Coal

The United States, the UK, Italy, France, Japan, Germany, and Canada have reached an agreement this week to phase out coal for power generation by 2035. This move has received mixed reactions, with some praising the decision while others, like Greenpeace, deem it insufficient. Despite coal accounting for only about 15% of the energy mix in the G7 economies, quitting it entirely may prove challenging, especially for countries like Germany and Japan, which rely more heavily on coal for electricity.

The agreement mirrors a recent U.S. Environmental Protection Agency stipulation, requiring all coal and new gas-fired power plants to either install carbon capture systems or shut down by 2039. In this case, the deadline is set for 2035.

While the G7 energy ministers appear determined to end coal emissions, the real challenge lies in whether future governments will uphold this commitment. The shift away from coal in these major economies could lead to increased coal use in other parts of the world, such as China and India, as they seek cheaper energy sources.

Replacing coal capacity entirely with wind, solar, and new nuclear power is unrealistic due to various factors, including the intermittency of wind and solar power and the lengthy construction time of new nuclear plants. This could lead to a surge in gas demand to meet the G7's energy needs, potentially offsetting any emissions reductions achieved through the coal phaseout.

Moreover, the rising demand for energy, driven by factors like artificial intelligence deployment and industrialization, could further complicate efforts to reduce coal use. Even if the G7 successfully eliminates coal, other regions may increase their coal consumption, potentially negating the emissions benefits of the phaseout.