The “decarbonization of energy” as a way to demonize coal

The “decarbonization of energy” as a way to demonize coal

The big trend of these past few years has been the massive spread of “green energy” and its numerous attempts to convince the public that the biggest threat to the ecology of our planet is the use of coal, this “19th century fuel”, in the energy sector. Carbon dioxide, nitrogen oxide, ash and slag; all these things are, according to those who insistently and intrusively fight for the decarbonization of energy, are the rubbish that comes along coal energy.

This is all about coal. It is being distributed in the earth’s undergrounds much more evenly than natural gas fields, and the technology required for its production is much cheaper than the struggles for tight oil. In addition, the processing and transportation costs of oil end up being way cheaper than the ones of nuclear fuel. It is indeed that same coal that doesn’t require huge water reservoirs and whose reserves are several times superior to those of oil and gas.

“The use of coal is harmful for mother nature” point blank period.

We might be mistaken, but it seems to us that this is the first time in the history of the development of science and technology when we are being urged to abandon all efforts made to expand these fields for the sake of completely banning the use of minerals. The calls to abandon coal do not intersect with the logic that lies behind the development of worldwide energy, as instead of encouraging the look for ways of neutralizing coal’s harmful properties, they are imposing a categoric turndown. There has never been anything similar regarding any other minerals, as the course of action has always been pretty obvious: we detect a harmful effect, we neutralize it. Here is a simple analogy: the use of smartphones can potentially cause damage to eyesight; we shall thus stop using them and legally approve this decision by the entire UN. We shall also levy fines from all those who try to resist the order and let legal action await the most malicious violators. Does this sound absurd? Of course it does. But surprisingly, everyone obediently nods their head when being told that this is the exact approach that has to be applied to coal.

Verifying the claims behind the fight for climate by using algebra

Finding the answer to this riddle isn’t very difficult: to do so, one must keep in mind that European countries are at the forefront of the fight against coal and compare this reality with data such as, let’s say, the BP Statistical Review of World Energy from June 2018, which listed the top 10 countries with the largest proven coal reserves.

Table No.1: Countries with the largest proven coal reserves

The pattern is obvious: the smaller the coal reserves in a country, the louder its calls to abandon the use of this mineral in the energy sector. The reverse pattern is also an obvious one: the larger the coal reserves, the more skeptical is the attitude of leaders and politicians towards the notorious struggle for decarbonization. As you may know, Donald Trump is busy drawing up the US’s withdrawal from the Paris climate agreement. No surprises here: the truth behind the fight for the climate lies in obvious political interests. European countries are far from being keen to invest themselves in the development of coal technologies for a very clear reason: in the event of coal being proven to be environmentally friendly by the professional scientific and technical community, then Europe’s dependence on the import of this resource will increase even more. Statistics also do provide an answer to the question why does Germany count among the opponents of coal. Here are the top 10 coal importing countries of 2016, according to the United Nations Statistics Division (there are no more recent ones, since China and France do not provide information on their industries). The overall world volume of import has been amounted to 846 618.9 million tons.

Table No.2: Countries with the largest share of coal imports for 2016

This top 10 includes four European countries, but their share, both absolute and relative, is small. This is a mathematical, statistical confirmation of the truth: there is no motivation for European countries to invest in research and development work in order to come up with an environmentally friendly coal energy technology. I would seem that Germany could be the only exception, since it is present in the top 10 countries with the largest coal reserves. But here is another set of statistical data: the top 10 coal exporting countries, once again for the year 2016, only this time because the USA did not provide any data on its exports for 2017 onwards. The data is expressed in millions of tons.

