As we have discussed the carbon market, and the different solutions to reduce carbon emissions in our previous posts, let’s look at one of the most significant contributors to carbon emissions primarily used to produce electricity – coal.

At the latest G7 summit, UN Secretary-General Antonio Guterres obliged the members to “phase out coal completely by 2030” (UN News, 2023). With coal being the largest source of energy worldwide, it’s not surprising that it has been the leading single source of temperature rise globally. 20% of greenhouse gas emissions are derived from coal (Canada.ca, 2022).

Coal is an affordable source of power generation which is why emerging economies widely use it. However, the impact of this energy source is significantly causing global warming, with the highest recorded carbon emissions at 36.3 billion tons in 2021 (IEA, 2022). Developed nations are coerced to step up in pioneering the transition to renewable energy and invest in energy transition projects in underdeveloped countries.

What are Renewable Sources of Energy?

Renewable energy is energy derived from sources that are naturally replenished on a human timescale. Examples of which are solar, wind, hydro, tidal, biomass and geothermal. These energy sources are considered renewable because they are continuously replenished and do not deplete when used. Capturing renewable energy varies per source. Solar energy is usually obtained through solar panels in sun-drenched areas, wind turbines to harness wind power, hydroelectric dams are built to utilize flowing water, and geothermal power plants for tapping into heat from beneath the Earth's surface.

The International Energy Agency (2023) reports that investments in clean energy are moving swiftly, with 24% growth between 2021 and 2023. Almost 90% of the investment is directed towards solar, low-emissions electricity technologies.

Recently, the country has phased out its coal power plants and converted some of these plants to operate on natural gas in Alberta (CBC, 2023). The province now relies on natural gas and renewables as its primary source of electricity starting this year. The Canadian Renewable Energy Association (2023) has also reported an “installed capacity of more than 19 Gigawatts of utility-scale wind and solar energy in the country last year in the progression to net zero emissions by 2030. This has led to the clean energy sector in Canada growing significantly at 10.5% in 2022 (CanREA, 2023). Aside from these, Prime Minister Justin Trudeau’s administration released a tax credit in the previous month’s budget on green energy projects to encourage the development of renewable technology (Financial Post, 2023). In the coming years, we will see more advances in the transition to renewables, including electric vehicles and clean fuels.

With all these investments into clean energy and the mandatory global move from coal to renewable resources, what are the implications of this significant shift?

• Global Warming Reduction – If we reduce global coal-generated carbon emissions by 80%, we will keep within the 1.5 degrees Celsius global temperature. A report by the World Meteorological Organization (2023) indicates that the chance of exceeding 1.5 degrees Celsius is 66% within the next five years, so countries must act swiftly to cut off the use of the largest single source of carbon emissions.

• Economic Rewards – The cost of shifting from renewable sourced energy, including capital spending, should offset the carbon tax applied to carbon emissions from coal-sourced energy. The social benefits of moving to renewable energy should outweigh the replacement costs and compensations for unrealized coal revenues as we try to save the world from intensifying climate change (IMFBlog, 2022).

• Improved Living Conditions – Coal-sourced energy will no longer affect human safety and the environment. Harvesting coal takes a toll on human health, with individuals having to risk their lives to mine these underground and on the environment through excavation on coal-rich ground and the torching process to produce electricity.

• Stable Electricity – dwindling resources of coal should not hinder the supply of energy to power households and commercial properties. Natural resources such as solar, wind, and water are ever-present; thus, these renewable sources should be able to provide uninterrupted electricity.

In pursuit of a sustainable future, GreenEco Investments commits to supporting energy transition programs. If you are involved in the development of green energy projects, we encourage you to connect with us. Let's collaborate to create a better world for all.