Executive summary CO2 emissions from coal are at the centre of the climate
and energy debate Coal is the largest energy source for electricity generation, steel making and cement production, three indispensable ingredients of modern life. At the same time, coal is the largest source of CO2 emissions, responsible for around 40% of energy-related emissions. This puts coal at the centre of the energy and climate debate.

Introduction
For some time, climate change has been identified as one of the main challenges the world is facing. Despite decades of significant international efforts, it was not until 2015 when a legally binding international treaty was adopted by the practical totality of the countries of the world, as 195 countries plus the European Union signed the Paris Agreement, with the goal of limiting global warming to well below 2° C, preferably to 1.5° C, compared with pre-industrial levels. The Paris Agreement is a historical milestone in the climate negotiations process. However, the analyses of the International Energy Agency (IEA) showed that the pledges as expressed in the nationally determined contributions of the countries were far from what was needed to lead the trajectory that the agreement actually pursued. Climate ambitions have been gaining momentum since the Paris Agreement was signed, with a growing number of countries pledging to reach carbon neutrality or net zero emissions by mid-century or soon afterwards. However, with the exception of the decline driven by the Covid-19 outbreak and associated lockdowns and economic recession, global greenhouse gas (GHG) emissions have continued to increase. Actually, the rebound of over 2 Gt CO2 emissions in 2021 is the biggest increase ever, making 2021 the all-time high at that time, with preliminary figures suggesting that 2022 would mark a new high. Turning the trajectory around requires reductions in emissions from all fuels, including from oil and gas. However, a rapid decline in unabated coal use is inevitably a central feature of all pathways to a more sustainable energy system. Coal is the most carbon‐ intensive fossil fuel and is responsible for a larger share of global GHG emissions than any other source of energy – 15 Gt CO2 in 2021.

Share of coal in electricity generation and coal policies

Impacts of the clean energy transition relative to coal are country-specific. It varies depending on the level of coal in the national energy mix, resource endowments, the structure of the labour market and the acceptance of local society. In order to assess the challenges the countries face in the transition process, the IEA developed the Coal Transition Exposure Index (CTEI), a typology of major coal-producing and -consuming countries’ exposure to the global clean energy transition. The CTEI maps out which countries are dependent on coal and in what ways. It is structured with four key categories and two indicators for each category.

The raw data of each indicator were normalised in order to assign a total score to generate the index. From least to most, Botswana, South Africa, India, Viet Nam, the People’s Republic of China (hereafter “China”), Mongolia and Indonesia have a particularly heavy and multifaceted dependence on coal, the biggest among the world’s countries. Scores have been calculated for a selection of countries that represent more than 90% of global coal production and consumption. The 15 largest coal producers and 15 largest coal consumers are included.

Coal Transition Exposure Index and its components

Korea, despite its medium to high coal dependency in the power generation mix, is a developed economy without a significant domestic coal-mining sector, and therefore is not among the most impacted countries, but this does not mean that a coal transition for Korea is going to be a simple task. Coal mining – a particularly labour-intensive sector – is usually concentrated in few regions even in large producing countries. Therefore, it is important to consider the regional aspect of transitions. Regions such as Shanxi in China, Mpumalanga in South Africa and East Kalimantan in Indonesia have a strong density of jobs, companies and tax revenues linked to coal mining, and this needs to be addressed in a very particular way. In the case of the coal power sector, the labour intensity is lower and might need less intervention, but the social aspects of the transition have to be properly addressed. The second chapter of this report analyses the regional distribution of plants and jobs in Korea.

A new context for the net zero transition Coal and energy security Energy commodities in the global market rose to record prices in 2022 as a result of market imbalances and supply chain disruptions following the Covid-19 pandemic and hat were exacerbated by the Russian Federation’s (hereafter, “Russia”) invasion of Ukraine. Prices of natural gas in Europe have been regularly above USD 40/MBtu for more than one year, which is more than double the oil price on an energy-equivalent basis. International coal has also seen unprecedented price levels, higher than USD 400/tonne, more than tripling the average price of the 2010s. In turn, high prices of natural gas and coal have led to high electricity prices in many markets. The global energy crisis is hurting entire economies – more severely in the EMDEs.

