How Ready is the G7 to Phase Out Coal?

Published: Tue, May 28, 2024: Author Herman Artinian, Los Angeles Editor Ronan Kavanagh

ANGHI/Shutterstock Energy ministers from the G7 recently pledged to phase out unabated coal power by 2035. The seven major industrial countries agreed to stop burning coal by then, unless in cases where carbon capture technology is used. Many hailed the move as a positive step towards cleaner energy, while others claim it doesn’t go far enough towards the group’s ultimate goal of net-zero emissions. Regardless of how the initiative is viewed, its effects on the energy mix will be significant. Coal accounts for roughly 37% of the world’s electricity production and 15% of G7 countries’ production. Replacing such a large percentage of fuel will be challenging, especially as electricity consumption continues to increase. To successfully transition away from unabated coal in a little over a decade, G7 countries will rely more on other fuel sources to secure energy demand, facing political and engineering challenges along the way. Currently, the biggest source of energy in the G7 is natural gas at 34%, followed by renewables at 18% (wind 11% and solar 7%), hydro at 11% and nuclear power at 18%. But when looked at individually, there is a wide range in coal dependence among the G7 countries.

Coal Dependence Variance

In Japan, coal provides 29% of the electricity. Because Japan imports coal, phasing out this fossil fuel will impact exports, and thus the economies of suppliers like Australia, Indonesia, Russia and Canada. Germany, which had planned to phase out coal by 2030, turned plants back on amid public outcry against nuclear. The Ukraine war further exacerbated its energy crisis by cutting off natural gas supply. Germany now gets 25% of its energy from coal. followed by the US, which sources 16% of electricity production from coal.

For others, phasing out coal is nearly complete. France sourced less than 1% of energy from coal in 2023. The UK will close its one remaining coal-fired station by the end of this year. Yet, even though coal was responsible for just 1% of the power generated in the UK last year, there was still a call to increase production as an emergency backstop during a cold snap last winter.

This variance illustrates the difficulties around phasing out the entirety of any energy source without sacrificing a degree of economic and energy security. We live in a modern society. Powering our devices, our homes and even the advancement of artificial intelligence (AI) requires versatility and flexibility in our modern approach to energy.

Backing Up Renewables

While renewable energy is the cleanest option, it’s not able to reliably meet all the power needs of the G7 countries. Renewables are subject to availability issues. For example, while US wind power output has been on an upward trajectory year after year for decades, low wind speeds in the first half of 2023 saw it dipping for the first time, highlighting wind’s volatility and limitations. Not all G7 countries, especially more northern ones, get enough sun to rely on solar power regularly. Combined, renewables have an important place in the energy mix, but countries still need a reliable back up.

While France gets the majority of its power from nuclear energy, Germany prefers not to use it at all. The current type of nuclear power available generates waste and comes with high public risk, should a disaster take place. Nuclear fusion holds promise as a cleaner source of nuclear energy, but it’s yet to be demonstrated as a viable option for public power. While it’s in the process of being developed, there are still no operational nuclear fusion power plants. This may be the case for several decades, long after the coal phase out occurs.

Natural Gas Reliance

Phasing out coal likely means G7 countries will rely more on natural gas while they continue to build out the capacity of renewables and the technology of nuclear energy. While still a fossil fuel, natural gas is cleaner than coal in that it produces 45% less carbon dioxide. There have also been advancements made in natural gas technology that further reduce emissions. For example, swapping traditional wellhead compressors for subsurface compressors significantly reduces emissions while still increasing productivity. Subsurface compression technology also reduces the need to drill new wells, allowing producers to get more out existing wells rather than fracking a new unconventional shale well. Advancements in AI allow for better predictive maintenance, too, another avenue for reducing emissions from methane leaks. Currently, there is an oversupply of natural gas in the US — causing producers to slow output in order to cut costs. Global gas reserves remain solid as well, creating a false sense of security. The International Energy Agency’s latest Gas Market Report showed a rise in demand for natural gas and forecasted steep growth in 2024 due to predictions of colder winter weather. As the G7 phases out coal, and other countries follow suit, the natural gas industry could be caught off guard. Now is the time for producers to look for ways to streamline operations in order to cut costs without slowing production.

Energy leaders will continue to make strides towards energy efficiency and sustainability. The pledge from the G7 will have ripples throughout the world and provide a blueprint for change. Phasing out the “dirtiest” fossil fuel while still allowing economies to thrive will be crucial to showing the world that it can be done

Heidi