For developing nations, coal transition requires more than just money

Canada’s efforts to help developing nations transition away from coal won’t pay off unless the countries create policies that encourage its industries to make that shift, researchers said.

At the recent United Nations COP26 in Glasgow, Canada said it would phase out its thermal coal exports by 2030 and pay $1 billion to developing nations that depend on coal for nearly half of their electricity consumption.

But researchers say money alone won’t be enough to encourage shifts in poorer nations.

Shakirul Islam, who heads the think-tank Ovibashi Karmi Unnayan Program in Bangladesh, said developing nations like his needs “well-researched plans” to utilize these kinds of funds.

“Most of our funding to tackle climate change is used to create crops that are resistant to salt or floods … and that’s not enough,” Islam told the Northern Miner by phone from Dhaka.

“If we want to truly adapt, we need to listen to climate migrants and create well-researched plans that can create jobs and develop rural areas,” he added.

The South Asian nation, which is the second largest producer of clothes in the world and produces garments for the likes of Zara and H&M, is in the process of building new coal-based plants to fire its economy.

Ending coal power emissions will be crucial to limit global warming and to ensure the world meets the goals of the 2015 Paris Accord, in which nearly 200 nations agreed to keep global temperatures within 2 degrees Celsius above preindustrial times.

As such, climate change activists have urged nations to guarantee a just transition — shifting away from coal and other minerals that produce carbon and making sure that workers don’t pay the brunt for the move.

“[A] just transition has huge financial needs in developing countries … but unless mechanisms to implement it are in place, having money is not going to solve the challenge,” Srestha Banerjee, an Indian researcher and director at Just Transition at iForest, an Indian think tank, told Thomson Reuters in a story published on November 3.

“In India, many local-level interventions fail because of lack of planning, capacity of implementation (and) issues of accountability, among others,” she added, noting that the country depends on coal for more than 70% of its electricity.  

But the CEO of the Climate Investment Funds (CIF), one of the world’s largest funds that will distribute Canada’s $1 billion to developing nations through its newly created Accelerating Coal Transition (ACT) program, described the opportunity as “enormous.”

“The transition to clean energy is an enormous economic opportunity for developing countries. I look forward to working with Canada to further unlock this potential at scale,” Mafalda Duarte stated in a press release last week.

In total, the ACT received funding worth US$2.5 billionincluding funding from the United States and the European Union, to help countries like South Africa, India, Indonesia and the Philippines, which constitute about 15% of coal-related emissions globally, shift away from coal.

Campaigners believe that the initiative could spur innovation across a range of sectors, including electric vehicles and green hydrogen, and support workers, especially coal miners, women and the youth, in these thriving economies.

On the domestic front, Canada already plans to invest millions to support its coal workers and their communities to transition to cleaner energy and phase out coal-fired electricity.  

In July the government announced that it would provide $420 million to Algoma Steel Inc., the country’s only fully integrated producer of steel plates that employs 2,600 people, to phase out its coal-fired process and shift to Electric-Arc Furnace Production.

The move is expected to cut emissions by more than 3 million metric tonnes per year by 2030 according to the government, which is equivalent to more than 900,000 passenger vehicles off the road.

In December last year, Prime Minister Justin Trudeau announced measures to ensure the Lower Churchill Projects —  a set of hydroelectric ventures — are financially stable and can provide clean energy to Newfoundland and Labrador.

In addition, some of Canada’s largest coal producers last month committed to a goal of net zero by 2050.

For instance, Teck Resources (TSX: TECK.A/B; NYSE: TECK) told the Northern Miner that it’s planning to reduce carbon intensity in its operations by 33% by 2030 and become carbon neutral by 2050. It’s also planning to produce more copper in a bid to contribute to the renewable economy.

Furthermore, the company stated that Canada’s decision to phase out its thermal coal exports wouldn’t affect the company since it produced steelmaking coal — an essential ingredient needed to build infrastructure for renewable energy systems, which is different from thermal coal.

“For example, the average wind turbine requires 260 tonnes of steel, which in turn requires 170 tonnes of steelmaking coal to make,” Chris Stannell, a Teck spokesperson, said via email.

In his concluding speech at the COP 26 last week, Prime Minister Trudeau spoke about the need for new and bold approaches to build cleaner economies, new jobs and a “healthier world for our children and grandchildren.”

Researchers from developing nations though are skeptical and worry that the lack of planning has paved a long, difficult road ahead.