India Wavers on Emissions as Power Plants Balk at Price Tag

India may ease a deadline to cut pollution from coal-fired power plants blamed for causing the world’s worst air quality amid pressure from generators who say it’s too difficult to implement the $37 billion reforms.

The deadline to meet all the new standards may be pushed back beyond the original December 2017 target, said S.D. Dubey, chairman of the Central Electricity Authority and head of the panel drafting the road map for power producers to meet the new guidelines. Prime Minister Narendra Modi’s government proposed the limits on toxic emissions in December 2015.

The delay highlights the challenge facing Modi’s administration to provide cleaner air alongside affordable and reliable power to all of the country’s 1.3 billion people. Limiting emissions would take longer than the government’s original two-year deadline and cost as much as 2.5 trillion rupees ($37.4 billion), the Association of Power Producers, a lobby group of non-state generators, said in March.

The new goals may be implemented “in a phased manner,” Dubey said in a phone interview. “Particulate matter emissions should be addressed in the first phase. The next step would be sulfur dioxide emissions and later on oxides of nitrogen. That’s the direction we are moving in.”

The office of Federal Environment Secretary A.N. Jha, whose ministry originally proposed the standards, didn’t respond to e-mails seeking comment.

India’s 187 gigawatts of coal-fired power capacity, which generate more than 75 percent of the nation’s electricity, contribute to the air pollution that makes India home to what the World Health Organization has determined are 11 of the top 20 cities on the planet with the worst air quality. The plants account for 61 percent of its generation capacity, according to the Central Electricity Authority.

India must first establish monitoring systems at all plants to establish an emissions baseline, determine what technologies will be appropriate and then install them at the plants, said Leslie Sloss, an analyst with the IEA Clean Coal Centre, a technology cooperation program of the Paris-based International Energy Agency.

“The time frame for the new norms is extremely challenging and probably not possible in practice,” Sloss said. “The new norms equate to India complying with emissions standards within a few years that Western economies have worked up to over decades. ”

Coal-fired power plants contribute to the release of about 60 percent of India’s industrial particulate matter, as much as half of the sulfur dioxide and 30 percent of oxides of nitrogen, the New Delhi-based Centre for Science and Environment said in a report in December, weeks after the new standards were announced.

“The emission norms require capital expenditure, which will lead to an increase in tariffs and burden the already weak financials of state power retailers,” said Sachin Mehta, an analyst at Mumbai-based Centrum Broking Ltd. “The plan is fraught with challenges. It is impossible to meet the current deadline.”

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Encouraging Potential for Self- consumption of Solar PV in Germany


A report from the independent German think-tank Agora Energiewende(Agora) has concluded that projected increases in self-consumption through solar PV power systems in the country does not mean upsetting dynamics of the nation’s renewable energy surcharges.

The study outcomes have been welcome news to advocates for Germany’s enviable transition to clean power (referred to as ‘energiewende’). Recent figures show German solar PV capacity of over 40 GW (38.5 TWh) — providing 7.5 percent of Germany’s net electricity consumption through 2015.

There is an underlying concern addressed by the study. Matthias Deutsch, senior associate at Agora, told Renewable Energy World: “An on-going controversy in Germany surrounds the potential and consequences of self-consumption. Some people argue that large-scale up of solar PV — this rise in prosumers — means putting at risk the solidarity of the grid, because people are contributing less to the fixed costs of the system.”

A broad effect of this is thought by some to be reflected in increasing surcharges imposed by the German Renewable Energy Sources Act (EEG) on the kWh price of electricity paid by consumers and increases in grid charges, as trends for autonomy from the grid continue.

On the basis of the study’s findings, Agora observed that through 2035, albeit projecting considerable expansion, “self-consumption of solar PV will play only a secondary role in overall electricity consumption.”

The report concludes: “From today’s perspective, self-consumption poses no risk of quickly eroding the funding base of Germany’s EEG surcharge or network charges.”

Dr. Patrick Graichen, executive director of Agora Energiewende, stated: “There’s simply no reason to fear that a solar power boom will have everyone generating their own power. Even if every eligible homeowner installed a rooftop solar array overnight so they could generate their own power, the EEG-surcharge would only increase by a maximum of 0.5 cents per kWh.”

Figure 1: Development of renewable energy capacity in Germany. Credit: Agora Energiewende.

