[Scott] Next on "Energy Switch," we'll hear why, in many places, coal is still king.

- I wish I had better news for environmentalists.

[laughing] I don't see it changing that quickly.

The trend is certainly in decline, but coal is especially important for countries with rising demand.

And coal just happens to be what certain countries have.

- I don't think we have to worry about coal coming back in the United States specifically.

It's on a hard-baked path where the coal plants are too old.

And I think we should look for all these leverage points to help phase out coal where you can, but then recognize that we can't always do it, and where we can't do it, we should help with things like reducing coal emissions and air pollution and those kinds of things.

[Scott] Coming up, the persistent dominance of coal.

[Narrator] Major funding for this program was provided by Arizona State University.

Shaping global leaders, driving innovation, and transforming the future.

Arizona State, The New American University.

[upbeat music] - I'm Scott Tinker, and I'm an energy scientist.

I work in the field, lead research, speak around the world, write articles, and make films about energy.

This show brings together leading experts on vital topics in energy and climate.

They may have different perspectives, but my goal is to learn, and illuminate, and bring diverging views together towards solutions.

Welcome to the "Energy Switch."

In the U.S., we don't hear much about coal, largely because we don't use much coal for power generation anymore, but that's not the case elsewhere.

Despite our decline, coal is still the dominant source of electricity worldwide, and that's because it's available domestically in many countries, and it's cheap and easy to mine, transport and burn.

All those benefits come with serious downsides, local air pollution and global CO2 emissions.

We'll discuss with Rahul Tongia.

He's a senior fellow at the Center for Social and Economic Progress, a non-resident senior fellow at the Brookings Institute, and adjunct professor at Carnegie Mellon University.

Mark Thurber is associate director of the Program on Energy and Sustainable Development at Stanford University, a fellow at the Energy for Growth Hub, and author of the book, "Coal."

On this episode of "Energy Switch," the long rule of King Coal.

Rahul and Mark, we're glad to have you with us today.

In this day and age, some might have heard coal is gone, it's dead.

Why should our viewers care about coal?

- Coal is not in fact dead.

It's about 25% of global energy and about 35% of electricity generation comes from coal.

- That's not dead.

[laughing] - It's not dead.

- Long way.

Anything to add to that, Rahul?

- I mean, it's not just that large percentage, but the single largest source for electricity is coal.

So in the U.S., people don't think that much about coal, but it's still about 1/6 of electricity in the U.S.

- And it's an important kind of electricity too.

It's the kind we can, it's always on, sort of a base load.

- I mean, so if you use the term base load, what you really want is, one, cheap enough to run a lot at the margin.

Once you've built it, you will run it.

And the second is some control, or predictability, or firmness.

And coal ticks both of those boxes.

Others do or do not.

Hydro can if there's enough rain.

Nuclear is not as flexible, but it's still a base load in some ways.

Gas, there's a huge spread across the world.

And coal is also energy secure.

I cannot overstate the importance of energy security when countries are doing energy policy.

- Anything to add to that, Mark?

Oh, I think one of the advantages, I mean, coal is cheap to mine, it's ample around the world, but it's also relatively cheap and easy to transport and store, which is a big advantage relative to some competing fuels.

[Scott] Absolutely.

- It's very cheap to pull out of the ground in many places.

Is it cheap in a holistic manner?

Maybe not, because we're not paying for the externalities of coal.

We're not paying for the local air pollution often.

We're tightening that up now.

And we're certainly barely paying for the carbon externalities.

- Right, so where are the resources?

Who has the largest coal resources around the world, Rahul?

- China, India, but also the United States, South Africa.

The users are where the resources are, and that's also why coal's usage is not equally spread around the world at all.

- Any other places it's concentrated?

I think we covered the big ones.

- So in addition, I mean, so a lot of reserves in the U.S., China, India.

Indonesia and Australia are very large exporters as well with big reserves.

Russia has significant reserves as well, although sometimes limited in getting those to market by rail constraints, 'cause it's in Siberia.

