A Friend of Mines: Asia’s Coal Habit (Economist radio, 23 min listen)

(You can listen to the podcast by clicking here)

We have previously talked about the economics behind renewables and the rising appeal of their low cost. This podcast explores the reasons why Asia – specifically China and India – is still favouring coal as its main energy source and why these two countries will probably miss (by some decades) the deadlines agreed to under the Paris Climate Change Agreement. Miranda Jonson, Economist South-East Asia correspondent, explains that while China is initiating small steps, such as more investment in renewables and a carbon trading scheme, India is much more complex. The latter has become the biggest builder of coal fireplants as the government is preparing for a tripling of energy demand by 2030. Towards the end of the episode, the topic turns to the troubles of Liberia, which, after suffering a 14-year civil war, is left with a non-existent economy and a starving population. Even though the war ended in 2003, poor political leadership might be driving another uprising soon.

Why does this matter? Despite the clearly devastating impact of coal on the climate and the promises made to reduce its usage, Asian countries are stubborn. Coal is heavily interlinked with these emerging economies. For example, the central Government in India owns about three-quarters of ‘Coal in India’, which provides revenue to the treasury through dividend payments and taxes on coal production, and employs thousands of people. To reduce pollution and greenhouse gas emissions, improving the efficiency of the coal-fired power system, might be a more realistic goal than trying to remove it entirely.

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(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)

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