Coal is so unpopular in the US that they can’t even give it away. The governor of mining heartland West Virginia is petitioning President Donald Trump for a $15 per tonne subsidy for burning his coal. But remarkably in the Middle East, a region with almost no coal of its own, the demand for the black fuel is on the up.
Dubai’s solar successes have made the headlines, but a different kind of electricity generation is rising at Hassyan, on the coast beyond the site for Expo 2020. In November, a consortium of Saudi Arabia’s Acwa Power and China’s Harbin Electric began building a 2.4 gigawatt coal power plant on the site.
The UAE’s energy strategy states coal will account for 12 per cent of the total national electricity generation by 2050, which translates into about 11.2GW. Beyond Dubai, Federal Electricity and Water Authority (Fewa) has planned a 1.8GW plant in the northern emirates, but it is not clear where the additional 7GW is expected to come from.
Egypt has imported coal since 2014 for industrial use, and North Africa’s most populous nation is planning to build a number of large-scale coal-fired power plants with Chinese investors. Abu Dhabi-based Al Nowais Investments Group, in 2014, also signed a deal for a 1.32 GW coal-fired plant on the Gulf of Suez.
Iran, which witnessed a coal mine blast in Golestan province in May in which more than 20 miners died, is pushing ahead with planned coal power plants, mostly in the coal-rich area of Tabas in the east, with Chinese involvement. Turkey, which already generates more than 16GW of power through coal, plans to build additional plants.
Jordan, whose energy strategy targets 5 per cent of power generation through coal by 2025, last June signed a deal for a small coal-fired plant, while Oman is looking to build coal-fired plant at its new port development of Duqm.
In a region rich with oil, gas and solar power, but very few coal resources, this surge is surprising. Most coal-dependent regions are moving away from it: China burns more than half of the world’s coal but consumption has been falling since 2013 as the country tries to clean up its skies. Cheap gas, solar and wind power are crushing coal in the US, while environmental regulations and low-priced gas imports are pushing it out of Europe as well. Even India is cancelling plans for giant new coal plants in favour of renewable energy.
The Middle Eastern countries that are looking at coal are trying to diversify their fuel mix, and to reduce vulnerability to economic or supply shocks. Gas is cheap at the moment but its price is volatile, and states such as Dubai, Egypt and Turkey do not want to be too import-dependent. For Dubai, which attracted a very competitive bid from Acwa and Harbin, coal is a key part of strengthening its negotiating position with other suppliers. Iran and Turkey are trying to maximise the use of their domestic coal, and for Turkey, reliance on rivals Iran and Russia for two-thirds of its gas is dangerous.
Despite gas prices being low at the moment, coal is cheaper still — at least once the required import facilities are constructed. Chinese power and engineering companies, looking for other markets, are offering their expertise and low-cost financing.
Most of these plants will be built with modern pollution controls, that trap sulphur dioxide, particulates, mercury and other toxic and acidic emissions. But they will still produce large quantities of carbon dioxide, the main factor responsible for global warming, working against the region’s efforts to cut emissions with solar and nuclear power and more efficient energy use. Some of the plants are intended to be “capture-ready”, that is to be able to trap carbon dioxide and dispose of it safely underground, but none plans to use carbon capture from the outset.
Coal’s rise in the Middle East is understandable from a purely financial viewpoint, but its growth is the consequence of the failure of other industries to advance their case. Nuclear power has a strategic, low-carbon role in Abu Dhabi, but in general its costs have remained stubbornly high. Renewable energy, particularly solar, has made impressive progress in the UAE, with Dubai Electricity and Water Authority (Dewa) in the lead. However, countries such as Oman, Egypt and Iran, with equally good conditions, have shown little progress. Politics, over-regulated gas prices and a lack of openness to private investment have prevented development of a regional gas grid.
Coal can have a limited part in the Middle East’s energy mix, but its environmental negatives need to be properly accounted for, and there should be a clear path to introducing carbon capture facilities. Without a price on carbon – regional or global – coal looks misleadingly cheap compared to cleaner sources. At least this region is moving the right way in dismantling energy subsidies, instead of following West Virginia’s absurd proposal. But it should not stumble into a coal future because of getting other parts of energy policy wrong.
Source: The National