Wyoming’s coal exports have dealt another blow


G7 countries, in effort to stem the effects of climate change, agree to halt funding for carbon-emitting carbon energy projects by end of 2021

Wyoming’s hopes of exporting Powder River Basin (PRB) coal to other countries as demand for coal declined in the United States took a heavy blow on Friday.

After a two-day meeting, G7 climate and environment ministers pledged to phase out all government-funded funding for carbon-emitting coal projects by the end of the year.

The G7, or Group of Seven, is an intergovernmental organization of major economies. Its members include Canada, France, Germany, Italy, Japan, United Kingdom, and United States. The group also includes representatives from the enlarged European Union.

In its press release, the G7 pledged to rebuild better, placing “climate, biodiversity and the environment at the heart of our COVID-19 recovery strategies and investments. […] We will help put the world on a nature-positive and climate-resilient path to bend the curve of biodiversity loss by 2030 and keep a 1.5 ° C temperature rise limit within reach by making our 2030 ambitions consistent with the goal of achieving net zero. issues as soon as possible and at the latest in 2050. “

Wyoming and the thermal coal industry have long considered exporting coal to Asia, the industry’s only bright spot. On a cost-per-tonne basis, the coal export market generates higher yields than coal sold in the United States, but it has been hampered by high transportation costs and regulatory decisions from West Coast states. .

1.5 degrees

The Paris Agreement under the United Nations Framework Convention on Climate Change aimed to limit the increase in global average temperature to 2.0 ° C by 2050. However, based on a report panel of the Intergovernmental Panel on Climate Change (IPCC), many environmentalists and the G7 focused on 1.5 ° C as a threshold to avoid the worst impacts of climate change.

While eliminating the financing of coal projects, the group has committed 100 billion dollars per year each year until 2025, for “actions to mitigate and adapt to climate change”. The statement also called on other government organizations and the private sector to align their funding decisions with the Paris Agreement.

The coal is out

The press release and the G7 take a strong stance against coal for power generation.

The Powering Past Coal Alliance (PPCA), whose members include 36 countries, of which the United States is not a member, are specifically acknowledged in the press release. Although the United States is not a member of the organization, several American states and municipalities have joined the group.

According to the PPCA website, the organization aims to “secure commitments from governments and the private sector to phase out existing coal power relentlessly; encourage a global moratorium on the construction of new coal-fired power plants relentlessly; shifting investments from coal to clean energy, including through efforts to restrict funding for coal-fired projects; [and] achieve coal phase-out in a sustainable and economically inclusive manner, including appropriate support for workers and communities. “

The G7 communiqué appears to advance a number of the objectives of the PPCA.

Unlike Wyoming’s targets, the G7 statement includes only limited support for carbon capture utilization and storage (CCUS) technologies, listing it only as an option to achieve net zero emissions for decarbonize certain “hard-to-reduce industrial sectors such as iron and steel, cement, chemicals and petrochemicals. “

CCUS has been a frequent topic of discussion in Wyoming, with the support of Governors Matt Mead and Mark Gordon and the legislature to develop and deploy CCUS technologies (WyoFile reposted on County 17, May 10). The University of Wyoming participated in carbon capture and storage (CCS) feasibility studies as part of the Dry Fork Station Power Plant CarbonSafe project in Gillette (County 17, March 18).

In order to achieve the G7 objectives, the press release concentrates investments in energy efficiency, renewable energies and energy storage.

Limiting construction in developing economies is seen as essential

The elimination of the financing and financing of coal-fired power plants will make the continued construction of new plants very difficult for developing countries. As many countries strive to lift their populations out of energy poverty, generating electricity from fossil fuels is often the most cost effective and reliable option. Developing economy countries lack both the capital and grid reliability to deploy renewable energy on a large scale, and the technology for cost-effective grid-scale storage could still take years, if not decades.

Although the focus has been on CCUS and CCS by Wyoming, the technology has yet to be proven on a commercial scale and is expensive to both implement and operate. Falling natural gas prices have prompted many operators in the United States to simply ditch aging or unprofitable power plants to reduce carbon emissions and save taxpayers money, as natural gas continues to be available. generational price levels without expecting major price increases in the foreseeable future. .

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Almost all new coal-fired power plants are being built in developing countries, with China leading the way. According to Reuters reports, even taking downgrades into account, China’s coal-fired capacity increased by 29.8 gigawatts (GW) in 2020. In the same year, 17.2 GW of coal-fired capacity have been withdrawn in the rest of the world.

According to reports from YaleEnvironment360, 58% of the total energy consumed in China came from coal and China accounted for 28% of total CO.2 emissions in 2020. China also has 247 GW of coal production capacity in planning or development, which means the country is by far the largest economy investing in coal. China has indicated that its emissions will peak by 2030.

The G7 press release draws attention to the importance of “moving away from high carbon electricity production to support clean energy transition in developing countries”.

By blocking access to capital, many countries will be unable to build new coal-fired power plants. Those who keep moving forward are likely to be forced to switch to other fuels given the high costs of CCUS and CCS or to seek funding from China, which has been more active in financial markets in recent years.

According to The Guardian’s report, Japan, which is a member of the G7, held on to the two-day summit last week, arguing that if it stops funding coal-fired power plants, developing economies would simply turn to China, whose designs are less effective than those of Japan. Ultimately, however, Japan’s representatives agreed to the terms set out in the statement.

Wyoming’s response

Despite Wyoming’s reliance on coal for its income and jobs, to date only Representative Liz Cheney (WY) has spoken out against the G7 move. In a tweet earlier today, Cheney said, “Refusing to fund coal projects will be devastating for Wyoming,” and mentioned technology as a solution.

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A declining industry

In the United States, the decline of coal as the main source of electricity produced has been rapid.

For the year 2020, reports from the Energy Information Administration (EIA) show that coal produced 19% of total US electricity, having been largely replaced by natural gas, which provided 40% of electricity. American. This is a role reversal, as coal has provided 40% or more of the electricity produced in the United States for decades.

Electricity production in the United States by major energy source, 1950-2020. (Graphic: Energy information administration, public domain)

In 2011, EIA data shows that coal provides 42% of electricity in the United States. The total gigawatts of electricity generated from coal declined over the same period, from 1,733,430 GW in 2011 to 773,805 GW in 2020 (EIA report). Likewise, in 2011, the coal consumed for power generation in the United States totaled 934,938 thousand short tons, up from 436,076 in 2020 (EIA report).

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