to coal, the world is torn between two extremes: using it to fuel economic growth through cheap, reliable access to energy; and fighting it by refusing to insure new plants and encouraging divestment of coal assets. As Keisuke Sadamori, Director of Energy Markets and Security at the International Energy Agency (IEA) said: “The story of coal is a tale of two worlds with climate action policies and economic forces leading to closing coal power plants in some countries, while coal continues to play a part in securing access to affordable energy in others.”

This dichotomy is alive and well within the G7 countries although it would appear that – with the noted exception of Japan – the “battle” against coal for power generation is close to being won. Four out of seven countries are now committed to delivering a domestic coal ‘phase-out’ and are in the process of developing legislative approaches to implementation. In this light, the G7 appear to be the good performers of the G20. A recent report by the Overseas Development Institute (ODI) states that “G20 countries […] account for 79% of global greenhouse gas emissions. In 2009, they committed to phasing out fossil fuel subsidies in the medium term, and since then many have played an important part in driving forward climate action internationally. However, a decade on from this commitment, G20 governments continue to provide billions of dollars of support for the production and consumption of fossil fuels, spending at least $63.9 billion per year on coal alone.” Beyond this, in 2017, global coal demand grew 1% after two years of decline, fuelled by global economic growth which increased both industrial output and electricity use. So, while the Western world heralds the end of coal, the IEA forecasts that demand will remain stable until at least 2023.

A Dose of Realism
Coal was branded the number one enemy of the fight against climate change decades ago. Policy, environmental activism and public perception have focused on coal for power generation. Despite all these concerted efforts, coal still represents 37% of the energy mix across the world. Whilst Europe has a clear pathway to removing coal from power generation by 2040, it will still play a significant role in other parts of the globe. Twenty-four countries are responsible for 50% of CO2 emissions and have clearly highlighted the role of coal in their Nationally Determined Contributions (NDCs) during COP21. These agreements will be re-opened in 2020, but in the meantime, coal remains very much part of the energy mix and of manufacturing processes globally.

An important driver of coal relevance in the coming energy transition is urbanisation, which requires access to affordable energy as buildings made of steel and concrete will need to be built. Coal accounts for over 75% of the final energy used in the steel industry worldwide (10% of global coal production). In the cement industry worldwide, coal accounts for over 60% of final energy use. Ironically then, the boom in renewables also currently requires coal. As an example, a wind turbine made with steel and sitting on a concrete base is more likely to have been manufactured using coal and coal by-products.

Indeed, global economic growth drives increases in both industrial output and electricity use, with 61% of coal used to generate electricity while 19% went mostly for iron and steel production. Why is this? The answer is quite straightforward: coal is affordable, accessible, and easily stored and transported, making it well suited to meeting the energy needs of industrializing economies.

Until technological advances allow us to reduce and ultimately remove the CO2 footprint of coal, we must ensure that as the world ‘weans itself off’ at different paces, we do not lose sight of the moral imperative we have to ensure a “Just Energy Transition”. Technological breakthroughs and cheaper renewable energy might allow these countries to remove coal from the energy mix faster than anticipated, but even the most optimistic scenarios foresee a role for coal in the medium-term.

The Drive for Responsible Sourcing
As a fossil fuel, coal is not viewed in the same light as minerals and metals mined across the globe, despite the crucial role it still plays in our society. And whilst socially and environmentally responsible sourcing for minerals has increased significantly over the past decade, coal has been somewhat exempt from that trend. It is ironic to see that we now have a plethora of mining initiatives and voluntary sustainability initiatives in the mining sector both covering mining in general or specific commodities (like gold, cobalt, precious stones), yet only one initiative looks at coal.

New responsible mining initiatives purposefully exclude thermal coal as it is classified as a fossil fuel, yet will consider metallurgical coal in their assessments. Whilst this is understandable as they would likely face undue pressure from environmental NGOs, it is concerning to see that organisations would choose to distinguish between metallurgical coal and thermal coal. The emissions linked to the use of metallurgical coal are not better or worse than those of thermal coal in power generation and some of the producers are the same, and the mines are run in the same way.

