Coking Coal Has A Branding Problem

Coking Coal Has A Branding Problem

Submitted by Doomberg

I’m sorry to bang on about coal, but it makes you look a little bit weaselly not answering the coal question.” – Justin Rowlatt

The world has gathered in Glasgow for COP26, and on the opening morning we were treated to quite the spectacle on the BBC. Justin Rowlatt, the BBC’s climate editor, took British Prime Minister Boris Johnson to task for not doing enough to rule out a new coal mine currently under consideration in the UK. That’s Rowlatt below, foaming with total indignation that Johnson could even fathom allowing such a project to proceed.

Flustered by the line of attack, Johnson retreated to citing statistics about how coal has become almost irrelevant to the UK power grid:

When I was a kid, 80% of our power came from coal. When I was mayor of London, it was 40%. It’s now 1%.

Not satisfied with that answer, Rowlatt interrupts Johnson:

Let’s talk about coal and I know everybody asks you this question. But you’re going to China, you’re going to India, you’re going to the developing world saying, ‘phase out coal,’ at the same time saying as not ruling out a new coal mine in Britain, a new coal mine in Britain! We started the industrial revolution, we should have closed the mines!

I’m not sure what’s more hysterical (horrifying?) – that the climate editor for the BBC seems to have no earthly idea what he is talking about or that the British Prime Minister seems to have no earthly idea what he is talking about.

The coal mine at issue would have been in Cumbria and it was to produce coking coal, not thermal coal (we use the past tense because it is clear this mine is never opening). Coking coal is not burned to make electricity. Coking coal is used along with iron ore to make steel. If the world cannot produce steel, much of the world economy grinds to a halt.

Unfortunately for coking coal, it has coal in its name. Unfortunately for the renewable power industry, they’re going to need a lot of coking coal. This seems like quite the conundrum.

For example, it is well-known that the production of wind turbines consumes a lot of steel. At least we thought it was well-known. The picture below shows a popular tubular steel tower design. It’s a similar story with electric vehicles and all manner of stuff required to enable the green revolution. There is no path to meaningfully reduced CO2 emissions that doesn’t involve the use of massive amounts of steel.

Is the production of steel a dirty business? Absolutely! It accounts for nearly 8% of global CO2 emissions. Are there ways to reduce that impact and should they be implemented? No doubt! Is China’s steel industry measurably dirtier than mills in the United States and Europe? Unquestionably! Think they care what we do? Nope!

The world will keep mining coking coal and making steel as it always has, it’ll just be much more expensive and less environmentally friendly than it could otherwise have been, which will further impede the implementation of the renewable energy revolution. Coking coal mines in Russia and China will continue cranking out product with far fewer environmental protections than Cumbria would have implemented. Huge dry bulk cargo ships will meander around the globe, packed with coking coal from exporting countries like Canada and Australia, polluting the oceans in the process.

As with many fundamental commodities, the price of coking coal has soared to eye-watering levels in the past few months, albeit for reasons mostly unrelated to the Cumbria standoff. We were already writing a piece on arbitrage in the coking coal market when the BBC clip crossed our Twitter feed – we hope to get that one done before too long.

Critics will point out that the production of green steel – an innovative set of technologies that rely on hydrogen instead of coal – is just over the horizon. We certainly hope so, but we note that the hydrogen will have to come from fossil fuels or (gasp!) nuclear power, because otherwise the production of green hydrogen at scale will rely on the very same yet-to-be-built renewable energy infrastructure that will consume massive amounts of steel. How’s that for the circle of life?

We don’t doubt that steam reforming natural gas to produce the hydrogen necessary to make green steel a reality would lead to substantial reductions in CO2 emissions. After listening to that BBC interview, we have grave doubts using natural gas for this process will be considered acceptable. It’s a fossil fuel, after all, and better isn’t better when only zero will do.

Anyway, that mine is never getting permitted and – to borrow a phrase from a former British Prime Minister with a little more shrewdness than Mr. Johnson – we shall continue attempting to lift ourselves out of the bucket we are currently standing in by pulling on the handle.

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Tyler Durden
Thu, 11/04/2021 – 13:00

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