Alberta’s coal phase-out: Pros and cons

According to the International Energy Agency (IEA), coal is the second largest fossil fuel in the global energy mix, its primary use is to produce steel and cement, and it is the largest source of electricity generation and a significant fuel for industrial use. It is also the largest single source of global carbon dioxide emissions, which accounted for approximately 40%, or 15 billion tonnes, of global CO₂ emissions in 2021.

Based on this statistic, it is easy to understand why 196 countries – including Canada – are working toward meeting their global pledges to reduce their emissions to net-zero by 2050 with most of these emissions reductions to come from phasing coal out of their energy mix.

However, despite emissions reduction targets, the IEA says the current energy crisis has forced some countries to increase their coal use. Coal demand is set to grow by 1.2%, reaching an all-time high and surpassing 8.0 billion tonnes for the first time, and it will plateau at this amount through 2025. Coal used in electricity generation was expected to grow by just over 2% in 2022.

The IEA says Canada’s coal production rose 4.8% to 47 million tonnes in 2021, with most of the increase in metallurgical coal, which accounted for approximately 57% of the country’s output. Coal production in Canada was expected to rise by 3.6 million tonnes in 2022. However, the IEA forecasts Canada’s coal production to decline to 45 million tonnes by 2025 due to reduced thermal coal production in response to slower domestic demand.

Phasing out coal might be a boon to the global environment, but it could be a stake to the coal industry, specifically Alberta’s coal industry.

Government of Alberta

In 2015, Alberta released its Climate Leadership Plan. One of the four key pillars of this plan is to end pollution from coal-fired electricity and develop more renewable energy. The plan mandated all coal-fired power plants either cease operations or eliminate all emissions by 2030 to help the province achieve its climate goals and drive innovation in the province. All these plants will have closed or be converted to natural gas by the end of 2023, seven years ahead of schedule.

As of 2016, the Alberta energy regulator estimates Alberta’s coal reserves to be 33.1 billion tonnes – 29.3 billion tonnes of sub-bituminous coal and 3.8 billion tonnes of bituminous coal. According to government of Alberta data from 2022, there are currently only five active coal mines in Alberta – one sub-bituminous coal mine (Genesee) and three bituminous coal mines (Coal Valley, Grande Cache, and Vista) and one small scale sub-bituminous coal mine (Dodds) that produces coal for local use.

There were 13.2 million tonnes of coal produced – 4.7 million tonnes of sub-bituminous coal and 8.5 million tonnes of bituminous coal. Of that coal produced, 700,000 tonnes of metallurgical coal, 12.4 million tonnes of thermal coal, and 8.5 million tonnes of bituminous coal were produced. Most of the coal produced in Alberta is exported to Asia.

The socioeconomic benefits of Alberta’s coal industry include high paying jobs to more than 7,000 Albertans who live in small towns throughout the province. The coal industry also provides revenue in the form of royalties and corporate and personal income tax to all levels of government. In 2022, coal revenue was estimated to be approximately $46 million for coal royalty and coal corporate income tax combined. Although these elevated numbers are attributed to the high energy prices in 2022, in 2021, the Alberta coal industry produced $162 million in real gross domestic product.

With the transition from coal to natural gas, Alberta is seeing a major drop in CO₂ emissions, as natural gas-fired power plants emit less than half of the CO₂ emissions coal-fired power plants do; therefore, natural gas is a much cleaner burning fossil fuel than coal.

According to the province, the primary benefits of phasing out coal-fired electricity generation are the climate, environmental, and health outcomes. Specifically, a reduction in carbon dioxide emissions and a reduction or elimination of harmful air pollutants such as particulate matter, mercury, nitrogen oxides, and sulphur dioxide.

Based on national inventory reports, total Alberta greenhouse gas emissions were 256.5 million tonnes in 2020, representing a 27.8-million-tonne decrease in total provincial emissions from 2015. Electricity sector emissions were 29.3 million tonnes in 2020, representing a 17.1-million-tonne decrease from 2015.

According to the provincial government, the phase out of coal electricity generation, which were baseload power plants, have primarily been replaced with natural gas fired power plants. This has helped to reduce emissions in the electricity sector significantly, and companies are now looking at CCUS to further reduce emissions.