Providing further insights, Deutsch said: “The potential of self-consumption determined by the study is relatively low. Importantly, even if the price of PV energy storage systems continues to fall rapidly, growth of these systems in energy terms will remain gradual, so the impacts on EEG surcharges would not be too great.”

He added that the study is good news for the solar PV industry, and provides substance to the on-going debate about how to support and manage self-consumption in Germany.

“This is important, of course, since more and more PV storage systems for self-consumption are being offered in the market, and as we see in the report, this market is set to continue expanding,” he said.

The study considered solar PV potential over two distinct sectors: residential (single- and two-family homes) and commercial.

It found that potential residential self-consumption amounts to between 4.6-38.6 TWh per year by 2035. The upper figure was calculated with contribution of energy storage systems included; and the authors noted that there are reasonable grounds for adopting this projection.

However, since not all of this energy is conventionally supplied by the grid (notably due to solar PV powering novel heating applications) the amount of energy that self-consumption may offset in terms of grid demand is less, around 20 TWh.

In the second sector considered by the study, commerce, trade and services, the authors concluded: “We found considerable potential for self-consumption: around 3.8 TWh per year, or just under 3 percent of total electricity demand in the sector, is economically feasible.”

Altogether therefore, Deutsch said that “overall, self-consumption may lead to reduced energy use from the grid of around 24 TWh per year. This represents about 5 percent of today’s net electricity consumption.”

Correspondingly, this potential would affect Germany’s EEG surcharge only moderately: a rise of around 0.5 euro cents (US$0.55) per kWh. While EEG surcharges and other components of power prices have risen in recent years (see figure 2), Deutsch points out that the increase wouldn’t be significant.

He emphasised the hypothetical nature of this calculated increase: “This increase refers to an instant realization of the total potential for self-consumption [that] we expect to unfold only gradually in the future. At the same time, other factors will tend to reduce the EEG surcharge.”

Figure 2: A break-down of recent years’ electricity prices in Germany reveals multiple components. Credit: Agora Energiewende.

Figure 3: The future costs of supporting renewable energy in Germany (in billions) suggests that even promising development of solar PV will not overwhelm the national support system. Credit: Agora Energiewende.

Beyond assurances, the report recommends that the German government now look towards delivering a stable regulatory framework that encourages self-consumption via solar PV.

Previous regulatory amendments, comments Deutsch, have been counter-productive and sent mixed signals to the industry and prosumers.

“While the 2009 version of the EEG featured a bonus scheme for self-consumption; [in contrast] the 2014 revision introduced additional charges,” he said.

Contradictory stances have also been expressed towards the nation’s energy storage support schemes.

He concluded: “Instead of such mixed signals from policy makers, we need to develop a forward-looking system of levies and fees, which includes owners of private property and their tenants in the overall costs of the system; and which ensures that future changes in legislation do not retroactively devalue investments in on-site solar power.”

Lead image: The Solar Settlement project in Freiburg, Germany. Credit: SA 3.0


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Renewables could lose European power grid priority, documents reveal

Industry concern after confidential impact assessment models scenarios for paring back the ‘priority dispatch’ system for clean energy

The sun reflects off a solar collector assembly at the Andasol solar power station, southern Spain. Retroactive changes to funding rules have caused disputes and cutbacks in several countries, notably Spain.
 The sun reflects off a solar collector assembly at the Andasol solar power station, southern Spain. Retroactive changes to funding rules have caused disputes and cutbacks in several countries, notably Spain. Photograph: Marcelo Del Pozo/Reuters

Paring back the “priority dispatch” system could increase carbon emissions by up to 10%, according to a confidential EU impact assessment seen by the Guardian. But the document goes on to model four scenarios for doing just that, in a bid to make Europe’s energy generators more flexible and cost-competitive.

Some industry sources have told the Guardian they are alarmed and think it highly likely that priority dispatch for clean energy will be scrapped from the EU’s renewable energy directive, which is currently being redrafted for the post-2020 period.

Oliver Joy, a spokesman for the WindEurope trade association, said: “Removing priority dispatch for renewable energies would be detrimental to the wind sector, which would face more curtailment across the continent. It also seems to be at odds with Europe’s plans to decarbonise and increase renewables penetration over the next decade.”