Table No.3: Countries with the largest share of coal exports for 2016

With the exception of Poland, not a single European country supplies coal to the world market. Poland’s export is too small for anyone to feel like it’s worth investing in technology development, and Germany isn’t even on the exporters list. No doubt that German scientists, technologists, designers and engineers are capable of developing an entire set of everything needed to drastically reduce the amount of harmful emissions, but also new methods for processing ashes and slag, as well as finding a way to fully utilize carbon dioxide. But coal does have a very well-known feature: every field has its own “individual” features such as heat of combustion, ash content and so on. For which coal rank could German experts develop such technologies? Australian ? Indonesian? Russian ? American? It only makes sense to invest money and effort into technologies for “foreign” coals if there’s a guarantee of return on such investments, which would require extremely close cooperation, long-term partnership and trust that this cooperation will not be interrupted. Without such cooperation there simply is no reason to engage in the development of this industry; this is exactly what we see happening in reality, although we do hear all kinds of talk about climate protection and fight against global warming.

Fluctuations “somewhere out there” versus specific consequences “here and now”

There is one more consequence from the data showed in table no.3: in the past years, Russian coal companies have been steadily increasing both coal production and its supply to foreign markets, which resulted in the growth of the coal industry being 2 to 3 times higher than the growth rate of Russia’s total GDP. Given the fact that importing countries (as seen in table no.2) are concentrated in the region of Southeast Asia, this cannot be called an easy process. A huge amount of work has been carried out not only by coal companies, but also by Russian Railways and RusHydro who are responsible for the energy supply for the regions of the far East where ports have been seizing (and still do) great export opportunities.

However, winter 2019 has been a time of weather anomalies in Europe. According to results of the first quarter, coal prices dived down by 40% right away, which is up to $50 per ton. In March 2019, an agreement was signed between the Swiss trading company Glencore and the Japanese company Tohoku Electric Power on fixing the prices for Australian coal. As a result, coal prices in Southeast Asia have also shown some negative dynamics. The average price of a ton of coal in March 2019 amounted to $94.75. In April, it came to slightly above $86 and in May, about $85. One could say the Russian coal industry got “stormed”, and the only thing that prevented it from becoming a tsunami is the fact that Russian Railways reduced transportation fares.

TASS, November 26, 2019: “The Kemerovo Arbitration Regional Court has declared the Krasnobrodsky South mine as bankrupt.”

Tayga Info, December 30, 2019: “Workers of the Zarechnaya mine were paid wage arrears for October and a 14% advance for November.”

Prime, September 30, 2019: “In May of our current year, the Kemerovo Arbitration Court has closed the case of the bankruptcy of the Rover coal company.”

There has been a lot of similar news over the course of last year. Debts, courts, lawsuits, property arrests and public sales. Naturally, bankruptcy does not mean that production at a given mine has stopped once and for all: a bankrupt company can always get new owners who will decide to start everything over again, or it can be bought by a larger producer who, by investing money, will solve the situation fairly quickly. However, no one can guarantee that world coal prices will not be brought down to a level such as one that could drive the Russian coal industry into a crisis. They actually could be, whether that be by upcoming weather anomalies in any particular region on the planet, major contracts of Australian coal miners with important consuming companies, decisions coming from the economic department of the Central Committee of the Communist Party of China or even Greta Thunberg on the pedestal of the world’s largest economic forum.

The role of coal industry in the Russian economy and more

Yes, Russian is indeed increasing its coal exports year after year, confidently moving away from those who rank fourth or fifth in the ranking table. However, the gap between leaders is shrinking way too slowly, as Australia and Indonesia together control over half of the world market. Also, the stubbornness of European countries in their struggle for a complete abandon of coal in the energy sector does not depend on the actions of Russian companies, both coal and transportation. Russian ministries of energy and economic development periodically publish their forecasts, but with all respect due to the experts, there are countries whose behavior cannot be predicted nor do they control the weather. Forecasts inevitably have a probabilistic nature. By relying on them, both the long-term strategy of the Russian coal industry and the investment plans of individual companies have no chances of working out. The threat of a crisis will be roaming over the coal mines, just like the ghost of communism in Europe once did.

