Global coal demand is set to stagnate through to 2022 according to the IEA (International Energy Agency). Despite the growth of renewables and lower gas prices, additional demand for power will have to be met by coal. The need for coal cannot be ignored and therefore, it is imperative that buyers of coal in the Asian region start paying attention to where their coal comes from.
Mining and the use of minerals in any production process is coming under growing scrutiny from civil society organizations, governments and consumers. Companies need to demonstrate that they identify and monitor their supply chains fully understanding and accepting the provenance of the products they use. Coal as a resource for power generation, steel or cement manufacturing is under even more scrutiny because of its direct link to climate change. However, we need to look beyond that aspect of the debate, and producers and buyers alike need to focus their attention on the way coal is mined and transported to its end users. Identifying and managing social and environmental risks in the supply chain is a business imperative.
Bettercoal was created to deal with just that concern: ensuring that the coal purchased by its members comes from mines committed to a continuous improvement process in their operations. Bettercoal assesses performance of coal suppliers against the ten principles of its code and jointly develops a Continuous Improvement Plan, the summary results of which are shared with its members. The members take into account the results of the assessments in their purchasing decisions and due diligence processes. The outcome is a re-enforcing loop of improvement and recognition in the coal supply chain.
Bettercoal recognizes that Asia remains the hub of coal consumption moving forward as Europe implements policies aimed at ending coal fuelled power generation. To ensure that coal producers keep improving their operations, Asian buyers need to demonstrate the same commitment as the European utilities have to a responsible coal supply chain. As it happened in Europe, civil society organiza- tions and consumers will start asking questions about the conditions under which the coal they burn is being produced. Therefore, utilities will have to demon- strate that they understand and acknowledge the risks in their supply chains linked to social and environmental pressures.
Through its actions over the last couple of years, Bettercoal has engaged with mines in Colombia, Russia, the US, South Africa, Poland, Germany, Indonesia, Australia, Norway, Kazakhstan and the UK. Bettercoal members purchase coal from across the globe and therefore connect with mine operators in many different countries. Many of the suppliers currently engaged in the Bettercoal Assessment Process also supply the Asian market, therefore Asian utilities could benefit from joining Bettercoal.
Coal will continue to be challenged as the world transitions to low-carbon sources of energy. Producers and buyers should continue to work closer together to develop a shared understanding of the risks and build a system where demonstrating continuous improvement in practices will become a key purchasing decision factor, as important as price. Responsible business is good business and joining Bettercoal is one way in which both Asian coal producers and Asian coal buyers can demonstrate their commitment to a responsible coal supply chain.