“Investors took priority dispatch into account when projecting revenues in the original investment decisions, and it could have a bearing on existing projects if they are not protected from the change.”

The issue of retroactive changes to funding rules for renewables in Europe has been a cause for disputes and cutbacks in the wind and solar sectors of several countries, notably Spain.

Senior industry sources say they will push for financial compensation and access to balancing markets to help prevent a significant industry contraction, if priority dispatch is ended.

“We have had enough instability and retroactivity in Europe and going forward, the difference between existing and future assets should be well distinguished,” said one industry source.

“I would be extremely worried if they just removed priority of dispatch and did not touch other key issues around market design. It would mean that the commission was taking measures against the same renewable industries that they defend in public.”

Fossil fuel power providers argue that renewables have the lowest operating costs and so would anyway receive priority access to the grid network.

They also say that taking the clean energy sector out of priority dispatch would prevent “negative prices” – where more energy is produced than can be sold – and eliminate anti-competitive subsidies.

The EU’s assessment views the abolishing of priority dispatch as a step towards the creation of a “level playing field” for energy generators.

But without such a system, renewable sources may be the most likely to be taken offline because of the relative ease of switching off a wind turbine compared to a coal or nuclear plant.

The energy source with the lowest marginal cost – almost always renewables – is usually the first in line to be shut down by power grid operators.

As things are, a Europe-wide trend towards ending financial support has constrained the forward march of renewables on the continent, and siphoned off investment to elsewhere in the world.

“Everyone is investing in renewables outside Europe right now,” said one industry source. “If you want to bring investors back you have to send very relevant signals.”

Removing wind and solar power from priority dispatch may be intended to help reform the capacity market system, which currently pays gas generators to remain idle. Ironically though, it could lead renewable generators to demand an extension of the same mechanism to their own sector.

“If priority dispatch is removed, then renewables must be given a fall-back option of access and renumeration in the balancing markets to help stabilise the system, or clear levels of compensation in the event that curtailment is necessary,” Joy said.

Priority dispatch is supposed to be mandatory under current EU rules, although the UK, Sweden and the Netherlands are among countries that do not comply.

The study says that “the biggest impacts on generation [from ending priority dispatch] would be observed in Denmark, Great Britain and Finland, where biomass holds a large share of generation capacity”.

But this would be felt more in terms of bioenergy’s “expensive” production costs than its carbon emissions reduction potential, which is disputed inside and outside the commission.

“The removal of priority dispatch for biomass would indeed, in the first instance, imply an increase in GHG [greenhouse gas] emissions,” the paper says.

The four scenarios for scaling back priority dispatch involve an increase in CO2 emissions of 45m-60m tonnes.


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Surplus power: An opportunity beckons

Representational image (Photo: Getty Images)

India is witnessing a strange paradox. Providing electricity to ensure one light and a fan to the poor is in itself a big deal, and amidst tall government claims, many villages in the country are still not electrified or despite installation of electricity poles, remain powerless. Under these circumstances, the Central Electricity Authority, under the Ministry of Power, has come out with a report, according to which there will be 1.1 per cent surplus power in 2016-17.

Surplus or deficit power is seen in terms of power supply and demand throughout the year. If demand for power is greater than its supply, it would be considered deficit of power; where supply of power is more than its demand, it would be called a power surplus situation. In fact, this is the first time that we have surplus power, according to government statistics. The situation does give satisfaction, but it poses a problem as well. Due to surplus power, power plants are under stress because of lower demand and lower prices in view of competition. The important question is whether this challenge can be converted into an opportunity.

While analysing the reasons for surplus power, experts opine that demand for power is estimated from the people connected to the grid. However, a large number of people are still not connected to the grid. If we add the prospective demand from those deprived of electricity so far, then this surplus will vanish. As per international comparisons, India’s per capita consumption of electricity is among the lowest in the world. India’s per capita electricity demand is 1070 kilowatt hours, while the global average is 3026 kilowatt hours. Among BRICS nations, India is at the bottom in terms of per capita electricity consumption. Due to lower incomes, people have lower purchasing power and therefore they consume less electricity. However, electricity demand is on the rise year after year. In 2014-15, electricity demand increased by 6.6 per cent and in 2015-16 by 4.2 per cent. The government is making efforts to increase the capacity to generate more power, to facilitate availability of power for an increasing population. By August 2016, the total capacity was 306 Giga watts. Today total production of electricity is 1108 billion units from utilities and 166 billion units from captive power plants.

