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The world still needs coal

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In the Asia-Pacific region, coal consumption has been going up for many years now, and the Asia-Pacific countries plan to keep this trend going in the next decade. (Researchers at China’s Tsinghua University argue that coal is the prime source of energy production in East and South Asia, where the countries are building new coal-fired plants,) writes Fridrich Glasow, PhD, MMM and O&G expert

There is a great deal of discussion now going on in the world about the development of decarbonized energy. At the same time, Moscow is once again mulling the prospects of developing the coalmining industry, which looks somewhat paradoxical amid the rapidly "greening" European energy sector. On the other hand, it was interesting to compare the evolution of the coal industry in Europe and Russia. After all, pertinent reforms have been introduced in both of them.

However, looking closer at the subject one will realize that these reforms took place in completely different ways. First, the reform that took place in Europe can be called routine as it lasted for decades and was initiated by the state, concerned about the shrinking segment of the coal industry in the energy sector of the economy. Secondly, just tens of thousands of people were released from working in the most difficult conditions and reassigned to other sectors of the economy.

A closer analysis shows that the reform carried out in Russia was absolutely one of a kind. One should bear in mind the sad legacy that the young Russian Federation inherited from the Soviet Union: the collapse of all economic indicators (with an automatic drop in coal consumption), and mounting social tensions. The coal industry was falling apart across the board in terms of technology, labor safety, etc. Labor productivity and production efficiency were extremely low too.

In addition, coal was being “squeezed out” of the economy by natural gas (although back in the early 90s, even in Moscow there was a large segment of anthracite generation). The Russian coal industry (100% subsidized by the state) was no longer competitive on the world market.

To make things worse, the social crisis in Russia was nothing short of catastrophic with the living conditions in the mining towns and cities being extremely harsh. The number of people working in the coal sector stood at 900,000 and taking into account their family members, about 3 million people had found themselves in an incredibly difficult situation. The industry itself was in a real fix both when it comes to coal production, sale, underfunding and dim prospects for the future.

It was against this background that the reforms were launched with a program of restructuring the coal industry developed by the Ministry of Fuel and Energy, led by Yuri Shafranik. The program was three-pronged: closure of hazardous and unprofitable industries (with the withdrawal of all government subsidies, provision of social protection for laid-off workers and technical re-equipment of enterprises, along with measures to encourage new viable projects.

Results of the restructuring in figures

Due to increased labor productivity, the number of people employed in the coal industry fell from 900,000 in 1992 to 145,000 in 2018. The volume of production in 1990 was 395 million tons, and in 2019 - 439.2 million. Coal exports in 1990 stood at 52.1 million tons, while in 2019 they spiked to 217.5 million tons. Foreign currency earnings from exports increased fourfold, reaching $16 billion in 2019. This means that the Russian coal industry is now fully efficient, money earning and competitive. By the way, as a result of privatization, private companies now account for 100 percent of the total volume of coal mined in the country (the state has developed mechanisms of working with the private industry, regulating, helping and creating conditions for development).

However, just like in the case of the "gas problem," as soon as Russia entered foreign markets with more and higher quality coals (and cheaper too), it started facing complaints from Old and New World competitors that it was ignoring “green energy."

Well, in the first ten days of February 2021 alone, Germany increased the purchase of Russian gas by 47.8 percent compared to the same period in 2019. In January 2021, Italy had increased its purchases from Gazprom by 221.5 percent, Turkey - by 20.8 percent, France – by 77.3 percent, the Netherlands - by 21.2 percent, and Poland - by 89, 9 percent. Clearly, Europe does not want to freeze. The surprises that the process of global warming can hold for us can hardly be predicted by definition, so no one knows just how much natural gas the EU countries may need at the end of the day.

Coal remains very much in demand with low temperatures and rising gas prices putting Europe’s coal-fired power plants back to work and Russian coal exports going through the roof. And Europe is not the only one to face such problems. It is no coincidence that, speaking at a meeting dealing with the development of the coal industry, President Vladimir Putin said: “As for the long-term prospects of the global coal market beyond the current decade, I know that there are different forecasts to this effect. It is no secret that some of them imply a significant contraction of the market, including due to technological changes in the global fuel and energy complex and the extensive use of alternative fuels. What is happening we know all too well: Texas froze up during the cold season, and the windmills had to be heated in ways that are far from environment-friendly. Maybe this will also introduce its own adjustments."

P.S. - When I delved into this topic, I was surprised by how little I knew about it, and now I’m sure that 99 out of 100 European energy specialists were unaware of the fact that  Russia had succeeded in effecting such a phenomenal reform with such incredible results. Therefore, I firmly believe that Russia will not just give up its share of the world coal market.