- So Australia is exporting coal.

They won't burn it themselves, but they'll let somebody else burn it.

[laughing] - Well, they'll also burn it themselves.

They'll do both.

And in a number of countries, this was historically a dynamic thinking about how much you burn at home versus how much you export.

South Africa historically was a big exporter, but also a huge user.

And they had a motto of, "Export the best, burn the rest," right?

So, yeah.

- Oh, interesting.

Yeah, interesting.

- Number of countries had that, that they'll burn the brown coal, and the black coal or the higher-quality coal would be for exports because-- - 'cause you get more money for it?

- Well, one, you get more money, and then the transport's also more cost effective.

It's more dense, energy dense.

I think another very important part that people forget is not all coal is equal.

We talked a little bit about quality of coal, but there's also met coal, or metallurgical coal, also called coking coal, which is used to produce steel.

And that is not as equally spread around the world.

India, for example, imports a fraction, about 1/4 of it's coal, but disproportionately, a lot of that is metallurgical or coking coal, because that's not available domestically.

And so when we talk about this energy transition, most people just think energy, but coal also is a input to a lot of processes.

And so those industrial processes, especially steel, but also cement, are actually a lot harder to think about the alternatives.

- 'Cause of the heat, right?

You make steel to make cement.

- Well, it's the temperatures required.

You can't easily get that out of electricity.

But coal is actually used for its carbon properties.

So it's a reducing agent.

So it converts ore, which has got oxide in it.

So you reduce that ore to get iron instead of iron oxide.

People think that they'll go to hydrogen to do that, but it's not yet cost effective at any scale.

- Is India still building coal plants, coal power plants?

- It is, as are several other countries, mostly developing countries, almost 1/2 the coal consumed in the world today is by one country, China.

India is number two, but it's so much lower, it's only about 12%, despite being 1/6 of the population of the world.

- So 12% of global coal is in India?

- Consumption.

- Gotcha, gotcha.

- China's an interesting important country from an energy perspective.

They add more renewable energy most years than the rest of the world put together, and yet they're still adding more coal power plants.

So coal is especially important for countries with rising demand.

And I think that's one of the key factors for thinking about coal.

The U.S.

energy demand is about plateaued, plus or minus.

And if it weren't for population increases, the U.S.

would actually be coming down.

But Western Europe, if you look at it, it's coming down, the total energy demand, and therefore coal will also have a way down.

But that's not true for places where, per capita, energy use is still so low that human development just mandates more energy, and coal just happens to be what certain countries have.

- What's happened in the U.S.

with coal over the last couple decades.

- So if you look to 20 years ago, coal produced about 50% of U.S.

electricity.

Now it's less than 20%.

And so there were really several important factors that drove that.

So one was the so-called shale gas revolution, we're starting in about the mid-2000s.

Gas in the U.S.

is coal's most natural competitor in the electricity sector.

So a surge of gas onto the market.

And that combined with the fact that U.S.

coal plants by and large are pretty old.

So most of them were built in the '70s or '80s.

So you would have them get to a point where, "Okay, if we wanna keep running this coal plant, we've gotta invest a huge amount of money into it to keep it running," right?

But then you look at the electricity market, where electricity prices are set by the marginal offers into most markets, which tends to be natural gas, because of that plentiful gas, low electricity prices were the result.

And so coal plant owners were like, "This just doesn't make economic sense anymore."

- That's it, yeah, so in a couple decades, from 50% to 20% electricity, that's a big drop.

Same period of time in China, what's happened?

- I mean, in China, coal exploded.

I mean, not literally.

[Scott laughing] [laughing] But burnt.

- Occasionally, literally, but mostly not, yeah.

[laughing] - Around the similar time, mid-2000s, is when China really ramped up electricity production.

There was a period for multiple years in a row they were adding 100 gigawatts of coal capacity.

Now, to put that into normalization, that's twice as much as the next best growth ever any other country had achieved.

