The G7 has agreed to stop using coal, but can it be done?

Irina Slav

Irina is a writer for Oilprice.com and has over 10 years of experience writing about the oil and gas industry.

More information

premium content

• The US, UK, Italy, France, Japan, Germany and Canada agreed this week to phase out the use of coal for power generation by 2035.
• Coal as a source of power generation accounts for approximately 15% of the energy mix across the G7 countries.
• Despite the huge increase in renewable energy capacity, it is unclear whether the G7 will be able to abandon coal completely.

The US, UK, Italy, France, Japan, Germany and Canada reached an agreement this week to stop using coal for power generation by 2035. The news was praised by some in the green lobby, but also by others.Greenpeace, called it “too little, too late.” Now, the biggest question is not so much whether the G7 will turn words into action, but rather whether it will be able to do so.

Coal accounts for about 15% of the energy mix for power generation across G7 countries, according to data from climate change nonprofit Ember cited by Gavin Maguire of Reuters.reviewWe discuss this initiative and its potential impact on the economies of seven countries.

That’s not a lot, and it’s significantly less than the G7 was using to generate electricity 20-30 years ago. But achieving a 15% share of the energy mix may prove more difficult than expected for at least some G7 countries, such as Germany and Japan, which get 25% and 29% of their electricity from coal, respectively. That’s why this agreement has its pitfalls.

These regulations are the same as those recently approved by the U.S. Environmental Protection Agency regarding emissions from electricity generation. Under the provision, all coal-fired power plants and new gas-fired power plants must either install carbon capture systems or close by 2039. The G7 agreement is the same, except that it has a deadline of 2035.

The G7 energy ministers gathered in Turin, Italy, to sign the pledge gave the general impression that they are truly determined to end emissions from coal combustion. However, it may be necessary to add that it is inaccurate to call these emissions ‘carbon pollution’. Regarding the definition of the word “contamination” which is toxic. However, the real test will be whether subsequent governments stick to the agreement or take a different path.

Related: Japan loads fuel into world’s largest nuclear reactor

They may do just that too. That’s because even if seven of the world’s largest economies stopped using coal to generate electricity, it would only make coal cheaper in other large economies such as China and India, both of which are very affordable. Other poor Asian countries will only increase their use of coal because they will be forced to use more gas if the G7 stops using coal.

There is no realistic way that wind, solar, or even new nuclear power can completely replace lost coal-fired power. This is one reason why demand for hydrocarbons continues, as wind and solar cannot supply the generation capacity. Perhaps the best evidence of this fact is that even though Germany is rapidly ramping up wind and solar power generation, last year it announced that wind farms would be removed to expand coal mines in order to expand coal power generation. That would be the decision.

Meanwhile, new nuclear power plants take years to build, as the trend for small modular reactors has lost steam these days, and older large reactors have become the only proven type of nuclear power. In that case, gas demand would surge to meet the surge in demand from the G7, repeating what happened in Europe and Asia in 2022, but on a larger and perhaps more durable basis. It will become a thing.

This is the supply side of the energy equation, but what about the demand side? There is even less good news for ambitious G7 energy ministers and their bosses in this area. Because energy demand is on the rise, and most analysts seem to agree that this demand growth will become even more concentrated as the adoption of artificial intelligence accelerates.

The AI ​​element is particularly evident in the United States, where most of the AI ​​work is being done. AI computing uses much more energy than non-AI computing, causing power demand to skyrocket. This expected surge is already impacting gas producers in the United States.PlanningWind and solar do not increase production, so production increases accordingly.

However, semiconductor production for AI, data centers, and the burgeoning information technology industry are not the only factors driving increased electricity demand. Industrialization is also progressing outside of the G7. And industrialization, which greatly improves the lives of millions of people, will inevitably increase the demand for energy, especially electricity.

“The reality is you can keep adding renewable energy until you’re blue in the face and it just isn’t enough,” said the CEO of Renew, one of India’s largest wind and solar power companies. says this.SaidRecent Wall Street Journal.

So it’s unclear whether the G7 will be able to abandon coal completely, and even the UK, which generates only a fraction of its electricity from coal, has had to restart power plants during periods of low wind production. Ta. But even if it costs more, the rest of the world will use more coal, especially because it will become cheaper. The ultimate impact of the G7 coal phase-out, if it materializes, could actually increase global emissions.

Written by Irina Slav for Oilprice.com

Other top articles on Oilprice.com:

• Large crude oil inventories shake up crude oil prices
• OPEC resolves compensation plan for overproducing member countries
• Exxon completes $60 billion acquisition of Pioneer

Download the free Oilprice app now