Energy prices in global markets, 2020-2022

Coal is the most abundant fossil fuel and reserves would be enough to satisfy 100 years of global consumption with current levels. The United States is estimated to have the largest coal reserves with more than 200 Gt, followed by China, Russia, Australia and India. The low energy density of coal, less versatility than other fossil fuels and air pollution issues have driven the substitution of coal in transportation and residential heating, meaning that its direct use is overwhelmingly directed to the electricity and some industrial sectors. In 2022, importing countries have faced extremely high prices, but the aggregate costs of coal to the energy system have not increased as much: in countries that use domestic coal, prices are often lower than in international markets. Price changes in international markets have a strong impact in countries that import almost all of their coal such as Korea and Japan.

Global total energy supply from coal, 2000-2021

Nonetheless, coal has been increasingly in the spotlight for policy makers, investors and activists. This is not surprising given that more than 95% of global coal consumption occurs in countries that have net zero emissions pledges, albeit on different timescales and varying levels of legal status. Despite all these commitments, unabated coal demand has not yet entered into a structural decline.

Share of global coal consumption covered by net zero emissions pledges, by target date and status

Emerging market and developing economies increasingly dominate coal use Coal is unique among fuels in the unparalleled dominance of a single country: China, which accounts for over 55% of global coal demand. China’s power sector alone accounts for one-third of global coal demand. Indeed, China’s coal-fired power generation is larger than total generation in any country. China is also the largest coal producer by far, mining roughly half of global output, and the largest coal importer. Despite China’s impressive deployment of clean energy technologies, coal still accounts for more than half of China’s energy supply and almost two-thirds of electricity generation. The second-largest coal-consuming country is India, accounting for over 10% of global coal demand. Coal is also the cornerstone of India’s electricity generation, accounting for around three-quarters of total generation. India has around 45% of the coal share in the total energy supply mix, which is lower than in China (around 60%), owing to India’s lower level of coal-intensive industrial energy demand. Together, China and India account for two-thirds of global coal demand. EMDEs as a whole accounted for over 80% in 2021, up from less than half in 2000. Coal demand in advanced economies has declined by about one-third over the last two decades. The United States now accounts for around 6% of global coal demand and the European Union for around 4%.

Global coal demand by sector and coal share in energy demand by sector, 2000-2021

The surge in coal-fired capacity additions since 2000 was unprecedented. Between 2000 and 2021, the total installed capacity of coal-fired generation almost doubled, from about 1 100 GW to almost 2 200 GW. Even taking account of growing population, the expansion represents the fastest increase in the global installed capacity of coalfired generation since the birth of this technology. The rapid growth in coal-fired generation capacity in the 2000s was largely driven by EMDEs, particularly in the Asia Pacific region and especially in China. The world now has a large stock of young coalfired power plants, which must be made compatible with the pathway to net zero emissions.

The largest number of coal supply jobs are in mining, the most labour‐intensive part of the value chain, but the transportation, washing and processing of coal also provide many jobs. An estimated 740 000 workers were employed in coal‐related power sector jobs in China in 2019. This compares with around 150 000 in Europe and over 80 000 in North America, where these jobs have been declining in recent years. Coal jobs in power generation involve tasks such as operating and maintaining existing plants, constructing new capacity, and manufacturing components such as boilers, turbines and generators.

Employment in the coal value chain by region and as a share of global employment, 2019

Countries with net zero emissions targets currently account for more than 95% of coal consumption and employment along coal value chains. In the APS, total coal employment declines from 8.4 million in 2019 to 6.1 million in 2030. Some of this decline is due to a fall in coal production and consumption as countries make progress towards their net zero emissions targets. It also reflects improvements in productivity and increased mechanisation.