And they didn't just do it once, they did it for years on end.

And I think that's the other lens that people have to remember, coal is a means to an end.

It's demand that drives it.

Coal was needed for industrial processes, for heating, and it was a policy of speed over cleanliness.

So India and China were very similar in the '80s in their energy, total, not per capita.

And China took off because they built a lot of quicker-to-build, less-efficient, or dirtier, distributed regional plants.

India at that same time went for centralization of their electricity, with bigger plants under a public sector, state-owned enterprise.

China just went a different route.

But in the last few years, China's cleaned up its coal industry.

You talk about, what's China's arc been?

Partly due to concerns over air pollution and public outcry, in about three years, they really turned things around.

[Scott] That's incredibly fast.

- China scale fast.

[Scott] Yes.

- I mean, very few countries operate at the scales China does.

They put in both stringent norms, but they also enforce them.

And I think that's one of the challenges in a lot of the developing world is the intention is there to clean up, but are you actually enforcing what you should be doing?

- And an interesting sort of nuance there is that China's really done quite an impressive job at cleaning up its large central station power-generating plants, to the point where more of the coal air pollution challenge has started to shift towards industrial uses of coal.

- Interesting.

- Where there are more of them, they're smaller, they're harder to regulate than these large power stations.

- Will India follow China's coal path?

Or what are India's options if it doesn't do that?

- India's ambition is to develop quickly, economically and human development, without relying on fossil fuels like other countries have done.

That's the ambition.

For large countries, it's never been done before.

[Scott] Okay.

- And the question is, what are the alternatives doing?

Are they ready to step up?

Step up isn't just raw cost structure, obviously it's hard to compete with coal, but also the other properties, is it-- does it give jobs?

Is it secure?

Is it firm?

I think India's pursuing a strategy that's somewhat similar to China, which is a twin engine strategy.

Your plane's got two engines.

The first would be renewables and cleaner, but the other one still remains coal.

And so even through 2030 with a target of almost tripling wind and solar in six years, that's crazy growth.

Even if that's achieved, you still have coal as the majority form of electricity by 2030.

And so that's really the future, that it's going to be not about ending coal by any stretch, but it's gonna be by when can we plateau or peak coal?

And the second is what happens next.

And I think what many countries may end up happening because they need growth of energy, you're not gonna have a cliff on the other end of that peak.

It's gonna be a sort of slow and steady lingering sort of decline.

- Right, right.

- And I would like to highlight one dynamic because especially when you are in a place where coal is a mainstay of your electricity generation, is wind and solar really don't play very well together with coal from both a financial perspective and an operational perspective.

So a world where you have very high renewable shares is a world where ideally you'd like other energy sources that you can sort of turn on and off flexibly and at low cost to adjust to those renewable variations.

Coal is not great at that relative to say natural gas.

And then the other thing that's very characteristic of coal is the financial model of coal is, a coal-fired power plant is quite capital intensive and expensive to build, but the variable cost of operating it are quite low because coal is cheap, and so, but that's a difficult financial model to combine with very high shares of renewables because when you have those high upfront costs, you wanna be running this plant all the time to make those back with your lower variable costs.

- Interesting.

- So I just think this is a dynamic because you're absolutely right, I mean, India and almost everywhere is kind of going headlong into wind and solar, but it does set up a bit of this challenge that those two models have a fundamental tension to them.

- Interesting.

Mark, you mentioned, I'm pretty sure I heard you right, 35% electricity, 25% primary energy coal.

- Correct.

- What are the CO2 implications of that?

- Coal is likely somewhere on the order of 30% of total global greenhouse gas emissions from human activity.

- Okay.

Are there other things in coal that also get released when it's combusted that those other fossil fuels don't have?

- In addition to the greenhouse gas impact, there's very serious local pollution impacts because there are other, so sulfur oxides, nitrogen oxides, mercury, the particulates that creates pollution and it's bad for human health.

- Right, interesting.

