[MUSIC] Let's start even though we're waiting for one more speaker which he will arrive soon. So welcome everybody. Thank you for coming for our third event and series, the geopolitics of energy and the energy transition. Today we want to speak about coal. Over the past centuries, coal has helped power economies and developed countries lifting billions of people out of poverty. At the same time, coal is emerging as the leading contributor to climate change and air pollution. And in order to keep up with the Paris Agreement targets of restricting global warming to well below two degrees, coal burning must decline rapidly. Most importantly, coal masters appear from the energy system of both advanced and developing economies. However, coal's role has accelerated since 2000, was global consumption increasing? This is mainly driven by rising consumption in Asia like China and India. Currently, coal still accounts for about 30% of the world's primary energy consumption. The future of coal remains an urgent question and different global trends lead to uncertainty about this future. Rising demands in Asia on the one hand and so the emergence of shell and collapsing prices of renewables on the other hand. The question arises which future coal will play in this energy transition, and in a situation where both rising energy demands and population growth face very serious climatic challenges. In this context we have organized this high level debate on the future of coal today. And we will discuss which role the source of energy will play or should play for a global energy transition which is required in order to meet the Paris Agreement goals. >> Thank you Leone for this lovely introduction. I'm excited to introduce our speakers for the day. So Mr. Olivia Sartor, who's a senior researcher for European climate and energy policy at the l'Institut du développement durable et des relations internationale or IDDRI. Then Mr. Peter Fraser who is the head of Gas, Coal, Power Markets Division, at the International Energy Agency. And finally, who will arrive a bit later, Laurence Tubiana, who is the CEO of the European Climate Foundation, the chair of the Board of Governors at the French Development Agency, and the former climate change ambassador of France and special representative for the cap 21. We will start with a short introductory presentation by each of our speakers addressing their vision of an effective, an efficient, fair, and inclusive energy transition with or without CO. Following this, we will continue with the debate among our speakers in which I will ask them to react to a statement that we introduce. The second part of this evening will be dedicated to questions on the topic. So first we'll have the presentation by Mr. Olivia Sartor. Thank you. >> [APPLAUSE] >> Can you put up the presentation so I can keep to it? I think you do it- >> Just click. >> Okay, great. >> Okay. >> Hi, thank you very much for the invitation to being here today, it's a pleasure to speak to you all, especially in such a lustrous room [LAUGH]. So I recently ran an international project called the Cold Transitions Project where basically I worked with a consortium of living research teams in six major coal consuming countries namely China, India, South Africa, Australia, Germany, and Poland. And as part of this project, we looked at sort of emerging trends that will affect the future of coal. How countries are going with implementing their indices to reduce their coal consumption under the Paris Agreement. And also we explored pathways with them to how they might feasibly transition out of coal in a way that's both technically and economically feasible for the energy system of the economy, but also just for workers and communities that are affected by the face than of coal. So if you're wondering more about it, please click on the website that's called transition.org, all our publications are there. Okay, so I was asked to provide a bit of sort of a scene setter about what's happening in terms of coal consumption in the world. So here you see, first of all in the top graph, basically, you see in the paper that coal consumption rose last year by x percent and blah, blah, blah. Really what's happening, if you look at the global picture, coal consumption rose a lot for about 20 years, between the 1990's and some 2010, largely leading to the growth of China, and industrialization of China. Since then, coal consumption has basically been flat. It goes up and down depending on sort of the economic factors in some of these key countries, but essentially it's stalling. An important thing to note however is that we have consumption going in very different directions in different parts of the world, okay? So in China as you can see basically consumptions have flattened out, but it's not yet declining. And that's a significant problem. In the developed world, so OECD countries, European states, North America, coal consumption is now declining. And in some other places in the world such as South East Asia, coal consumption is still increasing. That said, when we look at various factors that are affecting coal consumption going forward, we see that it's most likely coal consumption is actually, pretty much peaked, and will start to decline in the next decade or so, okay? We're still a long way from the two degree compatible pathway required by the Paris Agreement. But we do see coal consumption declining. So why is that? Well there's a few different factors that one is, as the previous speaker mentioned, is that the cost of renewables is becoming super, super cheap. And so we're now