The Decline In Coal Appears To Have Been Exaggerated

Despite big promises of a green transition and the creation of ambitious climate pledges, some countries are continuing to support the development of new coal mines. The U.K. and Australia both have coal facility plans that could go against their climate pledges, while there is no sign of slowing down China’s coal industry. So, just what does this mean for the green transition of these countries and globally?

In December 2022, the U.K. announced plans to build its first new coal mine in three decades. The $204 million project will be constructed in Whitehaven in Cumbria and is expected to produce 2.8 million tonnes of coking coal annually, as well as create 500 jobs. The plan is to export most of the coal produced, as the U.K. expects to increase its renewable energy capacity to stop the need for domestic coal use. 

Many U.K. steelmakers have already stated that they will not be using coal from the development. And several European steel producers are also transitioning away from coal in response to mounting pressure from governments to decarbonize operations. Companies working in the heavy industry sector are now looking to renewable energy to power their facilities, where possible. 

The mine is expected to produce 400,000 tonnes of greenhouse gas emissions a year, equivalent to around 200,000 car emissions. This will contribute heavily to the U.K.’s carbon emissions at a time when it is expected to shift away from carbon-intensive energy production in support of an accelerated green transition. Although the government has stated that the development is still possible within the scope of the U.K.’s climate legislation, with no doubt that it can achieve the net-zero scenario by 2050 following the closing of all coal operations by 2049. However, an analysis published in January suggested that this view is overly optimistic and that the coal project will likely break U.K. climate pledges. 

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The Biden Administration’s Arithmetic Problem 

The Biden administration is building its entire energy agenda on a foundation of speed. Or as some members of the Biden energy team like to say, “deploy, deploy, deploy.” Their mandate is to build wind turbines, solar arrays, site transmission lines and reshore supply chains overnight while the U.S. (EPA) Environmental Protection Agency simultaneously tears down existing sources of power. Speed is the key to threading this needle – the lynchpin to filling the gaps created by EPA’s regulatory agenda – but what happens when instead of moving faster, deployment slows down?

There are signs that’s exactly what’s happening. Deployment of new generating capacity and construction of essential infrastructure is slowing down in some places, and where it is speeding up, it still doesn’t appear to be moving fast enough.

Rapidly retiring baseload generating capacity – accelerated by EPA’s suite of rulemakings and a range of state mandates – combined with rising electricity demand from electrification, is beginning to collide with a stark reality: renewable energy deployment and its enabling infrastructure aren’t materializing nearly fast enough. Under the pretense of cleaning up and fixing the grid, the administration is breaking it. 

The barriers to deployment for wind and solar power, and the required supporting transmission infrastructure, are stubbornly familiar. Supply chain challenges, higher interest rates, public acceptance – or the lack of it – and permitting hurdles are all weighing on a sector that the administration says must fly.

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