sectoral economic costs and benefits of ghg mitigation - IPCC

Fossil Fuels
Discussion: Impact on Coal
Ron Knapp
Introduction
The paper by Ulrich Bartsch and Benito Müller (Oxford Institute of Energy Studies) on ‘Impacts
of the Kyoto Protocol on Fossil Fuels’ demonstrates there will be substantial economic impacts/
differences across the fossil fuel sectors from the introduction of the Kyoto Protocol. It is also
clear that there will be very significant differences for an individual sector, such as coal, across
differing countries – and within regions of the same country. These variations are not just a
simple split between Annex B and non-Annex B countries, but also depend on the market
structure of the coal industry within a particular country.
All fossil fuels emit GHGs, but coal and other solid fuels (covered by the general description of
“coal”, such as lignite, etc.) are at a disadvantage in a Kyoto GHG-restricted world as they emit
greater volumes of CO 2 per unit of energy delivered. However, coal can and will make a
significant contribution to achieving the objectives of Kyoto and continue to provide a significant
share of global energy and industrial inputs and reduce their GHG impact through the on-going
introduction of higher efficiency energy conversion technology.
Coal – the product
Coal is produced in more than 50 countries. Production in 1998 was around 3.6 billion tonnes of
hard coal and a further 0.9 billion tonnes of lignite/brown coal.
There is a wide range in the level of energy contribution for individual countries camouflaged
within coal’s 26% share of world primary energy in 1998 – and also for the electricity sector
where coal’s share was 37%. For example, countries heavily dependent on coal for electricity in
1998 included Poland 96%, Republic of South Africa (RSA) 90%, Australia 86%, People’s
Republic of China (China) 81%, Greece 70%, Denmark 59%, USA 56% and Germany 51%.
About 16% (600 million tonnes (Mt)) of total hard coal production is currently utilised by the
steel industry worldwide – some 70% of total global steel production is dependent on coal.
Some coal consuming countries rely on the international coal trade to meet all their coal demand
while others use the traded coal market to supplement domestic supplies.
The coal trade
Kyoto is neither trade neutral nor sector neutral. Kyoto will have a significant – but variable –
impact on coal exporting countries. In 1998, the international coal trade was 524 Mt. This was
valued at approximately $US22-23 billion CIF per annum under 1999 market prices.
Coal is the largest global dry bulk shipping task and dominates rail freight in a number of the
major export countries (with Indonesia as an exception, relying on road and internal waterways
for the domestic transport segment). Rail haulage is also significant in the distribution of coal for
domestic use in major producer/consumer countries such as China, India and USA.
54