Why coal power is not the answer to energy poverty

by Ilmi Granoff, ODI | Overseas Development Institute
Monday, 16 November 2015 09:33 GMT

A villager is pictured as she selects coal at a small depot near a coal mine of the state-owned Longmay Group on the outskirts of Jixi, in Heilongjiang province, China, Oct. 23, 2015. REUTERS/Jason Lee

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* Any views expressed in this article are those of the author and not of Thomson Reuters Foundation.

Power capacity, especially coal, is set to expand dramatically, yet 1 billion people will still lack access to electricity

Coal is the world’s number one source of CO2 emissions, and produces 40 percent of the world’s electricity. Failing to phase out coal power emissions will push us toward catastrophic climate change, which threatens to draw 720 million people back into extreme poverty between 2030 and 2050.

At the same time, eradicating extreme poverty will require an increase in energy access for billions of people. More than one in three people do not have clean and safe energy for cooking, while more than one in six lack basic access to electricity.

The coal industry claims that scaling up coal-fired power is necessary to combat energy poverty. Yet this is hard to square with projections based on current energy policies that forecast a dramatic expansion of power capacity, especially of coal, yet leave 1 billion people without access to electricity and 3 billion without access to clean cooking facilities in 2030.

How is it that a world with ample coal-fired power would still leave so many in energy poverty? If not coal, what improves energy access?

Three development-focused organisations - the Overseas Development Institute (ODI), CAFOD and Christian Aid, joined by contributors working in the developing world - have created a new set of FAQs on coal and energy poverty to provide answers.

The FAQs explain how we can help energy-poor people gain energy access, and why coal power has little to do with it. It boils down to four factors.

First, most energy poverty is from dangerous, low-quality cooking, not inadequate electricity.

There are over twice as many people who lack clean and modern cooking than lack electricity. For those cooking over open flames, bold ambition to expand power supply—whether from coal or otherwise—does little to help them.

In Indonesia, for example, where almost four out of five households have electricity, only 0.4 percent of those connected use it for cooking. Cooking with electricity remains expensive, and other clean and modern methods are cheaper, such as improved biomass cook stoves and cleaner burning gases.

Reducing energy-poor people’s reliance on dangerous methods of cooking entails improving their access to these technologies, not expanding power supply.

Second, geography and politics stand in the way of grid-based electricity access.

About 87 percent of those lacking electricity live in rural areas: the majority, far beyond the grid. These people would gain access most cheaply and quickly through off-grid and mini-grid systems powered by renewable energy (and in some cases diesel).

Even for urban households, and rural ones in close proximity to the grid, politics can stand in the way of new generation leading to new connections. Many utilities in developing countries set electricity rates at levels that are politically popular to existing consumers, but that fail to cover the cost of developing new infrastructure.

“Governments often view utilities primarily as sites of political patronage and vehicles for corruption,” stated a recent Africa Progress Panel report.

“Providing affordable energy can be a distant secondary concern.”

Operating at a loss, these utilities are reluctant to invest in electrifying new villages and connecting new households, especially if those new households are poor and can’t cover the costs. In many African and Asian nations, new connections cost more than the average monthly income, explaining why lots of households remain in electricity poverty for decades after their village is electrified.

Electricity access shouldn’t need to wait for (much-needed) utility reforms and decade-long coal plant projects, when faster, cheaper, scalable renewable alternatives are better suited to the challenge.

Third, the world’s coal pipeline is not being built for the electricity-poor.

Most current and planned coal power plant construction will take place in areas where almost everyone already has access to electricity. China plans to build the most coal power plants despite having already achieved nearly universal electricity access.

In contrast, sub-Saharan Africa, which has the highest number of people without access to electricity, has few coal development prospects outside of a few Southern African nations. Only South and Southeast Asia (especially India) have both substantial coal power development plans and large populations without access to electricity.

Finally, coal is no longer the cheapest.

Powering the grid remains important for providing electricity access in urban areas, especially where utility reform allows ambitious extension and connection programs. But frequently, coal is no longer the cheapest option.

In most areas where energy-poor people live, electricity produced from solar, wind, hydropower, nuclear and natural gas is cheaper, and rapid innovation in renewable energy is making coal even less competitive. In South Africa, for example, two new coal plants are projected to generate more expensive electricity than the 2GW of new wind power under development.

Despite the assertions of the coal industry, adding further coal power is not the solution to energy poverty. Unless we target energy access directly – by improving the availability of grid connections, off-grid electricity systems and modern cooking technologies, and by helping the energy poor to afford them – we will not achieve our target of universal energy access by 2030.

Click here to access the FAQs on coal and energy poverty (including full references/sources)

Ilmi Granoff is a research fellow with the ODI who leads its work on green growth.