It is satisfactory that we have surplus power and there are few possibilities of power cuts. However, we still have 3.2 per cent power deficit during peak hours. The current government pats itself on the back for the surplus power. However, CEA has estimated that though we have surplus power in the southern and western parts of the country, there is still power deficit in the eastern and northern parts of the country.

Power deficit was a major problem in India till some time back. However, the situation of electricity surplus is no less challenging as electricity producing units will have to sell electricity at un-remunerative prices and therefore may incur huge losses. As a result, future capacity generation may get adversely affected if electricity generation becomes a loss-making business. The last three years have seen 77636 megawatts (MW) of installed capacity in power generation.  Due to the efforts of the present government, especially the Prime Minister, significant strides have been made in solar power and there is a great future for it in the country. Therefore, it is essential that we are able to maintain a balance between demand and supply of electricity in the country.

Even when faced with power surplus, we are still using a large amount of petroleum products for transportation and cooking. A huge amount of LPG is being imported for cooking. If we are able to produce enough electricity, would it not be appropriate to promote use of electric stoves. All over the world due to environmental hazards, people are turning towards electric vehicles. While going fast on solar power generation, the Prime Minister has set a target for reducing petroleum imports by at least 10 per cent. If we are able to achieve this target, the country will be saving at least US $10 billion to 12 billion. Today, India is the fourth largest oil importing country of the world. So, a reduction in imports may also cause further reduction in the prices of petroleum products globally. We may not only be moving towards energy security, the commitments made in the Paris Deal may also be achieved faster.

Due to power surplus and fast increasing electricity generating capacity, India has also started exporting electricity, though in small quantities. We are exporting electricity to Bangladesh, Nepal and Myanmar. Electricity exports to Sri Lanka are under process by laying a cable under sea. Therefore, we can say that in times to come, India may not only be self-sufficient in electricity, it may even be exporting electricity to neighbouring countries.

Riding on electricity surplus, by increasing the use of electricity in cooking and transport, we may not only be protecting our environment, even costs may come down. On the one hand we may be able to reduce our oil import bill, and on the other, earn valuable foreign exchange. However, for converting the challenge of surplus power into an opportunity, we will have to keep a close eye on the scenario, so that the targets of electricity generation are not hit due to lower prices of electricity.


Coal Ministry opposes NITI Aayog’s draft Energy Policy

NEW DELHI: Wary of losing Coal India’s pricing power, the Piyush Goyal-led Ministry of Coal has raised reservations over the draft National Energy Policy, which favours aligning domestic coal prices with international rates. The lack of consensus between the Centre and the ministry has delayed the policy, which has been in the works at NITI Aayog, the government’s thinktank, for more than a year now.“There has been severe opposition from the top coal ministry officials to the policy as they don’t want markets to determine prices of coal in India,” a senior government official told ET on condition of anonymity.

According to the official, the ministry is scared of this forward-looking policy because it would lose control over coal prices and would no longer be able to maximise profit for Coal IndiaBSE 0.48 %.

Coal secretary Anil Swarup declined to comment on the matter.

State-run Coal India LtdBSE 0.48 %. is the country’s largest producer of the commodity, which it sells at prices approved by the company board.

The company produces 84% of India’s coal, according to its website. Due to a combination of lower international prices and inadequate domestic production, the value of India’s coal imports touched a high of $17.8 billion in FY15. Higher domestic production in FY16 lowered imports to $13.7 billion.

NITI Aayog’s National Energy Policy is aimed at curbing imports by increasing production of renewable energy in the country fivefold to 300 billion units by 2019 and tripling coal production to 1.5 billion tonnes. Coal imports are envisaged to come down by 10% by 2022 and by 50% by 2030.

“The draft National Energy Policy is ready and we have used the best possible inputs and the best possible expertise. We had extensive discussions will all secretaries and it will be uploaded shortly,” NITI Aayog CEO Amitabh Kant told ET.

According to Kant, once inputs have been provided by everyone, it is not necessary to reach a consensus on all issues. “NITI Aayog is a think-tank. It must have differences.

If it were to have consensus on everything, NITI Aayog would have been miserably failing to do its job,” Kant said.