The province’s abundance of natural resources and industry innovation has helped speed up phasing out coal. Another benefit of phasing out coal is that it created room in the market for significant investment by the private sector in renewables development. Renewables offer a cleaner, cheaper alternative to coal-fired power, and it is predicted that over 80% of renewable investment will take place in Alberta over the next five years.

“The phasing out of coal for Alberta’s electricity sector is beneficial not only for Albertans but people around the world. We have the highest standards of responsible energy production across the globe. Alberta LNG has the capacity to replace coal-fired electricity while reducing emissions at the same time,” said Pete Guthrie, Alberta’s Minister of Energy.

While the benefits of phasing out coal are clear, the disadvantages are less clear as coal is used for more than just generating power in Alberta.

Coal Association of Canada

The world is not getting off coal anytime soon. According to the IEA, coal reserves would be adequate to satisfy more than 100 years of current levels of consumption worldwide. The complete phase out of coal would have detrimental effects not just for Alberta’s coal industry but for emerging markets and industrializing countries that rely on coal exports from Alberta for their power generation and feedstock for other sectors.

According to Robin Campbell, president of the Coal Association of Canada, the provincial and federal governments’ new coal emissions regulations will create a market gap that will be filled with inferior-quality coal from countries other than Canada.

“Alberta’s foothills and the eastern slopes of the Canadian Rocky Mountains hold major deposits of very high-grade coking coal, and its thermal coal is considered extremely high-quality and has a low sulphur content relative to world standards,” added Campbell.

The global population is expected to reach 9.8 billion by 2050. This increase in population will result in more global demand for coal which is required for more energy production to build infrastructure, transportation, and housing. New buildings will require more steel and cement, which are derived from metallurgical coal.

“Alberta’s coal is responsibly and ethically produced with excellent environmental stewardship, and with new extraction technologies, producing coal is still critical today and in the future to meet global needs,” says Campbell.

Campbell also says Alberta’s phase-out of coal will eradicate the province’s coal industry. He added, “The phase-out of coal in Alberta will result in a tremendous loss of jobs, forever change the landscape of many small coal mining towns, result in an enormous loss of government revenue and taxes, as well as the loss of a high-quality product (coal) that is still in high global demand today and is expected to be decades into the future.”

The jury is still out on whether every country should phase out coal from their energy mix and as feedstock in products like steel and cement, until something else can replace coal.

In summary, the IEA says the current situation in energy markets underscores the huge challenges of reducing emissions while maintaining energy security. Renewable energy options, such as solar and wind, are the most cost-effective new sources of electricity generation in most markets, but despite their impressively rapid growth in recent years, they have not yet brought about a decline in coal’s global emissions. Experts have warned that meeting net-zero emissions targets by 2050 might be an ambitious goal.

According to a Forbes article, only natural gas can be a close substitute for the coal-fired base load and provide the same reliability. Solar and wind are intermittent and fluctuate based on sun and wind conditions and cannot provide steady base load power. Moreover, natural gas fired power plants are flexible and can easily and quickly adjust output to fluctuations in demand – ramp up production to meet peak demands or ramp it down when demand falls – for example, during evening hours.

Weather-dependent, intermittent renewables are lacking this flexibility. In fact, wind is more likely to blow at night rather than at peak afternoon hours. This makes renewables a hard sale as an ideal and exclusive coal substitute. And until science comes up with a solution such as energy storage that can break away from the problem of intermittency, renewables will not be able to compete with either natural gas or coal for the dominant role in the U.S. electric energy mix.

But renewables are an important element of the energy mix as they resonate strongly with the environmental policies and climate change mitigation strategies. There is also a good chance that, as technological changes including grid flexibility, efficiency gains and breakthrough in energy storage take place and renewables overcome the issue of intermittency, they may become a viable competitor in the future.

However, for Alberta’s future in the coal industry, Campbell says, “The $1.36 billion taxpayer dollars that the Alberta government is paying power companies to close or convert their coal-fired generating electricity plants by 2023 instead of 2030 could have been invested into emissions reduction technology instead of phasing completely off coal.”

Diane L.M. Cook is a freelance mining writer.