At a time when businesses are increasingly encouraged – if not legally bound – to disclose more and more information about the materials they use in their supply chain, coal should not be exempt. There has been a growing movement seeking to enshrine in law the duty that companies have to respect human rights not only in their own activities but also throughout their value chains worldwide. The “Loi de Vigilance” in France is one example and this is clearly a growing trend.

The Coal Exception
The entire coal supply chain should want to be scrutinised for its environmental, social and governance performance as any other mined product for two crucial reasons: one, buyers need to shield themselves from risk by ensuring that the producers they purchase from have good practices; and two, suppliers will increasingly need to differentiate themselves by demonstrating these good practices, as responsible business is good business.

Buyers of coal – whatever the end use – need to understand the risks in their value chains. By understanding who their suppliers are, by assessing their performance at mine site level and by understanding how this can be improved, buyers can not only ensure that risks do not disrupt their supply, but also that they are fully aware of the risks attached to purchasing from specific suppliers. Furthermore, the OECD guidelines and increasing legislation inside and outside of the EU, requires end-users to assess and mitigate the risks in their supply chains. Coal should be treated no differently to lithium, cobalt or any other mined product.

Bettercoal, a voluntary sustainability initiative started by power companies in Europe, harnesses the power of buyers to encourage coal producers to assess the performance of their mines against an ESG Code – the Bettercoal Code – and commit to continuous improvement in their operations. However, such an initiative can only influence coal producers which export their coal. This initiative plays a valuable role in building a more responsible coal supply chain, but as a buyer-led initiative, it cannot influence the behaviour of producers where coal production is for domestic use.

Hundreds of miners died in Pakistan mining coal since the beginning of the year; and in less than three years between 2015 and 2018, 377 coal miners died in India. This does not make headlines. These mines will not be assessed as part of responsible mining voluntary initiatives, as thermal coal is a fossil fuel, because their product is not exported and because these people mined a commodity that we have chosen to demonise. Had these miners been mining cobalt in the DRC purchased to make our cell-phones, they would have commanded our attention.

Increasing Risks
We must beware of the consequences of demonization of coal. Coal is the easy target in the fight against climate change, but it is not the silver bullet we would like it to be and the stigma currently born by the coal industry is dangerous for three main reasons. Firstly, it means that there is insufficient investment in technology to reduce the carbon emissions coming from coal for power generation. Secondly, it has led to a decrease in scrutiny on the performance of coal mining operators. And thirdly, it has led to a fragmentation of the industry and irresponsible divestment as opposed to closure. All these factors are making the coal supply chain riskier and the possible negative externalities greater.

The trend to stop the financing of |new coal fired power plants has grown exponentially and this is likely to continue as long as other sources of energy keep getting cheaper unless an affordable and scalable CCS solution can be implemented. And this makes sense given the unequivocal necessity to reduce CO2 emissions. But the trend pushing utilities and mining companies to divest their coal assets is not helping the fight against climate change: it is simply passing on the problem to another company. Moreover, it could be argued that, by divesting, companies are being the opposite of responsible and that they are alleviating themselves from the challenges of shutting down, dismantling, rehabilitating the local environment and ensuring that both local communities and employees have alternative means of subsistence.

World leaders, consumers, environmental activists must open their eyes to the realities of the coal market. Yes, decline in consumption is likely to accelerate; yes, newbuild of power plants will stall and may even stop faster than anticipated; yes, carbon capture and storage might enable us to reduce the carbon footprint of coal use. But in the meantime, we cannot afford to pretend that the coal industry has already disappeared, and we certainly cannot reward any business which chooses to divest coal assets instead of closing them down. By allowing this to happen, we will only increase inequalities and negative impacts in the coal supply chain.