at the point where, which wasn't the case even five years ago, wind and solar are essentially competitive with coal without subsidies in many parts of the world. In some places like India or Australia, the options are coming in below the operating cost of some coal plants. A second factor is of course climate mitigation. So we have an increasing number of countries that are basically pledging to phase down or to limit coal consumption or phase out coal consumption. There's local air pollution factors, so obviously as you would know in China or India, local air pollution is a major political issue and is a key motivator for the government there to reduce coal consumption which is partly why it as put a cap on coal consumption. And then also there's other physical environmental limits, right? So even things people don't think about like water for example. In India in 2017, the country had to basically choose between providing water to farmers and water to cool coal plants in some water stressed regions. And that lead to a closing down roughly 10 gigawatts of coal fire capacity during the dry season. So there's a bunch of factors like these which are also basely adding to this momentum behind the fact that, well coal is not ideal for development, it's not ideal for our economy, it's not what our citizens want. And the cheaper these alternative solutions become, the easier it is to basically put in place alternatives, all right? So broadly speaking, this together with climate is the reason why we see coal demand declining. So I mentioned before that the declining cost, so this is basically world average auction prices for offshore wind, solar, and onshore wind. As you can see, even since five, ten years ago, the costs are now in a race since they're broadly competitive with coal. For smaller scale solutions, batteries are also becoming more interesting which is good for energy access in poor countries. Because it means that you can often supply electricity access without building big coal plants and big powers and big cables and the poles. In several countries, you also have political decisions to phase down or phase out coal, okay? So, in 2017, you had a thing called the Powering Past Coal Alliance, which has now had something like 36 national and sub national governments sign on to effectively phase out coal by 2030. France is signature to that, the UK, Canada, and actually roughly two thirds of the European countries. More recently you've had Spain effectively agree with unions and coal mining regions to close down the last four coal mines in Spain. The EU has recently agreed, adopted a massive package of legislation to effectively achieve a minus 40%, cut its emissions by 2030. In fact, it may even go a bit further than that, depending on how it implements the policies, which will contribute also to phasing down coal. And perhaps the biggest recent news is that Germany, which is the fifth biggest coal consumer in the world and the fourth biggest economy in the world, a major industrialized economy, recently achieved an agreement with its coal sector. So unions, local governments in coal mining regions, energy experts, etc, to basically phase out coal between 2035 and 2038 at the latest, okay? So, this is a major coal-consuming economy that's now basically designed and scheduled for coal that the government is now looking to implement. And that was done with the support of labor, with the support of the regions because it was based on a consensual approach to finding a common solution to tackle this problem. So what we also see, I think, is that the social consensus around coal is changing, whereas once upon a time it was contested whether we should phase out coal or not, or move first or not. Now we see countries just seeing it as being inevitable, and therefore leading to get ahead of the process, and manage the transition the way Germany has learned to do. And then you have some other news, so for example, recently, I can't quite read my slide from here, but basically a major mine that's in Glencore. Which is the biggest exporter and trader of coal outside of China in the world, recently announced that it would cap its global coal output, so it would not seek to increase its coal output in future. And would diversify into mining to support clean mobility and clean energy. Glencore is, I can tell you, one of the more conservative actors [LAUGH] in the energy space and has been for quite a while. So it's a big change. And also in Australia, Australia is the biggest exporter of coal globally. Recently, a court in New South Wales, in the biggest state in Australia basically stopped the opening of a new coal mine by a company because it was not considered compatible with the Paris Agreement, okay? Which again, will seriously affect the massive reinvestments in new mines in Australia, okay? So, all that's fun, people want to say, but yes, but some countries are still putting new coal right? And that's also true, so you have to have a nuanced picture of what's going on. What we see however is, so this graph on the left basically shows you foreign investment decisions in new coal plant, since 2010, basically what you see is since 2015. So you have the Paris Agreement, you essentially have a reduction by about a half to a third of the new investment that's going on. What this means is that roughly we're now phasing out old coal plants at roughly the rate that we're phasing new okay, which means that we're not yet at the point where we can turn the corner, but we're getting there. Okay, a critical issue is that we have, if we look at the age of