IEEJ：December 2018○ｃIEEJ 2018
Special Bulletin
A Japanese Perspective on the International Energy Landscape (404)November 30, 2018

Discussions in Russia on Where to Position Coal-fired Power GenerationKen Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn November 29, I had an opportunity to participate in a conference titled “SKOLKOVO
Energy Dialogue: The Role of Coal-Fired Power Generation During the Energy Transition” inMoscow. Sponsored by the Moscow School of Management, SKOLKOVO, a Russian higher
education institution, the conference dealt with where to position coal-fired power generationduring the world’s energy transition, as indicated by the title. Some 50 Russian government
officials, energy industry people and experts took part in the conference for vivid discussions. In
the following, I would like to summarize impressive points of the discussions at the Moscow
conference.
According to the BP Statistical Review of World Energy, coal accounted for 38% of global
power generation in 2017, the largest share among electricity sources, followed by 22% for naturalgas, 16% for hydro and 10% for nuclear. The share for remarkably growing renewable energy
including solar photovoltaics and wind was limited to less than 10%. In Asia growing as the gravity
center of the global energy market, coal’s share of power generation was dominantly high at 60%.
At present, coal is the largest electricity source in the world, particularly in Asia, because of
its abundance, price competitiveness and significance as a domestic energy source. As responses toclimate change, air pollution and other environmental problems have grown more significant, however,
the market environment has become severer for coal. The future course of coal has grown more
uncertain, as indicated by movements for divestment in coal and other fossil fuels. In this sense, theMoscow conference dealt with the very important issue of where to position coal-fired power
generation.
I was interested in why the matter was vividly discussed in Russia. In Russia, coal’s shareof total electricity generation was 14% in 2017, the fourth largest following 49% for gas, 19% fornuclear and 17% for hydro. However, coal exerts great influence on local economies and employment
mainly in coal producing regions in Russia. Given that Russia is a coal exporting country, the future
course of domestic and foreign coal markets and coal-fired power generation is expected to exert grave
influence on the Russian coal industry. These conditions represent a background for the conference.
In countries with leading domestic coal industries, discussions on coal or coal-fired power generation
tend to be politically and socially sensitive. In the United States, coal’s revival has been touted under
the Trump administration. Germany is struggling to achieve its ambitious greenhouse gas emission
reduction target while its domestic coal/lignite industry plays a key role in the respective regional
economy in the country.

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Through the conference, I felt that many participants recognized the significance of climatechange and air pollution countermeasures but called for balancing such countermeasures with coal’scontributions to energy security, to competitive electricity supply and to coal producing regions’economies and employment, indicating the sensitiveness and complexity of where to position coalfired power generation.
Significant regarding such balancing are how far Russia would enhance climate change
countermeasures and whether Russia would toughen emission standards for such pollutants as sulfur
and nitrogen oxides and PM2.5 to address air pollution. Environmental problems are externality
problems for the energy market. Government regulations to address environmental problems arevitally important for the energy market. Government regulations depend on a government’s“perception” about how seriously environmental problems are to be taken and how faithfully theyshould be addressed. The perceptions of various stakeholders and the government leading regulations
in Russia would hold the key to where to position coal-fired power generation.
In addition to discussions about regulations in Russia, another interesting point at theconference was participants’ great interest in Asia’s coal-fired power generation and coal market.
Many of them presented a view that while European countries such as the United Kingdom maysteadily phase out coal and reduce coal demand, Asia may continue to select coal as a competitiveelectricity source meeting its robust electricity demand and keep its coal demand high. They also
argued that Asia would expand coal imports as Indonesia and other Asian coal exporters lose theircoal export capacity. Participants noted that the Russian coal industry would have opportunities toexpand exports and production.
Even if Asian coal demand and imports expand over a long term, however, who will cover
the expansion will be determined through severe market competition. There is no guarantee that theRussian coal industry will benefit from the Asian coal demand expansion. However, it was interesting
to find that Russians were viewing the expanding Asian market as providing Russia with a businessopportunity. This may be partly because Russia’s oil and gas/LNG industry has successfully expanded
into the Asian market.
Energy transition is very susceptible to political, economic, social and technological factors, being
plagued with great uncertainties. It is very risky to bet on a single energy transition path. Representative longterm energy outlooks and various energy scenarios in the world indicate their wide gaps. However, gaps
concerning coal are particularly wide. Some project steady growth in coal demand while some others indicatethat coal demand would immediately peak out and decline over a long term. In the face of such uncertainties,
we can or should begin with objective and scientific analyses of facts and realities.
While introducing the IEEJ Outlook 2019 at the conference, I argued that as there is not any
almighty energy source that can resolve energy problems, we should combine all available energy
options in a balanced manner while overcoming each energy source’s weak points and that the idealenergy mix could differ from country to country. This is because I felt that these arguments would beappropriate for the discussions in Russia.
Contact: report@tky.ieej.or.jp
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