Our magazine does not involve itself in political science, we simply state the facts the way they are: the Russian Federation as a state does not have a single share in any Russian coal company; the coal industry in this country is wholly and entirely under the control of private owners. Capitalism, as an economic system, does have one innate feature: the inevitable privatization of profits and the nationalization of losses. In the event of a crisis, incorrect leadership decisions, climatic anomalies, decisions taken by politicians and leaders of other countries, Russian private coal companies may become bankrupt. This is the risk they’re taking, for they are entrepreneurs. But the problem of unemployment, the risk of a wave of bankruptcy sweeping across the entire chain of related enterprises (a simple example: after receiving advance payments, an entire batch of equipment was made for a customer who ended up being “out of service”. Thus there is no final payment, a delay in salaries and settlements with suppliers of various components and a delay in payment of fees for monopolists, which leads to a bankruptcy no longer in the coal industry but in the engineering one) which will cause an emergency situation in one or another industry, all that will become a problem of the state and will inevitably lead to tax losses for regional and state budgets.

About 150 thousand people are directly employed in the Russian coal industry and at least half a million work in coal related industries. Coal enterprises are city-forming in 31 cities with a total population of 1.5 million people. Coal stands for 50% of electricity generation beyond the Urals and nearly 100% of heat generation. For the Artic, it is basically the only energy resource that ensures the very existence of settlements on the coast of the Arctic Ocean and the lower part of the largest Siberian rivers. Coal represents about 40% of cargos for Russian Railways (being ordered by railcar industries and its related enterprises). Even if we assume that a miracle could happen and the gasification of the entire territory of Russia will reach 100% overnight, the climate of the Arctic, Siberia and the Far East will not allow us to completely part with coal. Sudden freezes cannot be canceled, reserve gas transportation capacities cannot be maintained and it is impossible to equip each settlement with underground gas storages, whereas having a peak-load boiler house and coal reserves is pretty doable.

Coal and developing countries

Russia has always needed, still needs and will always need its own coal. It also is and will remain a demanded raw material for both ferrous and non-ferrous metallurgy. Coal has always been, still is and will remain demanded in numerous other countries for energy needs. No matter what Thunberg can say, about a billion people on this planet have no opportunity to use electricity and another 700 million receive it with interruptions and other problems, and it is precisely the countries where these people live that are lacking funds to build nuclear power plants, regasification terminals for receiving LNG, gas pipelines, underground gas storage capacities and distribution networks. However, that these countries can afford to do is to find funds for coal-fired power plants by paying with other minerals and thus provide the needed services.

The prevailing stereotype “middle east = oil” has been rooted in our minds for a long time, though the reality is quite different: coal-fired power plants with a total capacity of about 24 GW are already operating there and another 41 GW worth of power plants of being designed. Oman is planning the first coal-fired power plant with a capacity of 1.2 GW in the near future. In Egypt, it is planned to build a giant with a capacity of 6 GW, and the UAE plans to complete the construction of two coal-fired plants with capacities of 2.4 and 1.2 GW by 2023. Other stations are under construction in Iran and Jordan. There are also active coal stations in Israel. According to IEA (International Energy Agency) estimates, this region will have a total installed capacity of coal-fired power plants of up to 77 GW by 2025 (in comparison, Russia has about 50 GW of coal-fired generation).

In the years 2017-2018, there were 260 coal-fired power units under construction in the world. Among the countries launching new power units we may cite Bangladesh, China, India, Indonesia, Japan, Mongolia, Pakistan, Philippines, Senegal, South Korea, and, of course, the list does not end there. Anyone “taking a walk” along the great Nile river can notice that there are many countries in its waters that are experiencing problems with electricity generation and who do not feel the desire to live long enough to experience heated conflicts amongst themselves because of the construction of hydropower dams. According to UN estimates, by 2025, with the exclusion of Egypt, about half a billion people will be living in Burundi, Congo, Ethiopia, Eritrea, Rwanda, Sudan, Tanzania and Uganda. Politics and military cooperation are important, of course, but in this region the country that will end up with the most decisive influence is the one that will be able to offer the best option for the creation of a large-scale and balanced energy system.

State development programs or noble aspirations…?

In Russia, the “Program for the development of the coal industry for the period of 2015 to 2030” is in force. This program is not particularly stringent, though it has some so-called “main guidelines”: increase the production volume up to 480 million tons, a complete renewal of production capacities, accelerated development in the east of the country, strengthening industrial and environmental safety, labor productivity growth by 3.5 times. There also is a lot of talk about how “everything is getting better and better” when it comes to commodity development, modernization, restructuring, ensuring the technological development of the industry, ensuring the strengthening of the scientific and technical base of companies and research centers, developing labor relations, improving the training system for professional cadres and so on. At the same time, the funding coming from the state budget has been planed to amount to 282 million rubles, 150 million of which are to be directed to the development and expansion of the BAM infrastructure. Which leaves a total of 132 million rubles in the balance for 15 years. And the expected result is an increase in production of 100 million tons, an increase in productivity by 3.5 times and the «strengthening of Russia’s position in the global coal market». And no one is even considering revising this state program; there is no dirty black coal in neither national projects or the president’s message, the only exception being the existence of three-room apartments in Vorkuta for 3 thousand dollars each, there are 31 coal-mining towns in the country, but changes in the program, there’s only one thing about them, and it has to do with the construction of the Kyzyl-Kuragino railway, which is necessary for the development of the Elegest coking coal deposit with reserves of 1 billion tons. What is a paradoxical situation is that the government recognizes coal as one of its strategic resources, recognizes its importance for the country both as a source of energy in demand in the country and in terms of its export potential, but it is clearly not in a hurry to coordinate the activities of coal companies. “Will a free competitive market decide of everything by itself?”

The volume of coal production in Russia is growing, coal companies are investing in the development of open pits and mines (that is, they are at least purchasing all the necessary machinery and equipment). Naturally, Russian machine-building enterprises are receiving orders, but not everything is being commissioned in Russia. Coal miners do not only acquire BELAZ equipment, but also American Caterpillars and Japanese Hitachi mining excavators. 51.4% of mechanized roof supports for mines were imported, as well as 81.4% of harvesters for mine cleaning operations, 38.5% of headers and 51.8% of loading machines. In Russia, over 40 manufacturers of mining and transport equipment are working for the coal industry, 14 of which are located over the Urals and 4 in the Urals. The main coal basins in the country are located in Siberia and Yakutia, but it is not the case for machine-building enterprises, which is why even maintenance repairs lead to transportation costs. There is no centralization in the purchasing of imported equipment and there are therefore no service centers for foreign manufacturers in Russia, not to mention the localization of their plants in this country. There is a lack of coordination in these activities: there is no reduction in the costs of technological equipment, nor is there any contribution to reducing the costs of the final products.

“Efficient private owners” and “clumsy” state holding

We could elaborate on efficient private owners if it wasn’t for one obstructive event that occurred in the summer of 2019: on July 26th, the “MINEX Far East 2019” exhibition ended in Khabarovsk during which the PIMCU named after E.P. Slavsky (the Priargunsky Industrial Mining and Chemical Union), a sub-division of the mining division of the state corporation Rosatom, introduced new ARGO loading and delivery machines that are being assembled in the city of Krasnokamensk of the Transbaikal Territory as part of a joint project with Aramine (France), as well as its own model, the PD-2E, which is produced by the repair and mechanical factory of the PIMCU.

“The LHD assembled by Russian mechanics have been successfully tested in France and have already begun working at the underground mine No.1 of the PIMCU. Localized equipment is more than 20% cheaper than imported one. The costs of its production and operation are 10% lower than its cable counterparts, and 15% lower than the diesel ones. We are planning to expand the line of joint products and concentrate on the production of mine dump trucks and other auxiliary equipment.” Igor Semenov, Executive Director of ARMZ Mining Machinery, MINEX Far East conference..

In order for this news to sink thoroughly, we shall repeat once again. While efficient private owners scour the entire planet in search of the most effective mining equipment, fight with manufacturers for discounts and think about what to do and how to do things in the future when comes the time to carry out repair campaigns, a clumsy, inert, bureaucratic state corporation is developing production in Transbaikalia.

ARGO, loading and delivery machine

Rosatom does not discuss the reasons why private coal companies do not follow the same path, since what the corporation does is that it finds a niche for itself and acts accordingly. They seek foreign partners who would agree to at least partial localization, they pick unoccupied production areas, prepare their workers, and they do all that in a way so potential customers can see the new equipment on the spot and not only at exhibitions.