the coal fleet globally, we have a bunch of old plants that we could phase relatively quickly, okay? But there's also a bunch of new ones that have been built, okay? And that's a big problem we face. Okay, so I'm going to skip this. This is basically showing that capacity and demand is declining. It's one of the big regions of the world, so the graph here on the left is basically coal plant capacity in Europe and the forecast 2030. On the right, you have coal demand in the United States, which is in major decline because of shale gas and renewables and other regulations. And also, in China and India, there are things happening to develop alternatives to coal. Since I have a colleague from the IEA here, I thought I might tease him a little bit and present this [LAUGH] craft which I which is basically looking at the forecast for coal demand going forward. Over the last 10 years that the forecast by the IEA okay and what we see is that essentially every year there but basically systematically every year this forecast has been revised downwards, okay? And that's I think because of the factors that I was describing, we see a structural change going on behind these projections which is leading us to a slowdown in the rate of growth. And hopefully soon a turn in the consumption of coal. [SOUND] Similarly we can do a similar graph for renewables to really [LAUGH] help. I shouldn't have gone with a second slide but it's a very impressive graph. Basically solar pv outdoing expectations significantly. That's still the case. So I'll probably finish up there and I can say more about the just transition in the social side maybe in the discussion. One thing I would say though is that, in our coal transitions project, we look beyond just the short term trends and we looked at this long term perspective, how do you get to a decline, a coal free energy system by 2050, okay, which is the key question. And one of the things our teams did was they developed pathways that they think are economically and technically feasible while assuring energy access for everyone in their country that would enable their countries to take coal out of their power systems and the heating systems. So here on the right, you can see a scenario for China which includes a mix of different technologies. Similarly on the left, you can see the scenario for South Africa. So even in these developing countries, it is possible to do this transition. And I'm about to say more about how that can happen later on. >> Thank you very much. Next up, we’ll have Mr. Fraser. Okay, it's good, Owen, >> Click forward. >> To the slides or so, because I'm doing- >> Okay, good. >> Nothing's happening. >> Can you get a person to push the button, yeah, yeah, next one, next one, okay. Next one. >> That's Henry, look at Henry here. >> [LAUGH] >> Sorry, this is mine. >> It's >> It's don't do the- >> I agree, sorry about that. >> Let me, so I'm trying to go backwards now. >> Okay, stop. >> But now I got- >> No, that's >> Forward. >> 40. >> Forward, forward. >> No. >> There we go. >> I got you. >> Okay, here we are. >> Sorry you got- >> All right, that's all right, just a little confused though. Got a little confused here. So obviously, after, Oliver will deny it, setting me up beautifully and a chance to actually create some, sorry, you can't hear me, some options for the debate, some points of discussion. So I am going to talk a little bit about coal(s history because I think it's useful to understand the past to understand where coal is going. Also to talk about our different scenarios when we look at coal and why we have what we have. But also talk about what the role of coal might be if we are going for a low emissions future, specifically through the eyes of our sustainable development scenario and how that might look like. Look like for coal. So let me start with the with the graph you see here on the left hand side of global coal demand which only goes back on the graph here in 1980. But just so here's a thought for you to appreciate where we've come in coal. It wasn't until about 1910 that the world consumed a billion tons of coals measured as coal equivalent in a year. Not before that all through the Industrial Revolution. It took another 80 years for coal consumption to grow from 1 billion tons to 3 billion tons. And then after remaining pretty quiet in the 1990s and late 90s from 1999 to 2010, it grew another 2 billion tons, in 11 years. So from 8 years to 11 years of growth, we experienced an enormous increase of coal consumption during that period. Most nervous China, and I will get into that in a moment. But as I was saying we've hit kind of a plateau since then, actually called demanded increase in 2017. And we'll have our preliminary numbers for 2018 out next week, and coal will be up again, in part because of China. And so coal for the moment is still hanging around, it is after all still today a quarter of the primary energy supplies coming from coal. It's also about 37% of the electric power produced in the world coming from coal. But when we look at it where coal can be going in the future, we really think it's not so much technology as environmental policy it's going to drive it. So we look at the three scenarios you see in the three colored lines on the left there. We have our current policy scenario where we actually think there's some room for growth. Our newly policy scenario where we think it can be flat. And our sustainable development scenario will talk more about later where we actually have a policy in place that will actually drive, things down. Now, after listening to all of our