I remember we visited Vietnam on our film, on "Energy Poverty," and visited a community and spent some time, and the table was covered with fine, basically coal dust.

And I ran my finger on it and I said, "What about that?"

And they said, "Yeah, but look at all the other benefits.

It's our jobs, it's our way of life, it's our--" they went through them, and they said, "This is the trade off."

And I don't think most people think about that that way.

- Exactly, that's the fundamental challenge, that this is producing livelihoods.

And if you look around the world, it's common across a number of countries, the coal belts of those countries, were also somewhat electorally or politically important.

And this is where coal was providing livelihoods, even as, as you say, it was having a lot of harms.

- Yeah, I mentioned this sort of disparity geographic across countries, but there's also local disparity within countries.

Unfortunately, and this has been the story worldwide throughout history, a lot of regions that produce coal or other natural resources don't benefit as much as they should.

- Interesting, right.

Can we clean it up?

[Mark] Well, yes and no.

[Scott and Mark laughing] - We can, do we?

- So we can.

[laughing] Right, exactly.

[Scott laughing] Like dividing out those different negative impacts, some are cheaper than others to mitigate.

And so most rich countries do mitigate their local air pollution well because there's enough demand for that relative to other things.

I'll just make up a number, let's say that adds 10% to your cost or something like that.

But then when you get into mitigating the CO2, to doing carbon capture and storage, then your number is much higher than 10%.

- One of my sort of beliefs is, we should be cleaning up coal instead of wishing it away.

So the first is efficiency.

And this is the example I talked about with why aren't we doing more of it?

Because an efficient coal power plant is usually cost effective and cleaner.

It's a win-win.

The second thing is what the U.S.

did, which was switch fuels.

They switched their coal from Appalachia to western coal.

Powder River Basin has some of the cheapest coal in the world.

The third is what you talked about, which is you just clean it up after the fact.

Pollution control equipment.

Now, that's easy for air pollutants, but carbon dioxide is expensive.

There's an energy penalty, an efficiency penalty, and all sorts of things when you try and do that.

It's not clear that that's the way you would do it for the power sector, but I wanna emphasize for other uses of coal, especially cement, you may need to go down the route of paying that premium.

Now, here I have a view that may not be popular, which is the Western World should do it first, to expect the same standard or timeframe for doing it from the poor or low-emission countries just doesn't make sense, either from a humanitarian perspective, but also from a practicality perspective.

- Why do you think that countries, why do you think they're not switching away from it?

- It's a problem of scale and access to alternatives.

And so if you see countries where there is the access to alternatives and a switch can be made at scale, it's happening.

So the two best examples of a large-scale switch from coal to natural gas are Britain, which interestingly you could think of that as the birthplace of the industrial revolution, starting in the late 1700s.

- With coal.

[laughing] - With coal, exactly.

They turned off their last coal plant last year.

And it was largely displaced by starting in the '90s with natural gas and increasingly, wind.

They had infrastructure, they had resources that were cheap enough.

U.S.

is a fantastic example of they switched, since 2005, the U.S.

went from having about 50% of its electricity be from coal to now less than 20.

And that's been replaced by natural gas and also increasingly, renewables.

But the U.S.

had the benefit of very cheap gas and existing infrastructure.

But other countries, China, India, the scale is so large and the infrastructure and the cost that it would take to put in alternatives and the potentially availability of affordable alternatives there, it's just not there.

- I think it's worth mentioning that in developing regions, your demand is rising so much that it's hard to get away from anything.

The second thing I think people underestimate is how entrenched coal is to many countries.

It's not just about jobs or politics, but many other factors of supply chain, knowhow, skills, skilling, R&D.

And in India's case, there's something very specific, which is the Indian Railways.

The Indian Railways is the largest civilian employer in the country.

They overcharge coal to pay for the undercharging of passengers.

- Oh, interesting.

- That's a political choice.

- Interesting.

- If coal went away, you'd have to raise railway fares to a level that's politically infeasible.