We are often guided by political and economic clichés, but we must never forget just how efficiently the Russian people managed to mobilize in the most difficult moments of their country's history - Fridrich Glasow, PhD, MMM and O&G expert.

                                           

Energy

Germany to speed up wind and solar energy expansion

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The German government plans to speed up the expansion of wind and solar energy by 2030 as part of its climate protection programme, a draft law seen by Reuters showed on Wednesday (2 June).

The new plan aims to expand installed production capacity of onshore wind energy to 95 gigawatts by 2030 from a previous target of 71 GW, and of solar energy to 150 GW from 100 GW, the draft showed.

Germany's installed capacity of onshore wind power stood at of 54.4 GW and of solar energy at 52 GW in 2020.

The climate protection programme also envisages funding of around 7.8 billion euros ($9.5 billion) for next year, including 2.5 billion euros for building refurbishment and an extra 1.8 billion euros for subsidies for electric car purchases.

The plan also includes doubling support to help industry change processes to cut emissions of carbon dioxide, such as in steel or cement production.

However, these financial pledges can only be approved after the German federal election in September.

The move comes after Germany's Constitutional Court ruled in April that Chancellor Angela Merkel's government had failed to set out how to cut carbon emissions beyond 2030 after plaintiffs challenged a 2019 climate law. Read more.

Earlier this month, the cabinet approved draft legislation for more ambitious CO2 reduction targets, including being carbon neutral by 2045 and cutting German carbon emissions by 65% by 2030 from 1990 levels, up from a previous target for a 55% cut.

($1 = €0.8215)

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Energy

Commission and Breakthrough Energy Catalyst announce new partnership to support investments in clean technologies for low-carbon industries

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Commission President Ursula von der Leyen and Bill Gates have announced a pioneering partnership between the European Commission and Breakthrough Energy Catalyst to boost investments in the critical climate technologies that will enable the net-zero economy. Presented on the occasion of the sixth Mission Innovation Ministerial meeting, the new partnership aims to mobilize new investments of up to €820 million/$1 billion between 2022-26 to build large-scale, commercial demonstration projects for clean technologies – lowering their costs, accelerating their deployment, and delivering significant reductions in CO2 emissions in line with the Paris Agreement. 

This new partnership intends to invest in a portfolio of high-impact EU-based projects initially in four sectors with a high potential to help deliver on the economic and climate ambitions of the European Green Deal: green hydrogen; sustainable aviation fuels; direct air capture; and long-duration energy storage. In doing so, it seeks to scale up key climate-smart technologies and speed up the transition towards sustainable industries in Europe.  

European Commission President Ursula von der Leyen said: “With our European Green Deal, Europe wants to become the first climate-neutral continent by 2050. And Europe has also the great opportunity to become the continent of climate innovation. For this, the European Commission will mobilize massive investments in new and transforming industries over the next decade. This is why I'm glad to join forces with Breakthrough Energy. Our partnership will support EU businesses and innovators to reap the benefits of emission-reducing technologies and create the jobs of tomorrow.”

A press release is available online.

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Energy

EU Reporter partners "All Things Energy Forum" 02-04 June

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Starting tomorrow, Wednesday 2nd June, EU Reporter is All Things Energy Forum June 02-04 is an international digital stage that will engage more than 140 Speakers and 1000 Attendees in an interactive dialogue. This high-level event will welcome more than 30 countries to deal with six mega phenomena in a novel manner, combining approaches and contemplating interrelated impacts.

The event will span over two and a half days. The first day (02/06/2021) will host government ministers and high-level industry and public executives, in two introductory panel discussions:

  • All Things Energy the EU Green Deal and the Impact of COVID-19
  • Energy Projects in SE Europe and the East Med


During the following two days, Thursday 03 - Friday 04/06/2021, the conference will host more than 100 speakers in plenary as well as specialised parallel sessions that will cover all the aspects and challenges of the energy ecosystem. The agenda will not follow the classic lines of supply, demand, policy, technology, finance etc. Instead, a novel combinatorial approach will be used focusing on the links between 1. Epidemics, 2.Economics, 3. Energy trade, 4. International politics,
5. Energy/Environment policies and 6. Disruptive Technologies.


Key issues to be discussed include:

  • New Visions of Energy: Succeeding in a disruptive context
  • New regional perspectives: The role of gas in the transition to a lower carbon economy
  • What major technology breakthroughs are revolutionizing the energy sector
  • Dynamic resilience: Preparing for extreme weather, water stress and cyber risk
  • The business outlook for oil
  • The outlook for hydrocarbon economies
  • Megaprojects: Global impact and implications
  • Rethinking hydro: Powering tomorrow’s world
  • Driving innovation: The role of governments in the future of energy


Register here to join the first edition of #ATEForum2021: https://www.eventora.com/en/Events/allthingsenergyforum-2020

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