you might think why aren't the three scenarios down, down and more down? Because that seems to be the the picture he's painting, but there's some reasons for that. And to do that, I have to click on to the next slide if I can. Oops, sorry that went too far. Now too far back. Okay. And that's really to look as I have alluded to the very different picture when it comes to different countries. And if you look, now to look at this we have 2000, 2017, 2000 blue 2015 orange, 2023 in the dash which is our latest medium term forecast of coal we publish a couple of months ago, three months ago. And if you thought that the three left three countries or regions on the left as US EU 28 and Japan Korea. And we can see a pattern since 2000. Since 2000 of overall declining coal demand, especially in the US, where a lot of it's been substituted for natural gas and Powergen. In the US as well, Japan and Korea actually increased. That can be explained by economic growth in Korea in the course of Fukushima accident in Japan. Whereas in 2000, these three regions accounted for a significant portion of a total global coal demand which is about again, about 3 billion tons. By 2017, there are much less significant. And in fact, you have EU for example is down to about 6% of the global coal demand. By contrast look what's happened on the right three there, China, India, and Southeast Asia. In China, as all have mentioned, has had this enormous growth and 89% of the growth that we saw between 2000 and 2017 came from China. We actually think that China is probably not going to grow anymore, our medium term forecast has it declining up to 2023. It's not so much because of power generation it's because China chose a very coal intensive path. They've used coal for heating. They use coal in industry and they have a horrible air quality problem as a result. So they are making great strides, great strides in reducing their coal consumption in industry and in residential. Most of it replaced by gas, and some of it replaced by electricity. Now the gas, replacement by gas does reduce their CO2 emissions. Their replacement by electricity for the most part unless they're using heat pump does not. But it does make their air quality much better. And air quality is an important environmental policy that's going to drive changes in the next several years. One of the factors that we've all alluded to. Now we see India is also growing, and we still think it continues to grow. Last year it grew at about four and a half percent, in terms of CO2 emissions and power generally similar. And we do think there's some room for India to continue growing. And in fact the same for Southeast Asia. But it's also pretty clear from the graph that India is not China. China was once one of a kind, but it's an enormous. And also you need to keep in mind that in the case of China and India, they are mostly using domestic coal. China consumes just over half of the world's coal, it produces 48% of it. And the fact that coal is a domestic fuel is why you might see a country like Germany take another 20 years to phase it out. It's a difficult decision for some of these social issues that Oliver is relating to. It also means that changing the path is much more difficult. Now, that's the picture on demand. But of course the picture on demand is also a picture on investment. And so as a consequence, the group of countries on the right there have been investing in new coal infrastructure. Whether it's coal mines, whether it's coal power plants, the other coal infrastructure like rail reports. There's been a lot of investment in developing the growth of coal there in the last 15-20 years. So that actually has an impact in terms of how we think about the future in a low emissions future, and where the reductions are going to come from. When we look at our new policy scenario, which was the middle line that I showed you for coal. And this is for all CO2 emissions, not just from coal. This is from coal, oil, gas as well. We actually would expect if the promises for the nationally defined contributions are met at 2030, but without further policy beyond there, that emissions would actually increase up to 2040. But if we want to get to our sustainable development scenario target, we're going to have to cut emissions quite a bit. But when we do that, we have to think about the existing infrastructure, a lot of which is in Asia. And whereas in places like Europe or North America, where countries who have signed the powering pass coal lines which by the way account for about 2% total coal demand. The infrastructure is old, retiring it is not a huge imposition. It's a different scenario when you think of a place like China. And indeed, half the world's coal plants today are under 15 years old. And as a result, there's a real risk that some of those assets can be stranded. Now, if I just, again, you see that the existing assets and those under construction, that's not just again, not just coal, but it's also Gas infrastructure, it's also oil infrastructure, because we really have to cut in our sustainable development scenario, we have to cut our oil consumption quite a bit. That actually doesn't leave us a lot of room to do things without stranding some infrastructure. Now, I want to show you something interesting, which is the role of coal fired power plants. And in this you see that the coal fired power plants under 15 years of age for the most part are still quite a bit of them around in 2040. And that makes it particularly challenging to meet our limits. And to do that what we really need to close about a thousand