Installed capacity by energy source (in MW, %)

In the first half of 2022, coal accounted for the largest share of 31.1% (90 657 GWh) in the generation mix, followed by nuclear (29.7%; 86 681 GWh), gas (28.5%; 82 985 GWh) and renewables (9.2%; 26 800 GWh). Coal has been the dominant source of power generation in the last five years despite a decreasing share. The shares of nuclear and gas have been slightly increasing with fluctuations.

The number of workers in the sector excluding the plant workers amounts to 22 306 (including the primary contractors). In other words, each of the almost 60 units employs around 372 workers on average. While these units could potentially retain 57% their employees through converting coal to liquefied natural gas (LNG), the outcome may vary significantly by company and job responsibility.

Coal phase-down progress

Follow the principles of a people-centred transition Today, countries accounting for more than 95% of total coal consumption worldwide have made net zero emissions pledges. In the Announced Pledges Scenario (APS), the implementation of these pledges brings profound change in coal industry and its workers. As stated in other parts of this report, in accordance with the International Energy Agency (IEA) approach, energy transitions are for people and about people. This is not only a good motto, but the key principle which should inspire the whole energy transition and every part of it, and indeed, this should be also the case in Korea.

Develop enabling infrastructure Renewables generation capacity accounts for the main share of investment needed for the transition away from coal, with grids accounting for only a fraction of it. However, the proper consideration should be given to the development of transmission and distribution capacity, which has been – and continues to be – a major bottleneck in the energy transition. Grid planning needs to be considered at early stages of the transition. This requires taking care of economic provisions to make them happen, but also paying attention to the approval procedures. While the authorities need to guarantee strict compliance of the legal procedures and ensure the rights of citizens to participate in the approval process, they should also be mindful that grid constraints can slow down the transition significantly.

Consider retrofitting coal power plants with CCUS

Coal plants retrofitted with CCUS can support power system transitions in several ways. As well as supplying low-emissions power from existing coal assets, they can provide stability services such as inertia, ramping flexibility and firm capacity at peak times. At the same time, they use transmission infrastructure that is already in place, and allow current plants to be operated so that investments can be recouped while reducing their carbon footprint. As Korea looks to get to net zero power generation by 2050, CCUS retrofits could provide an attractive path to do this.

Convert to low-emissions fuels

Coal power plants can be converted to use other low-emissions fuels (biomass, ammonia and thermal). Since Korea introduced the Renewable Portfolio Standard (RPS) in 2012, a system that mandates power generation business operators (suppliers) of 500 MWe or more to supply a certain percentage of total power generation as renewable energy, various biomass resources have been used to meet the RPS targets. For instance, SGC Energy made 100% conversion of a 60 MWe coal power plant to a biomass power plant in October 2021. With this conversion, SGC Energy could reduce carbon emissions by 400 000 tonnes per year. A high share of biomass co-firing can reduce the use of fossil fuels at power plants. Furthermore, carbonnegative electricity can be produced by capturing by-product CO2 from a biomass conversion plant if the biomass is sustainably produced.

With the increasing share of renewable energy, the need for thermal energy storage may increase. When electricity produced from wind and solar PV is abundant, it can be stored in thermal storage. Those stored energy then can be transferred to water in the steam generator when there is a shortage in electricity generation. In that way, it can increase the overall efficiency of the energy system and ensure the security of energy supply, since it offers high energy density. Replacing coal plants with thermal energy storage can reduce the negative impact on the local community and reuse existing facilities. Such transformation is elementary and economically reasonable.

Some countries are studying and piloting the concept of using auction‐based compensation mechanisms that allocate funding to plant owners in exchange for early retirement. The objective is to provide funding for the unrecovered capital remaining in the plant to the owner. The competitive nature of the auction mechanism aims to reveal the lowest amount of compensation that plant owners will accept in exchange for early retirement. For example, Germany established an auction mechanism where a shutdown premium would be awarded to plant operators that agree to take some capacity offline. To date five auctions have taken place between September 2020 and March 2022 and 34 coal units have been committed to retirement, accounting for almost 10 GW of capacity.

Source:http://IEA