The Australia Institute (TAI) has released a new report questioning Prime Minister, Tony Abbott’s, claim that “coal is good for humanity” and poor people in particular. The Executive Summary is presented below:
The term “energy poverty” refers to people who do not have access to electricity and clean cooking facilities. Globally, 1.3 billion people do not have access to electricity in their houses and 2.6 billion people cook by burning coal, wood and other solid fuels. This has major impacts on people’s health, safety and quality of life.
The coal industry is very vocal in promoting energy poverty and pushing coal as a solution to it. The head of major coal company Peabody Energy describes the problem as:
Energy poverty is the world’s number one human and environmental crisis.
However, what Peabody says and what it does about energy poverty are very different. Although the company contributes to many charitable causes, it does not donate money, staff time, expertise or discounted fuel to any project that directly alleviates energy poverty.
Peabody’s only contribution to energy poverty is maintaining a website and social media page which promotes coal as the solution to the problem.
While Peabody talks about energy poverty, other organisations act. The United Nations, World Bank, governments and non-government organisations are addressing energy poverty through programs relating to electrification, lighting and improving access to cooking facilities, often in partnership with the private sector. The largest program is the United Nations and World Bank ‘Sustainable Energy for All’ initiative which has links with governments in 85 countries.
None of the main energy poverty initiatives promotes the use of coal.
Perhaps because of this, the coal industry does not support any of the main energy poverty initiatives.
Other coal companies regularly echo Peabody’s statements on the importance of addressing energy poverty, however unlike Peabody, some of them do support direct efforts to alleviate energy poverty, such as:
- Indian coal company Adani provides solar-powered street lighting to rural areas in India.
- BHP Billiton supports solar projects in Pakistan.
- Rio Tinto connected villages in Peru to hydo and gas-fired electricity grids.
- Anglo American are piloting an off-grid electricity system for South African villages using platinum and methanol fuel cells
- Thai coal company Banpu built a mini grid for villages near a mine in Indonesia, powered by a diesel generator. Despite extensive searches and contact with companies and mining lobby groups, we could not find a single example where coal companies have supported coal-powered energy poverty alleviation projects.
The reason that even coal companies do not use coal-fired power to assist with energy poverty alleviation is that it is not economically rational to do so. The cost of other energy sources, including renewables, is now competitive with coal-fired power at a utility scale. More importantly, off-grid and mini-grid initiatives avoid the large up-front costs associated with coal-related infrastructure making them a much better investment for households, communities and governments affected by energy poverty.
In light of this economic reality, many of the claims made by Peabody Energy and other coal industry supporters do not withstand scrutiny:
Claim 1: Coal use drives world economic growth
A regular claim made by the coal industry is that coal use causes economic growth. This claim mistakes correlation with causation. It is not coal that causes economic growth, but economic growth can lead to increased coal use.
In fact coal use has grown much slower than economic growth. If world GDP had grown at the same rate as coal consumption since 1980, today’s world economic output would be almost USD$12 trillion lower than it is.
Even the correlation between economic growth and coal use is not as strong as the coal industry claims. Official data sources show that from 1988 to 2002 world coal use was flat while economic growth was strong, as shown below: