Obama's War on Coal Goes Global

November 17, 2013 Topic: EconomicsForeign AidEnergy Region: United States

Obama's War on Coal Goes Global

A set of administration policies could hinder access to electricity in poor areas around the developing world.

Reluctant as it may be to go to take part in wars in the Middle East, the Obama administration seems to be determined to escalate its war on the world’s most widely used energy source—coal.

After years in which the EPA has been blocking the permitting of new coal-fired power plants domestically, the U.S. has just taken the war on coal global. The Treasury Department announced that it would prevent multilateral development banks where it is the largest shareholder like the World Bank or the Asian Development Bank from financing coal power plants abroad unless they include carbon capture and sequestration technology, an immature and hugely expensive technology that would effectively make them unfeasible.

Even those who disagree with President Obama’s fixation on clamping down on greenhouse gas emissions would agree that shifting from coal to cheaper and cleaner burning natural gas might be a sensible approach for the United States, where natural gas prices are now among the lowest in the world. But the developing world is a totally different story. There, almost one and a half billion people suffer from energy poverty, and coal is the only source of energy that is cheap enough and abundant enough to provide relief. In encouraging private-sector investors and forcing other financial institutions to deny developing economies access to capital for building coal plants, we are essentially condemning hundreds of millions of the world’s poor to endless poverty—if not worse.

Take, for example, South East Asia. According to the International Energy Agency, the combined 600 million people economy of the ten ASEAN countries is projected to triple by 2035 and the region’s energy demand is projected to increase 80 percent, a rise equivalent to Japan’s current demand. Energy poverty is omnipresent throughout the region, with 130 million without any access to electricity: not one light bulb to read a book, no electric stove to cook a meal, no fan to alleviate the sweltering heat. Natural gas and renewables like solar and wind all far more expensive than coal. Natural-gas power plants are twice as expensive to construct as coal plants, and natural gas in the region is more than four times as expensive as in the United States. Renewables will take decades—if ever—to reach cost parity with coal. No wonder three quarters of the thermal capacity now under construction in the region is coal fired.

In the Philippines, a country now struggling with the outcome of a devastating typhoon and where per-capita energy consumption is a mere ten percent of the OECD average, coal is king, projected to account for two-thirds of incremental output between now and 2035. But under the guidelines of America’s war on coal millions of Filipinos might have to be denied power to grow their way into the twenty-first century.

The situation in Africa, India and parts of China and Latin America is not much different. In India alone nearly 400 million people—more than the entire population of the U.S—suffer from energy poverty and three to four hundred thousand deaths occur there every year because of fires and respiratory ailments related to indoor burning of wood and animal waste. Such needless loss of life could be prevented if those people only had access to basic electricity. But for the Obama administration, fighting global warming in the hope of (maybe) saving lives generations from now has taken priority over saving lives today.

Administration officials visiting the developing world repeat the mantra that the U.S. has no intention of doing anything that would stifle the poor countries’ burgeoning economies. But this hollow statement is almost always followed by paternalistic calls to make climate change a higher priority, a euphemism for “stop using coal.” This was the message of Secretary of State John Kerry in his visit to India this summer, itself similar to his predecessor Hillary Clinton’s plea in her visit to India four years ago. At the height of the hypocrisy is President Obama’s Power Africa program, launched in his recent Africa tour in June. The plan aims to tackle sub-Saharan Africa’s acute power shortage—more than 69 percent of the population there has no access to electricity—by providing aid money and leveraging donor community funding to develop electricity in the region, but only as long as it renewable. Geothermal, hydro, wind, and solar energy—sure. The cheapest of all—coal—no.

One can think of effective policies which would allow developing economies to electrify themselves using coal with less environmental impact. For example, most approved coal plants are highly inefficient, with average efficiency of 34 percent. Coal plants in Japan use one-fifth less coal, and hence their carbon dioxide emissions and local air pollution are substantially reduced. If instead of vetoing coal altogether, the U.S. and the development agencies provided loans to encourage better plant designs, developing economies could progress economically at a reasonable environmental cost. Instead, they will achieve neither.

Compassionate Americans believe in America’s role as, in the words of Ronald Reagan, a “shining city upon a hill whose beacon light guides freedom-loving people everywhere.” Our beacon glows indeed, but the current no-to-coal-at-all-cost approach threatens to keep many in Africa and developing Asia in darkness, at a great human cost.

Gal Luft is co-director of the Institute for the Analysis of Global Security (IAGS), a Washington based energy security think tank