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SUEK says clean coal to play greater role in combating emissions than renewables

? Coal forecast to power a third of electricity generation in the next 30 years

? Using cleaner coal technologies could help lower greenhouse gas emissions

? SUEK invested over US$400 million in production of clean coal

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Sergei Grigoriev, member of SUEK management board and director of public relations and communications.

Source: Siberian Coal Energy Co. OJSC

Siberian Coal Energy Co. OJSC, or SUEK, is one of the world's largest coal producers, with output of 107.8 million tonnes in 2017.

S&P Global Market Intelligence talked to Sergei Grigoriev, the company's public relations and communications director, who believes that analysis on coal tends to focus on the resource being slowly phased out, ignoring the fact that when used sustainably, coal remains a reliable source of cheap energy, especially in emerging economies. This is an edited transcript of that interview.

S&P Global Market Intelligence: Many argue that the rise of renewables means the end for coal. What does this mean for SUEK?

Sergei Grigoriev: Analysis on coal often tends to be one-sided, as "coal is dead." Coal still remains a fast-growing source of fossil fuels, adding more to the absolute world energy supply in the last decade than all other forms of energy combined. Despite our optimism about the future of renewables, coal is forecast to generate a third of all electricity globally in the next 30 years.

Using cleaner coal technologies will make a greater impact on controlling emissions than being in denial that coal still powers the world. Last year, India's energy minister, Piyush Goyal, said that the "shift towards cleaner coal will have a bigger impact on Indian emissions than all its renewables combined." He is right, and it is not only true for India. This is true not only for developing countries where up to 50% of total power generation is coal-based, but for the rest of the world. China, the world's top greenhouse gas emitter, is working to clean up its coal power. It has been adopting clean coal technologies in recent years, increasing coal efficiency in power generation. The best we can do is to invest in and use clean coal technology to reduce environmental impact here and now.

How can coal compete as renewable resources become ever cheaper and more efficient?

Wind and solar energy combined, for example, only produce up to 4% of global electricity demand now. With the current level of technology, it is possible for renewable energy sources to power only some of the world's regions. Coal still remains a cheap and reliable source of energy that powers many world regions, where the link between access to affordable energy, social equality and economic growth is clear. According to the International Energy Agency, or IEA, over 30% of the total energy demand worldwide and over 40% of the electricity generated comes from coal. The latest IEA projections, released in late 2017, show that coal is expected to generate 26% of global electricity in 2040. Even as coal use declines, fossil fuels will continue to power growth across much of Asia-Pacific and Africa for the next few decades.

You have spoken before about SUEK's implementation of clean coal technologies. How viable is this technology for mass application? How does it affect operating costs?

We made significant investments, over US$400 million in recent years, into clean coal production, including modern high-capacity washing plants and enrichment facilities to produce high-efficiency and less polluting coal. In mining operations, we sustainably use captured methane for energy generation and work to reduce any hazardous emissions, primarily mine gas, and to improve wastewater treatment, waste disposal and energy efficiency. Our new environmental strategy provides for nearly US$2 billion of investments into ecological efficiency between 2017 and 2023. We run extensive land reclamation projects, including surface restoration, rock dump leveling, soil remediation, tree planting and landscaping. We invested into modern ports with high-tech dust control systems, reducing impact from trans-shipment operations. At the same time, we have low production costs benefiting from diversified assets located across Russia's regions and our own ports.

Demand has increased for coal in Europe, largely because of the move away from nuclear. But governments insist this is a temporary measure while countries recalibrate their energy infrastructure. How will this affect the future of coal in Europe?

We have seen an increase in coal supplies to Europe as some countries transition away from nuclear because of safety concerns. Once nuclear power stations are turned off, they cannot be used anymore, and they will have to use other energy sources like coal, which is reliable, cheap and safe if used sustainably. Germany still gets 40% of its energy from coal, while many Eastern European countries rely on coal as an affordable energy source. If energy prices go up, coal use in the energy mix lowers the costs to European consumers. So the European market is not lost, though current trends show that coal is more aligned to Asia's and Africa's energy future. Not every country is industrialized, and people need access to energy.

Coal exports and production in the U.S. have grown recently, but given that the push toward solar has grown unpredictably over the last decade, how can you ensure coal is sustainable for the future?

This is true, U.S. coal production and exports are up compared to the years before. But solar technology is not that advanced yet. Solar power now covers about 1% to 2% of electricity demand in the U.S. and globally. For instance, to provide power to everyone in the U.S. would require solar panels over an area about three times the size of Florida. And to make solar generation more reliable, sizable investments in storage capacity are also needed, making the overall cost of renewables much higher. Coal has been crucial to millions of people gaining access to electricity, especially in Asia and Africa. To make sure coal use is sustainable, we need to adopt clean coal technologies that increase coal efficiency and reduce emissions. The shift towards clean coal will make a bigger impact than all the renewables combined since coal is going to be around for the next 30 to 40 years. It depends on how we use coal and of what quality.

Can you elaborate?

Improving efficiency increases the amount of energy that can be extracted from a single unit. Using highly enriched coal with combustion at coal-fired power plants that utilize high efficiency, low emission, or HELE, technology will be a significant step towards near-zero coal emissions with carbon capture and storage technology. HELE technology can reduce greenhouse gas emissions from the entire power sector by 20%. China, for instance, plans to launch construction of a new coal-fired power plant every week. Almost 600 coal-fired electric power plants are at the planning and construction stage in India and other Asian and African countries. The United Nations' Intergovernmental Panel on Climate Change said that tackling global warming without clean coal technologies will be much more expensive, and we need to enhance action on, and investment into, clean coal.

What is SUEK's vision for the next couple of years? How does it see the coal market developing?

The world's energy consumption is growing, and coal remains a reliable and affordable source of fuel. We see a stronger demand for premium, higher-quality coal as many end users are focusing on environmental and generation efficiency. We can see that Asian countries develop more advanced and efficient coal-fired power generation. We continue investments and the development of coal mining and enrichment, which will allow us to increase sales. The market conditions may fluctuate, but demand for our product should remain stable and increase. Overall, it is set to be a positive forecast in the next couple of years.