Energy chief announces measures to drive development of coal fields, in face of cheaper gas and clean energy options
By Olga Dobrovidova in Moscow
The Russian government has endorsed a long-term coal industry development program, featuring an increase in coal production and coal-powered generation – a day after adopting a brand-new climate action plan.
In a textbook case of perfect timing, the government finally agreed on an implementation plan for the 2020 GHG emissions reduction target on April 2.
A day later, ministers promptly went on to support a new version of the two-decade spending plan for the coal industry, worth some 250 billion roubles ($7 bln) of state funding earmarked mostly for transport infrastructure.
With coal currently at 16% in the domestic energy mix, coal production in Russia is not feeling so well, showing a consolidated loss of 22 billion roubles ($623 mln) in 2013 and total investment decreasing 1,5 times to 75 billion roubles ($2.1 bln).
Alexander Novak, the Russian minister for energy, told his colleagues at the Thursday meeting that the country’s coal industry is facing stagnation in the domestic market, with cheaper natural gas squeezing coal out of power generation, and declining prices internationally.
The minister also noted that increasing energy efficiency and investment in renewables in major economies also pose a “challenge” to the industry.
The refurbished program sees coal production in Russia increase to 410-480 million tons by 2030, and exports are expected to grow by some 70 million tons.
Production focus will shift from southwestern Siberia and other traditional hotspots to less developed Far East regions of the country with a view to increase the share of the expanding Asia-Pacific coal market from 6 to 15%.
Domestic consumption overall is expected to stabilize, but consumption of Russian coals in energy generation will increase by nearly 30%, from 92 to 120 million tons.
Although the program does involve building new coal-fired generation, at least part of that increase can be attributed to import substitution, as Russia is, incidentally, also a big importer of coal from neighbouring Kazakhstan.
In 2013, around 22 million tons were imported for power plants in the Ural region and parts of Siberia, and the program explicitly encourages a switch to ‘local’ coal for those plants.
Policies v implementation
Ironically, according to Vladimir Slivyak of Ecodefense, a Russian environmental NGO, no planned increase in coal consumption can undermine the climate target of keeping carbon emissions at 25% below 1990 levels, which he sees as inadequate.
“Russian climate policy looks good on paper while Russian coal industry is killing the climate. It is clear that national energy policy has wrong priorities with large preference for fossil fuel instead of renewable energy and efficiency,” Slivyak told RTCC.
Ecodefense was one of several NGOs behind the Banking on Coal report presented last year at the UN climate summit in Warsaw.
The report listed Russia, sixth largest coal producer in the world and third largest exporter, as an industry ‘hot spot’ along with China, Australia, Indonesia and other coal-loving countries.
Michael Yulkin of CCGS, a Russian consultancy, told RTCC that in the absence of consistent climate policy, all that’s left is the Climate Doctrine, a “universal document that casually allows the government to treat almost any activity as climate change mitigation”.
Yulkin added that most experts see planned increases in coal production and consumption as unrealistic, and cited research that shows greenhouse gas emissions in the coal industry itself, both from fuel combustion and methane leaks, have been decreasing in recent years.