“We are advocating reforms, we are advocating changes, trying to push India to a higher growth trajectory and therefore differences are necessary and are obvious.

Wherever there are differences, we’ll pose them before the Prime Minister and let him take a call. The final call is with the PM, who is also the chairman of NITI Aayog,” Kant added.

Coal Ministry opposes NITI Aayog’s draft Energy Policy
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Government trying to address coal, power sector issues: Official

New Delhi: While India is looking to export its surplus coal to Bangladesh because of low domestic demand, the government is trying to come to grips with what has been ailing the country’s coal and power sectors, coal secretary Anil Swarup said on Tuesday.
“Articulation of demand is not happening at the discom (electricity distribution companies) level. Today, railway rakes are available for coal evacuation, but unfortunately, there is no demand,” Swarup said addressing a World Coal Association conference here.”The focus is on the discoms now. The real problem is not the debt burden of the discoms, but the losses they are incurring…transmission losses and losses on recoveries, among others,” he said.

The Coal Secretary explained that while in his sector, the accent on implementation and the “change in paradigm” introduced by the current central government has yielded results in the form of surplus fuel production, the discoms’ issues had been left unaddressed for a long time.

“In 2015-16, Coal India acquired 5,000 hectares of land for mining purposes, which is unprecedented in the history of the company,” Swarup said illustrating how the state miner had managed to reverse a situation of earlier production shortfalls.

“Instead, things were not being implemented at the discom level. Governments were postponing addressing the crisis year after year,” he said.

Referring to the Centre’s Uday discoms’ debt restructuring scheme, Swarup said the current scheme, although also a postponement of the debt, has certain additional features.

“Today, we’re taking the bull by the horns on discoms. They were earlier not being monitored on accountability and parameters, which this government is trying to do,” he said.

The current low capacity utilisation of power plants is driven primarily by stressed discoms, which are unable to buy electricity because of weak their financial condition.

Swarup said the central government’s Ujwal Discom Assurance Yojana (UDAY) debt restructuring scheme would help improve the financial position of state discoms, which will also have a positive impact on coal demand.

Twenty Indian states and one union territory have given in-principle approval and 16 have already signed up for the scheme, which envisages taking over 75 per cent of discoms’ cumulative debt. States would issue loans against the debt at prevailing market rates. The balance 25 per cent would be issued as sovereign backed bonds by discoms.

The scheme also envisages access to cheaper coal, modernising transformers to cut distribution losses, as well as a provision to revise tariffs, which has been criticised by the AIADMK government in Tamil Nadu. Tamil Nadu stands out among states, which have not yet opted for UDAY.

According to US rating agency Fitch, the committed Indian states and UTs accounted for almost 77 per cent of the total net cash losses reported by discoms in fiscal 2014, and around 58 per cent of the total debt outstanding at end-September 2015.

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Power projects of 24,000 Megawatt capacity facing viability issues

New Delhi: Thermal power projects currently under various stages of construction in the country are facing viability issues due to either weak sponsors and poor offtake by distribution companies or fuel issues, research and ratings agency CRISIL has said.
“CRISIL estimates around 24,000 Megawatt capacities are facing viability issues. Of these, 13,000 Mw capacities face commissioning risks because of weak sponsors, while the rest are reeling because of poor offtake by discoms or inadequate fuel arrangements,” CRISIL said in a statement today. It added around a third of the capacities with weak sponsors can be revived through debt restructuring or sale to a new sponsor.The government has taken initiatives to increase coal production over the past year and the 5:25 refinancing scheme of the Reserve Bank of India (RBI) has reduced operational capacities at risk from 46,000 Mw estimated earlier to 40,000 Mw currently.“While lack of fresh long-term PPAs continues to impact generation capacities, facilitation of medium-term PPAs and corresponding coal linkages, continued focus on augmenting domestic coal production, and facilitation of open access by states can help further reduce the capacities at risk,” said Sudip Sural, Senior Director at CRISIL.

The ratings body also said the aggregate gap, or loss of distribution companies (discoms) of 15 states that have joined the Ujwal Discom Assurance Yojna (UDAY) would more than halve to 28 paise per unit by fiscal 2019 compared to 64 paise last financial year (2015-16). Therefore, the aggregate losses of these discoms are seen declining 46 per cent to Rs 20,000 crore from Rs 37,000 crore earlier.

