abatement technologies. This includes CO2.  

These technologies encompass high-efficiency low emissions and coal-to-hydrogen, all capable of being equipped with carbon capture and storage. These also include technologies to clean our local air quality, which limits emissions of particulates, sulphur dioxide, nitrogen oxides and trace elements.  

Advanced technologies such as coal gasification can produce power, or hydrogen and ammonia products such as fertiliser, essential for food production. The world is facing a crippling fertiliser shortage right now.  

In South Africa, players have incredible technical knowledge that should be leveraged to convert coal waste to high-value carbon products. 

What we call “future coal” is all about a collective ambition and the ability to form even more cooperative partnerships worldwide to clean up coal while bolstering energy stability. The World Coal Association is pivoting towards a reimagined contribution of coal beyond its traditional uses — which continues to support jobs, communities, and our local economy. 

My vision for the future summarised 

I believe in this path of clean tech-supported coal abatement — not just as an industry leader, but also as a husband, a father, a son and a man on the street, knowing that billions of people still need to be lifted out of poverty and billions more need affordable, reliable energy for their lives and livelihoods.

I also say this as a person who cares and knows that tackling climate change is a global imperative which is equal to people’s basic rights to energy.  

We can tackle this in a way that is balanced, sensible and far-sighted. We agree with the range of stakeholders that everyone’s survival is at stake.  

Coal has entered a new age that is beyond combustion, and 2023 and beyond will be all about finding new ways of diversifying away from coal while still ensuring energy stability, affordability, reliability and security in the face of the global permacrisis.  

Hope springs eternal in the human breast — but hope alone is not enough. Many cynical voices may say that coal’s legacy is nothing to be proud of, but I disagree. 

We, the coal pragmatists, the pro-abatement optimists, the solution seekers of the coal industry, can and will create solutions that relieve suffering and that make the energy transition possible. We remain committed to doing all we can to help get the world out of the scary place it is in right now. DM