The coal-SDGs link

The coal-SDGs link

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WHAT is the link between coal and the UN Sustainable Development Goals (SDGs)? While SDG 7 calls for access to affordable, reliable, sustainable and modern energy for all by 2030, the global coal industry believes it can play a major role in helping to achieve this target.

In his latest update on the progress of the SDGs, the UN Secretary General’s report noted about SDG 7: ‘Progress in every area of sustainable energy falls short of what is needed to achieve energy access for all and to meet targets for renewable energy and energy efficiency. Meaningful improvements will require higher levels of financing and bolder policy commitments, together with the willingness of countries to embrace new technologies on a much wider scale.’

The energy debate was recently rekindled when the US Treasury urged multilateral development banks to help developing countries access coal cleanly and efficiently to provide electricity to aid development. In Africa, more than 600 million people lack electricity, and African countries that are sitting on the continent’s 50 billion tons of coal reserves are hoping that the US Treasury’s move will change things for them. Some experts argue that coal plays a critical role in bringing affordable, reliable electricity to hundreds of millions of people in developing and emerging economies. World Bank figures show that 600 million people have been lifted out of poverty in the last 30 years, but with almost all in China, whereas the levels of poverty in the rest of the developing world have been negligible over the same period.

In line with the aims of the SDGs, energy experts, including those from Africa as well as UN agencies, will meet at a global forum in London this month to find out how coal can be a ‘responsible partner for development,’ especially in line with the SDGs. Apart from looking at the link between coal and SDG 7, the forum will also focus on SDG 8, which aims to promote inclusive and sustainable economic growth, employment and decent opportunities for work.

‘The link between access to affordable power from coal, economic growth and prosperity is clear,’ notes the World Coal Association (WCA), which is hosting the global forum. This is closely related to SDG 8, which calls for increased labour productivity, reduced unemployment rate, especially for young people, and improved access to financial services and benefits that are essential components of sustained and inclusive economic growth.

The UN Secretary General’s update on SDG 8 noted that overall average annual GDP growth in the least developed countries fell from 7.1 per cent between 2005 and 2009 to 4.9 per cent between 2010 and 2015, well below the SDGs target of seven per cent.

The WCA said of the London forum: ‘Building on contributions from expert speakers and interactive discussions, the forum will provide a platform for multi-stakeholder dialogue to confront the complex reality of meeting the 2030 Agenda for Sustainable Development, with a focus on the interface with coal.’

The coal issue was expected to be discussed at the week-long World Bank/International Monetary Fund Annual Meetings  in Washington DC this month. African countries are not happy about the way their economies have been run under the supervision of the Bretton Woods Institutions.

For instance, Ghana’s Finance Minister, Ken Ofori-Atta, wants African countries to have more say in the way that the World Bank and IMF intervene in their economies. Speaking at a ceremony to mark Ghana’s 60 years of membership of the World Bank, he noted that the World Bank got away with the mistakes it made in the 1980s and 1990s in Ghana because successive governments could not challenge the ‘orthodoxy’ that underpinned economic modules imposed on the country.

‘Like the SAP [Structural Adjustment Programme] and the ERP [Economic Recovery Programme],’ he said. ‘It was made to appear like the gospel. There are always no other alternatives.

‘There must be an honest discussion after 60 years,’ Ofori-Atta said, adding that he would like to see developing countries challenge World Bank economic prescriptions and to make recommendations on policies imposed on them. These countries are waiting to see whether the World Bank will follow up on the US Treasury’s recommendation on coal use – something that the African Development Bank already supports.

The coal issue, with its climate change implications, is focusing the minds of African countries that have substantial coal reserves such as Ghana, Nigeria, and South Africa. These are countries that are facing significant energy problems.

Experts point out that coal has an important role to play in supplying base-load electricity. Coal-fired electricity can be fed into national grids and will bring energy access to millions, supporting economic growth in the developing world, they explain. According to the International Energy Agency’s World Energy Outlook 2011, ‘coal alone accounts for more than 50 per cent of the total on-grid additions’ required to achieve the IEA’s Energy for All goal.

‘This clearly demonstrates coal’s fundamental role in supporting modern base-load electricity,’ noted the WCA. ‘Many countries with electricity challenges are also able to access coal resources in an affordable and secure way to fuel the growth in their electricity supply.’

Apart from coal resources meeting the huge demand for electricity in Africa, surplus coal could be exported to raise revenue. It has become a much sought-after resource by China and India, which are pushing ahead with coal-fuelled projects. Experts believe that African countries can fuel this demand by selling their excess coal to the two Asian countries.

‘Both countries will continue to rely on coal imports despite having their own deposits,’ Rory Kutisker-Jacobson, an equity analyst, told NewsBase Global Energy Research at the 2017 Africa Mining Indaba in Cape Town at the beginning of the year. ‘Coal producers in Africa can still make a lot of money.’

This is coming at a time when pressure is mounting on African national oil companies to balance their books, as prices continue to tumble. An analysis released last week by PwC, warned: ‘African countries that have for decades depended on their national oil company as a key source of revenue will need to rethink business models and strategies to avoid being captive to a single energy source and to allow them to rebalance budgets.’

 

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