The urgent need for coordination

Are over 40 machine-building enterprises trying to fulfill the orders of coal companies all capable of doing the same preparatory work? They are, only in one case: in the case of close cooperation with coal miners, with confidence that there will be demand for these new types of equipment and if there is funding. It’s quite clear that Rosatom doesn’t need bank loans in order to start a small production, as it will manage the funding part on its own. But when it comes to private machine-building enterprises, it’s not even worth asking, since the fact that Rosatom has turned out to be the leader in this niche is already an answer of its own: machine-builders with bank loans and close cooperation with coal miners is all good, only in theory. One can keep waiting for the “free market” and “efficient private owners” to decide of everything by themselves, but then one shall not be surprised when plans that were announced for the 2015-2030 program transition into some kind of 2030-2100 program. If luck is on the side of the world coal market, then the goals will be achieved. If it isn’t, they won’t. As per usual, there won’t be anyone to blame for this, and late some future government decide of the fate of these coal-producing towns.

Dmitry Medvedev, Ex-prime minister of the Russian Federation

The most surprising thing is that coordination work does not require gigantic budget financing. An analytical center that would undertake an assessment of the needs of the coal industry in equipment and transportation does not require billions of investments. If this is not done, however, what will happen can already be assessed: as soon as the winter turns out to be warm or as Australians get an agreement of their own with the Japanese and the Swiss, the population of Vorkuta will run away, there will be delays in salaries and bankruptcy. The question whether this attitude to the coal industry can be called a state approach sounds quite rhetorical.

Coal and uranium, or coal industry and the nuclear project

Since we started talking about Rosatom, we might just as well take a closer look at it. Russian coal companies export a resource known as coal. Rosatom too, exports fuel, only it’s nuclear. The Belarusian nuclear power plant is currently in the final stages of its construction and a fuel contract has been signed with it for 80 years, that is, until the end of its operation. The construction of the Ruppur nuclear power plant in Bangladesh is also actively carried out, and a fuel contract has been signed with it for 80 years, also until the end of its operation. The construction of the El-Dabaa nuclear power plant in Egypt has not yet begun, but the fuel contract has already been signed, once again until the end of its operation, for 80 years. The list can go on and on if one recalls that long-term fuel contracts practically do not depend of world spot prices for ore-U3O8 uranium (or “yellowcake”) which is the final product of Rosatom’s mining division. This nuclear corporation can build plans for its mining division 80 years ahead: to extract, clean, enrich, fabricate fuel assemblies, provide themselves with transport and packaging facilities, develop and optimize as much as possible all logistics in advance.

TVEL, nuclear fuel (Rosatom, Russia)

In order to maintain and expand their controlled sector in the global nuclear fuel trade, Rosatom includes its own research institutes, research reactors, design bureaus, machine-building enterprises, and have universities regularly train new specialists. The result is obvious: Rosatom owns 66% of the construction projects of new nuclear power plants in the world, and it has just implemented a breakthrough project for the world’s first floating nuclear power plant. One can compare the businesses of the Russian coal industry with the level that has been achieved by the country’s nuclear project. However, this comparison does spark a bitter smile. Simultaneously, the statistics of the global energy balance are also well known: nuclear generation accounts for 11% of the global balance, and coal for about 40%. It’s a childish question which one of these two sectors will have the most serious export potential in the case of research institutes and machine-building enterprises being carefully gathered in the coal industry. Same goes for which of these sectors will provide the most jobs, will commission more orders from related industries and which one will contribute the most to the development of infrastructure in the Far East, Yakutia, Taimyr and Siberia (which are the regions where coal basins are concentrated). If Russian coal miners take from the experience of Rosatom, the results should and will be enough of a legitimate offer for potential coal buyers.

