Coal the answer to energy poverty

The world's cheapest, most versatile and abundant fuel – coal – must be a major part of the solution to global energy poverty, writes Brendan Pearson.

The Washington Post reported in February that the world's sixth most populous nation, Pakistan, has less than 5 per cent of its original forest cover owing to rampant and mostly illegal logging.

It is on a trajectory to have no forests unless drastic steps are taken to reverse the trend.

Officials in Pakistan, the Post reported, feared that forest stripping would contribute to "more lethal floods, disruptive landslides, bacteria-ridden drinking water and stifling air pollution".

The twist, however, is the harvested timber is not being used to make homes, furniture or woodchips. The trees in Pakistan's cities, towns and regions are being cut down to be burnt so people can stay warm and eat cooked food.

The logging is a human response to a chronic problem – electricity supply can fail in Pakistan for up to 10 hours a day and wood fires are filling the gap. It is a question of survival.

The problem is energy poverty. And it is still more common than we appreciate.

Nearly half the world's population has limited or no access to electricity. According to the International Energy Agency (IEA), 18 per cent of the world's population have no access to electricity at all and 38 per cent are dependent on wood, crop residues and animal waste as their main cooking and heating fuels.

One billion Africans now use roughly the same amount of electricity (619 terawatt hours) as 40 million Canadians and New Zealanders (607 terawatt hours). Ninety million children in sub-Saharan Africa go to schools without electricity.

In Malawi and the Democratic Republic of Congo, as many as nine out of 10 people lack access to regular electricity. The IEA found India alone has 306 million people without access to electricity and 818 million people without access to clean cooking.

The consequences are not difficult to contemplate. Without energy there is no path out of poverty. In poor nations around the world, the calculation is even simpler than that.

As numerous analyses have highlighted, energy poverty affects health. Household air pollution from solid fuels used for lighting, heating and cooking contribute to:

  • 3.5 million premature deaths per year;
  • education – most African schoolchildren attend schools with no electricity and cannot study in the dark; and
  • jobs – lack of reliable and affordable electricity is a major constraint to growth.

The task to close this gap is great and by definition it must be done at least cost. While all energy sources will be needed, the world's cheapest, most versatile and abundant fuel – coal – must be a major part of the solution to global energy poverty.

Without it, the task is insurmountable and the human cost incalculable. Two problems help illustrate the point – cost and capacity.

First, a recent working group report to the International Energy Agency concluded that world energy consumption trends showed that "inexpensive coal serves to decrease the price of electricity, when the price-setting plant is a coal-fired one."

It is why China will increase its coal use by 14 per cent by 2020, why India has doubled its coal use over the last decade and will do so again by 2035, and why coal use in ASEAN nations will triple between now and 2035. Closing the energy access gap without coal will be slower and more costly.

Second, the bottom line is that other energy sources simply cannot meet the projected demand. The IEA reports that over the period 1990 to 2011, world electricity demand has grown by a compound annual growth rate of 2.9 per cent per annum, which is an average of 405 terawatt hours per year. Over the period to 2035, the IEA expects electricity demand to grow by an average of 548 terawatt hours per year.

Can renewables meet this demand? Not likely. The IEA expects power output from renewable energies – including wind, hydro, bioenergy, geothermal and solar photovoltaic (PV) – will grow by an average of only 297 terawatts per year.

Despite these realities, some international financial institutions (and some bilateral aid donors) have bowed to pressure from environmental groups to restrict aid funding to coal-fired generation projects in poor nations.

This decision threatens to have real and adverse consequences. The IEA has estimated that nearly half the funding for power generation projects in poor nations comes from multilateral institutions and bilateral donors.

A study earlier this year by the Center for Global Development assessed the impact of a mooted ban on support for fossil fuel generation plants in poor nations by the USA's major aid donor, the Overseas Private Investment Corporation (OPIC).

The findings were stark.

Sixty million people in poor nations would gain access to electricity under a portfolio that allowed OPIC to invest in natural gas rather than renewable projects alone. Or sixty million fewer with access to energy if the opposite approach is adopted. The findings would have been even more dramatic if the study had included coal investments.

Despite these findings, the World Bank is pushing ahead with a policy that will restrict funding support for coal-fired generation plants in poor countries except in "rare circumstances".

It is the sort of decision that will inevitably lead to perverse consequences. Just like in Pakistan.

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