However, the gap will still be well above the ‘nil’ level envisaged under UDAY because some states with very high aggregated technical and commercial (AT&C) losses have lesser preparedness to reduce it because of inadequate feeder separation, feeder and distribution transformer metering, and poor track record of other efficiencies. Also, the ability to increase tariffs is restricted in some states because elections are due within 12 months, cross-subsidisation is high, and tariff orders are delayed.

The gap is calculated as the difference of average revenue realised (ARR) and the average cost of supply (CoS). “Rajasthan, Haryana, Chhattisgarh, and Uttarakhand are expected to fare better in the implementation of UDAY and are therefore likely to be the biggest beneficiaries. However, UP, Bihar and Jammu & Kashmir are expected to be the laggards. These three states would account for almost two-thirds of the gap in fiscal 2019. So concerted efforts by them will be critical to narrowing future gap,” said Gurpreet Chhatwal, Business Head – Large Corporates at CRISIL.

Energy requirements of discoms are expected to increase at a compound annual growth rate (CAGR) of 7 per cent by financial year 2018-19 as compared to around 4 per cent till 2015-16. However, this will not be a major respite to generation capacities that do not have long-term PPAs as fresh signing of PPAs seems unlikely. This is because 25,000 Mw of capacities with already-signed PPAs are expected to be operational by fiscal 2019 and there will also be some pick-up in plant load factors of existing capacities because of better fuel availability.

CRISIL said any uptick in long-term PPA signings is possible only if discoms turn profitable by fiscal 2019 and strive to meet the government’s ‘Power for all’ objective.

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China leads as global coal demand set to reach 9bn tonnes by 2019

The world’s appetite for coal-fired power will continue to grow over the next five years, according to the International Energy Agency’s (IEA) Medium-Term Coal Market Report, released today. The report found that global demand is set to reach 9 billion tonnes by 2019, with China accounting for three-fifths of demand growth.

During this period, the IEA projects that the world’s coal demand will grow at 2.6 per cent, or more than 100 million tonnes (Mt), per year. Low prices due to oversupply, as well as efficiencies and economies of scale put in place by coal producers, will contribute to continuing growth.

China consumed more than 50 per cent of global coal demand in 2013, the report found, importing 341 Mt, the largest amount of coal ever imported in a single year. Indeed, growth in China’s coal use (196 Mt) was larger than global growth (188 Mt).

Unsurprisingly, the IEA said China will “determine the fate of the global coal market”. While the nation has instituted policy measures to reduce its coal use, diversify its energy supply and mitigate carbon emissions, the report found that despite these efforts China’s coal consumption will not peak in the next decade, and it “will be the coal giant for many years in the future” unless its economic growth is much lower than currently forecast.

India, ASEAN countries and other Asian nations will join China as the main engines of growth in coal use, the IEA said. Annual coal consumption in India, which is forecast to become the world’s second largest coal consumer, will grow by 177 Mt, with a 5 per cent average annual growth rate. Meanwhile, the recent spike in European coal use “was only a dream”, the report said – a temporary spike due largely to low coal and CO2 prices, high gas prices, and the shutdown of Germany’s nuclear plants.

OECD member nations’ coal use is predicted to decline through 2019, with growth in Turkey, Korea and Japan failing to offset declines in Europe and the US. The US’s retirement of coal-fired power plants and competition from shale gas are projected to lead to a 1.7 per cent decline per year to 2019. Australia is set for the largest export growth, while Indonesia, driven by growing domestic demand and policy changes, slows its shipments abroad.

The IEA took a strong stance on the world’s coal use, with executive director Maria van der Hoeven saying at the report’s launch: “Although the contribution that coal makes to energy security and access to energy is undeniable, I must emphasize once again that coal use in its current form is simply unsustainable.

“For this to change,” she added, “we need to radically accelerate deployment of carbon capture and sequestration.”

Van der Hoeven also called for more investment in high-efficiency coal-fired power plants, especially in emerging economies. “New plants are being built, in an arc running from South Africa to Southeast Asia,” she said, “but too many of these are based on decades-old technology. Regrettably, they will be burning coal inefficiently for many years to come.”

This article has been reproduced from Power Engineering International. Please click here for the original source.