“Here is our coal. Here are our technologies for coal-fired power plants, whose environmental load we have reduced to almost 0. Here are our coal gasification technologies. Here are our filter technologies that cut 99.99% of harmful emissions. Here are our technologies for the utilization and processing of carbon dioxide, ashes and slag. Nothing will be dusting your ports since there are technologies to prevent this. There will be no interruption in supplies since we do not charter anything; we have our own fleet as there are no problems with shipbuilding in Russia. It’s already hot enough in Sudan, Tanzania and Uganda, do you need heating for anything? Obviously, so here’s a variant of a desalination plant. And here is a plant for the production of materials for road construction using ashes and slag. Just sign the 50-year contract on the bottom left of the page. Why is there only Russian coal in the contract? Well, what other options did we have? Developing coal technologies in Australia and Indonesia? How does it all work? Pack your stuff, we’re going to Russia so that you can learn everything on the spot. And bring some people with you, since we need to train specialists for your country. Someone has to work here on all future enterprises. How about payment? Well, there you have tungsten, cobalt, iron ores, non-ferrous metal ores, natural gas and oil, so now we shall discuss everything. What? You also want the same technologies? Alright, then prepare to receive our geologists, they will search for what do you have in your bowels in terms of coal.”

Does this dialog sound surreal? Of course it does. However, if we replace the word “coal” with “uranium”, “nuclear power plants” and “nuclear fuel”, the science fiction ends right there. Rosatom represents nuclear power units with technology of generation III+, the safest of all the ones available, whose nuclear island equipment has already been to the level of manufacturing. This is the very supply of nuclear fuel and the solution to the issue of irradiated spent nuclear fuel. This is also the very training of future foreign specialists in Russian “nuclear” universities. This is also the steady development of technologies: nuclear energy only not energetic, and energetic only not nuclear, and even neither. The Russian nuclear project is a perfectly profitable business and at the same time, the very expansion of the sphere of technological influence of Russia in the world. In fact, this is the expansion and strengthening of the nuclear project itself. So what is the reason why we still cannot say the same about the coal industry?

A few words from Barmalei

Back in the soviet times was shot a wonderful children’s film titled “Aybolit-66” in which the fabulous Barmalei expressed quite adult aphorisms, one of which was “It’s actually good that we feel so bad”. The rapid development of the USSR gas industry at the turn of the 60s made the aphorism sound quite different in the ear of coal miners: “It’s actually pretty bad for us to feel so good”. Of course, gas turned out to be more cost-effective in the energy sector. Environmental laws almost completely solved the laws of chemistry: no ashes and slag, carbon dioxide emissions are half as low. Naturally, the Unified Gas System and the Unified Gas Supply System (UGSS) created in the USRR and still developing in modern Russia is one of the world’s engineering wonders. But entire technological schools, entire areas in the coal industry and areas located at the junction of coal and natural gas ended up being completely abandoned.

Barmalei, the hero of a Russian children’s film titled “Aybolit-66”

Dmitri Ivanovich Mendeleev was the first one in the world to put forward the idea of underground coal gasification. However, three research institutes created in the USSR in the 1930s were closed down in the 60s for being considered unnecessary. All developments of supercritical and ultra-supercritical power plants technologies were practically stopped. All developments related to technologies for burning coal using a fluidized bed are currently at an experimental level. The term «gas holder» turned out to be almost forgotten, since coal gasification using technologies of the first third of the 20th century is less profitable than the use of natural gas. Even such an effective solution to the problem of the explosiveness of coal mines as the extraction of coalbed methane (CBM) ended up being postponed, although Gazprom did conduct the corresponding work at one of the Kuzbass opencasts and the customers were quite pleased with the results. The privatization of coal mines and open pits in the 1990s has undone the coordination within the industry even further, since the coordination was already far from being ideal.

Naturally, it is not Geoenergetics’ work to criticize state policies and government programs for the development of the coal industry in Russia. All we do is state the facts by playing the part of Captain Obvious. However, we will definitely try to talk about all the technologies that are quite capable of reducing environmental damage during the large-scale development of coal energy in those places where it is economically feasible. It was only appropriate to list them in one single paragraph in this very article, just as it was to acquaint you, dear readers, what is actually hidden behind the loud calls for decarbonization of the global energy industry due to the complete rejection of the use of coal in it. We encourage you draw conclusions by yourselves.

Translated by Ellina Hensen
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