gigawatts of coal plants, so nearly half of them. We also need to of the coal plants that remain, we need to operate them less. And then finally, we need to for about 20% of this in the scenario that we've constructed, we have carbon capture in storage on the coal plants. That's a technology that's very promising but still rather expensive and it's not something we see happening anytime soon. So just to wrap up two points, one, it's really about decarbonization, not decoalification that we have to focus on. Coal just seems easy, but it won't even it's not that easy and it won't be sufficient in any case. And secondly, different countries are in different situations, and they're going to look at the question of how to deal with coal differently. And then we're really going to need them, and hopefully some technology options, to help them get on a sustainable path, thank you. >> [APPLAUSE] >> Thank you very much. Now I would like to invite Mrs Togana to make her introductory statement. >> Thank you, I think I will stay there, [COUGH] Olivier Sartois and you have presented, of course, the big picture and I don't need to repeat the numbers. And I maybe I will try in a way finally to commending a little bit the picture, how we look at that picture. Can we and of course, it's constructed picture, one is to say the when the decline of coal is not there but has begun in reality and the other one is is there to stay for at least 2040 only to be beyond. And so, again, all these depends on many, many factors which I would try in a way to provide my own interpretation. But again, everything depends on the seriousness in which the climate challenge is taken, by governmentby but much beyond by government, societies, investors, citizen, companies etc, because again the line, and it's, of course already there in the scenario. Consistent more or less consistently we stood two degree in reality a little bit optimistic about how to get to the result scenario. And so probably needing even more even if we forget the objective of 1.5 degrees compared to preindustrial level for global warming. We don't have a lot of choices, we have to decarbonize fully the power around 2050. As you know, the Paris global goal again, it's not because it's Paris, it's because this is consistent with IPCC recommendation if we want to stay below to the receipt In as a global warming compare again to preindustrial level so we have to be net zero emission in the second half of the century. So in a way it depends do finally, again, societies with their all components, companies, investors, citizen will value a risk the threat of climate change enough to make the change. And then of course goal is not only coal but gold is of course first the target but will have many is all for transport, of course heating is coal and oil, it's not only in gas, it's not only coal. But so I think the major element is this one, if people feel that it is really the moment and we can have mixed signal on that on one side, you have now when you look at, if you take that from the bottom to the top, in society you see that there is now citizen movement which we are not negligible in many countries, I was struck by the students strike. Normally more European or US type of movement, happen nice last Friday in one on one and seventy countries. So first, there is a feeling of the danger for the generation where of what you you'll see impact of climate change is happening already, happened really, very strongly. The second is of course the connection between climate change and local pollution. I think Olivier and you have mentioned that, the pollution element has been a deciding factor in China in a way to make climate change even if it's not climate change, but it is a connection between the source of global warming connected to local impact on health has changed as well as the perspective. So you see the society beginning to see finally is not that far away. It has already consequences and we have now piling up studies that connect the global threat who appears to be far away in time and in scale to be more close to whatever everyday societies. Though in this so we can take of course I am of course, I'm trying to make climate change a serious issue for everyone, that's no mystery, but I think we are at the juncture. I'm not sure we, finally people who do the job and because it's very difficult to do, it's very difficult to decarbonize fully the power sector. And we need much more electricity, if we want to decarbonize industry. In particular, it's a hard industry to steer the segment of the chemicals. We can, we know now begin to know how we decarbonize even the heavy industry very intensive in forcing fuel consumption abd in an energy but it's required more electricity and clean electricity. So what I see is that the discussion has changed totally after Paris. Again, it's always at the perspective I can bring that is just bringing something to your analysis which is which I think we can look at the facts exactly on the two sides. Of course what has changed after Paris, one, that in countries where coal was consider as an energy security issue, a domestic energy security issue a national one. I think India, I think Poland, or South Africa. Even China even if it wasn't already a nuanced picture because of the local pollution really, really, very hard because of this level of enormous level of consumption of coal in China, so this discussion after Paris is no more taboo. So in every country the discussion can we phase out coal and how and how we transition from the coal mining activities, a coal based power plant