The case for coal

• The International Energy Agency said renewables would overtake coal as the world’s biggest source of electricity generation by 2025.
• The US proposed making new federal buildings and major renovations fossil-fuel free by 2030.
• The mining company Glencore abandoned plans for a giant coal mine in Australia in an effort to hit emissions targets.

By approving the opening of a new coal mine in Cumbria, the UK government is betting against swift decarbonisation.

There are three reasons to think they are right:

Technology. The coal from the Woodhouse colliery is destined for steelmaking. Steel is the world’s most widely used material and a difficult sector to decarbonise. Some manufacturers, particularly in developing countries, are likely to use metallurgical coal in traditional steel production for decades. India’s growing population will drive global demand for steel over the next 20 years, and the country will largely rely on traditional methods. In Europe though, fossil fuel-based steel production is forecast to decline over the coming decades (more below).

The business case. The mine already has an agreed flow of finance for its product. Javelin Global Commodities, a new London-based trading business which is looking to expand in coal trading as others retreat, has agreed to market all of the mine’s coal and provide a ‘working capital facility’ – funding that cuts the time the mine’s owners have to wait for payment. The target markets are likely to be the UK, continental Europe and Turkey.  

Jobs. The mine is expected to create more than 500 direct jobs, including 50 apprenticeships, once it’s fully operational, as well as supporting 1500 jobs in its supply chain.

And there are three reasons to question the decision:

Technology. Steelmakers in Europe such as Germany’s Salzgitter AG and Sweden’s SSAB are betting on green steel, using a technology that combines the use of hydrogen with an electric arc furnace. The alternative is to fit existing coal-based steel production facilities with carbon capture in order to mitigate emissions. 

Chris McDonald, chief executive of the Materials Processing Institute, says companies will prefer to buy the latest steel technology rather than CCS, allowing them to digitise their systems at the same time as going green rather than sticking with legacy technology and adding the costly process of carbon capture. “You have to go green and increase your competitiveness at the same time,” McDonald says. That means the most cutting-edge steelmakers will be ditching coal.

The business case. Coal in all its forms is a sunset industry. Demand for metallurgical coal is expected to peak globally this year, analysts Wood Mackenzie say. That’s partly because of:

• Slowing urbanisation and a shift to a services economy in China (which is by far the world’s biggest user of coal).

• Government pressure. The EU has agreed a climate tariff, due to be launched next year, which would put a levy on carbon-intensive imports, while the US has proposed a ‘green steel club’ of countries producing lower-emissions steel.
• There will also be demand for green steel from sectors like carmakers, which face their own emissions targets. 

There’s a further drawback; the Cumbrian coal has a high sulphur content – which is a problem because it generates air pollution. For that reason, British Steel have already said they won’t be using it.

Jobs. The mine is scheduled to open in 2025, will be fully operational in 2029 and will close in 2049, hitting the UK’s 2050 net zero deadline by a whisker. It’s hardly a job for life, especially from an apprentice’s perspective. In her Bloomberg column, former government adviser Allegra Stratton notes that when she was in No. 10 there was an idea to build a heat pump factory in the area instead of the mine. “Sadly that didn’t happen – the churn in Downing Street reduced bandwidth to say the least,” she writes.

The UK has a critical need for more skills training to prepare its workforce for jobs that will endure through the net zero transition. Many of the green jobs created in the UK so far have been professional and scientific rather than in trades, with employment skewed towards London and the Southeast, according to PwC. 

Economic arguments stack up on both sides. Conspiracy theorists will note a compelling political case in favour of the mine: it makes life difficult for Labour in a seat the party held for four decades until the Tories won it in 2019. Ed Miliband, shadow climate change secretary, has said a Labour government will seek to prevent the mine opening.

If keeping Workington blue at the next election is really the motive, let’s hope it was worth it. Reminder: the mine is projected to have cumulative emissions over its lifespan of 8 million tonnes of carbon dioxide equivalent – that’s about the same as the annual emissions from 280 commercial airliners.

A message from

Companies are investing more time producing climate risk disclosures based on the TCFD recommendations. However, these disclosures are not translating into actionable strategies to accelerate decarbonisation. The EY report analyses the reasons behind this by reviewing the disclosures made by 1,500 companies across 47 countries.

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