- Given all the things we've talked about, I'll start with you, Rahul, how do you see the future of coal globally?

- I wish I had better news for environmentalists.

[laughing] I don't see it changing that quickly.

If you look at 50 years, 1971 to 2020, coal's share of total primary energy supply in the world is constant, just over 25%.

So this is the reason coal has been called King Coal.

[Scott laughing] And I would like to see a lot more aggressive attempts.

I would like to see more experiments, more attempts to be bold.

- Interesting, you see it different?

- I think one encouraging trend, I don't think we have to worry about coal coming back in the United States specifically.

It's on a hard-baked path where the coal plants are too old, the market dynamics and electricity are not such that they're gonna be able to support those plants being refurbished.

So I think that trend is baked in.

I think, echoing Rahul, I think in countries that are trying to grow very fast and that already have a lot of coal, that already have a lot of coal production, so like India, like China, I don't think there's gonna be a very quick phase out.

I'd like to see more support for emerging markets developing infrastructure for alternatives.

Maybe there's some specific cases where you can help support natural gas infrastructure as a better alternative.

I think a big role that sort of more mature markets can play is demonstrations, right?

And so seeing like, okay, in the United States, what are some innovations we can have for better integrating large shares of renewables?

And so that could include load following nuclear, it could include gas, maybe other alternatives.

But it also is about having our energy system be better adapted to this more dynamic world where we're bringing demand into the equation more, we're giving them incentives to adjust to wind and solar.

And so I think it's a combination of these things, and I think we should look for all these leverage points to help phase out coal where you can, but then recognize that we can't always do it, and where we can't do it, we should help with things like reducing coal emissions and the air pollution and those kinds of things.

[Scott] Right.

- One thing important to remember is, we can't tell countries what to do anyway, right?

[laughing] Countries are never going to do something that they think is gonna very much hurt their economy just in the interest of, "Okay, we need to get to something besides coal."

So I think coal is going to continue for some time in fast-growing countries that already have a lot of coal production in use.

But I think the attitude we need to think of is, okay, where are our leverage points to help them use less and help them use coal more cleanly if they are gonna use it.

But are there things we can do on supporting infrastructure builds that make alternatives more possible?

Are there other kinds of financial incentives we could give that might say, "Hey, this is low-hanging fruit from a global greenhouse gas perspective.

We're gonna create some fund that will make you build something else instead of this new power plant?"

With a longer-term view, coal, in my mind, does not have a long-term, long-term future.

The question just is, when is that long-term, long-term, right?

So it's just, how can we find leveraged plants to build fewer new coal plants and then just provide alternatives?

- Interesting, - Because as Rahul said, the future of coal is, to a large extent, the future of coal alternatives.

- You bet, good optionality ahead of us.

Well, look, I've really learned a lot, enjoyed our conversation tremendously.

Rahul, thanks for being here.

And Mark, thank you for all your good thoughts.

- Thanks, Scott, yeah.

Thanks, Rahul, yeah.

- Thank you.

- Scott Tinker, "Energy Switch."

Over the last 25 years, coal use in the U.S.

has declined, from making 50% of our electricity to less than 20%.

It did the same in the UK and a few other countries where, like us, they had alternatives, mostly cheap natural gas.

In China, coal provides 60% of electricity, allowing them to manufacture goods cheaply for export to other markets.

Overall, coal still provides 35% of global electricity.

It's the world's largest source.

And rising global electricity demand means coal will grow too.

However, in high-coal-use countries, local air pollution has begun a push to reduce coal's local emissions.

Though this makes the coal plant and its electricity more expensive.

Wealthy nations may want low-income coal countries to switch to something else to limit carbon emissions in our shared atmosphere.

But unless we can help them find affordable alternatives, King Coal's reign may last a very long time.

[upbeat music] ♪ ♪ ♪ ♪ [Narrator] Major funding provided by Arizona State University.

Home to the Thunderbird School of Global Management, redefining management education to empower transdisciplinary leaders.

Arizona State, The New American University.