to something different is there. And even in a country where I would not have imagined that it would take place so quickly. And in India there is an energy transition commission talking about the moment where renewable electricity plus storage would be At par in price with coal, where coal is not very high quality, but quite cheap. So my first thinking is, depending if we take climate change seriously or not, that's, of course, a major factor. Second, we see now a discussion that was not taking place because of these different views in the societies and in the government and, of course, because there's a new perspective on the solution. That's just trivial. Olivier has expressed that, the renewable energy progressive decrease in cost and continuing, because that's not stop. It continues in wind, in solar, in storage, of course, just low for this, in a way, possibility of looking up the fossil fuel industry differently, and coal in particular. Certain amount is before Paris, and even if it's there on the model that IPCC is projecting for around 2050 and after, that carbon capture and sequestration, meaning, we use fossil fuel and we capture and we try to do something out of the CO2, which is really embarrassing because that's not that easy and it's costly. But still we know we'll need that because the level of really taking out CO2 from the atmosphere will require that. But at the same time, it's a big choice of investment. And for the moment, the appetite to invest in CCS is relatively low. It hasn't picked up a little bit on the use of CCS as a CCU, but still very marginal. What I see more interesting is because, of course, of still coal in the making, think about Australia, for example, which is still a very important element just to try to see that how to progressively go to hydrogen based on lignite to green hydrogen and as a transition that coal has to focus on the transition to clean. So this is an element. But the third element, so technology is already, in my view, the investment in new technology is not really on coal. That brings me to the finance piece, which we have seen and I think Olivier has noted, that in many countries, the difficulty to find people who want to invest in coal. Even in countries where the government is really pushing hard, like Turkey, for example, whereas, again, not so much a security because Turkey is importing coal, but still a very important stake activities there. But there are not appetite to invest there because of the stranded asset element. Meaning, because climate change is beginning to be taken seriously by finance. So my assessment is that it will depend and you'll see a little bit how it goes. I do think that the bet on renewable energy will increase. I think that there's a massive investment because of the transport sector in particular, but at the same time, the power sector on the storage of electricity. So there was a lot of investment coming in. Just think about the Volkswagen major decision to go for electrification of cars, meaning, the whole chain of storage of electricity out, of course, which is the main problem for renewable is beginning to be a very target for investment. So my assessment is, one, I have no doubt we have to phase out coal as quick as possible. Because if not, we can't just fit in small couple of budgets that is left. There are good solution there. There is, of course, important negative externality of coal, which are pollution, water use, and some others. And at the same time, it requires a huge investment in transition and, of course, Germany, example, is interesting. Even if I think the budget that is, for example, allocated to transition of coal is just far too big, but it's there. And you see countries struggling with that to ensure this transition because the social aspect, of course, now is a more dominant aspect. So I think we are shifting from an energy security perspective to a social transition, which is mostly where it is up here. So in this aspect, you can bet that the investors will long to bet on new technologies. And this decarbonization scenario which is unto, in a way, managed between stranded asset and costly social transition. That, so there are issues that's not very attractive for private finance, so it will be essentially a public finance story. That's what I'm thinking, of course, of this knowledge. Again, we may be at the same time totally pessimistic and think that finally, the challenge is so big on climate change that people will not do it. There will be reasons and incumbents and political economies that would finally maintain this coal consumption. In China, it's not clear. China, on one side, is speaking it's probably very soon now this emission then going down, but with high level, and at the same time promoting the state-owned enterprise that are invested in coal heavily. So it doesn't mean that we know what we have to do, that we can do. It's not mean that finally now there are cheaper ways to produce electricity in many countries, not all. But I see hopeful signs. I see the debate around our situation of Eskom in South Africa as a good moment where people think seriously in a country where labor unions, companies, this government was totally invested in building up coal as a central asset to something that's from the past and trying to move forward to a different perspective. So that's a matter of political interpretation. I'm still rather optimistic, even if, of course, it is very, very difficult because it's always specific local investment, local incumbents and a lot of past dependency. >> Thank you very much. >> [APPLAUSE]
