Is it the end of coal?

The coal industry is struggling with low prices in Asia and environmental pressure at home. As the Canadian industry meets in Vancouver, what future is there for coal in Canada?

The coal industry meets in Vancouver today to talk survival in the midst of a deep downturn

Teck recently shut down six coal mines in Alberta and British Columbia for three weeks to reduce supply. ((Teck Resources))

At a glance, the Canadian Coal Conference kicking off in Vancouver today looks like any other corporate confab: A golf tournament, a hotel ballroom and a reception at an uptown restaurant are all on the agenda. 

However, amid the pleasant trappings Canada's coal industry will spend the next few days contemplating a frightening present that's pointing toward an even more uncertain future. 

Coal is facing a laundry list of challenges: reduced demand in Asia, prices at decade lows and environmental pressure in North America to stop burning the fossil fuel.

Max Wang is the chief executive of Grande Cache Coal. His company made headlines a year ago when it was sold for just $2 to Up Energy Group, based in China. Wang says that without that new ownership he's not sure Grande Cache would have survived.

"It has been a very good thing for the company," Wang said. "They have poured in a lot of money in to sustain the mine right now. Like the whole coal industry, we are in a very deep slump."

Grande Cache mines metallurgical coal, which is used to make steel. Almost all of Canada's met coal (as it's called) is shipped to Asia. The market for met coal is in the midst of a cyclical downturn, where there's simply too much supply and not enough demand. 

"We're not anywhere near from being out of the woods," said Joe Aldina, a coal analyst with Wood Mackenzie.

"The overriding message is that it's going to take time for a rebound in prices, we're probably a couple of years away from a turnaround."
Ontario has shut down its coal-fired power plants. Is Alberta next? (J.P. Moczulski/Reuters)

Green(er) power

The situation is different for thermal coal, which is used to generate power.

Since the election of Rachel Notley's NDP government in Alberta, there has been increasing talk about reducing Alberta's dependence on coal. A plan is expected to be released in Alberta's climate change policy, which is being formulated right now.

Alberta is really the last province standing when it comes to its dependence on coal-fired electricity. It burns more coal than the rest of the country combined.

Right now, federal regulations dictate that coal-fired plants can only operate for 50 years. There's an expectation that Alberta will reduce that to 40 years. Since many of Alberta's coal plants were built in the 1970s, that mean by 2030, much of the coal-fired power in the province will be phased out.

This is just one of many political shifts that Alberta has dealt with in the past five months. It has the power industry concerned and warning of higher prices to consumers, but is a relief to the environmental movement, which has long warned about coal's relationship with climate change, as well as the air quality in Alberta.

"I think it's something Albertans and our decision makers understand will be beneficial to our children's health and to the air we breathe," said Ben Thibault, who studies electricity with the Pembina Institute, a renewable energy think tank.

"And its really clear action that the province can take, that people around the world will understand. People will get that the home of the oilsands is moving away from coal. That makes a strong statement."
China has shut down this coal-fired power plant in Bejing. (REUTERS)

Don't count coal out

It's a green message that environmental groups hope is heard in the developing world, which is still very dependent on coal for its power. 

"You can definitely draw a line between developed worlds and developing worlds," said Wood Mackenzie's Aldina.

"In developed worlds, there's definitely a move away from coal, but where economies are growing and they need to do so cost effectively, coal is still attractive."

China has more than 600 coal power plants, but even it is starting to work on its air-pollution problem, including shutting down all the coal plants in Beijing and many smaller plants elsewhere in the country. It is also rapidly developing wind and solar power as part of its electricity grid.

However, other countries are waiting to be electrified. One of the first sessions at the conference this morning is titled: "India, the market's brightest jewel?"

"It's too early to count out coal," Aldina said. "It's low cost and it's very reliable. Those are the characteristics that keep it in the mix."


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