Peabody Energy pitches coal as the cure for Third World poverty

Source: Daniel Cusick, E&E reporter • Posted: Monday, April 14, 2014

Faced with uncertain domestic markets and mounting regulatory pressures over pollution at home, the U.S. coal industry is shifting its focus to some of the poorest nations of the world, where it argues coal should be a primary antidote to global energy poverty.In a sophisticated public relations campaign launched in late February, Peabody Energy Corp., the world’s largest private coal company, argues that policymakers, along with anti-poverty nongovernmental organizations and global investment banks, have overlooked the positive role that coal can play in meeting economic development and even environmental goals throughout the developing world.

For this reason, Peabody’s “Advanced Energy for Life” campaign — which is drawing both widespread attention and scorn from coal’s critics — aims to build “awareness and support to eliminate energy poverty, increase access to low-cost electricity and improve emissions through advanced clean coal technologies,” according to the St. Louis-based energy giant.

What Peabody doesn’t talk about in its campaign is the fact that coal is the world’s dirtiest mainstream energy fuel for power generation and that carbon dioxide and other air emissions associated with the burning of coal remain the No. 1 driver of global climate change and major public health concern globally.

Opponents of expanding coal-fired power, including the Sierra Club and the World Wildlife Fund, have mobilized to counter Peabody’s public relations effort, calling the “Advanced Energy for Life” campaign a deeply cynical publicity ploy from a “dying and desperate industry.”

“As coal loses ground in developed countries to more modern and sustainable alternatives, Peabody is marketing its dangerous technologies onto those poorest countries with the least development options,” Tony Long, director of WWF’s European policy office, said in a statement responding to an advertisement that appeared in the European edition of the Financial Times newspaper.

Selling light, life and warmth

The advertisement, bearing the headline “Let’s brighten the many faces of global energy poverty,” depicts children and adults in a variety of countries and settings, including a young woman cooking before an open-pit fire, two boys reading by flashlight, and a woman warming her hands in front of an indoor space heater.

The ad’s accompanying text notes that energy poverty is “the world’s number one human and environmental crisis,” and that Peabody Energy is working to “end energy poverty, increase access to low-cost electricity and improve emissions using today’s advanced clean coal technologies.”

WWF was so offended by the ad’s claims that it filed a petition with Belgium’s Jury of Advertising Ethics (Le Jury d’Ethique Publicitaire) charging that the ad contains false and misleading information and breaches several articles of the JEP Code, including principles requiring that “any publicity must be decent, honest and veracious.”

In an interview, Vic Svec, Peabody’s senior vice president for global investor and corporate relations, said the company stands by its statements both in The Financial Times and on the “Advanced Energy For Life” campaign’s website, which was developed with help from the internationally known marketing and public relations firm Burson-Marsteller.

The website, organized under headings “People & Energy,” “Economy & Business” and “Environment & Technology” relies heavily on images of adults and children representing various countries and cultures, including video clips of people performing tasks with and without electricity.

One clip, titled “Africa Switched On,” includes footage of street life and substandard housing typical of many African villages, with a narrator named Rugigana Kavamahanga offering his views on energy poverty. “Africa needs more energy, from all sources, especially energy from coal to provide the kind of baseload power that’s required to end energy poverty,” says Kavamahanga, who is identified as an energy finance consultant and Peace Corps volunteer.

Other clips contain person-on-the-street interviews in the United States and Australia about the meaning of “energy poverty.” It is also a clearinghouse of news stories and opinion pieces from U.S. and international media outlets that address energy policy issues, including the perils of energy poverty and the presumed virtues of coal.

Increasingly, too, Peabody Chairman and CEO Greg Boyce has talked about global energy poverty in various forums, including the recent 2014 ECO:nomics conference in Santa Barbara, Calif., a gathering of global business executives, policymakers and thinkers.

Rebranding a ‘toxic’?

“Energy inequality is the blight of energy poverty, limiting access to basic needs like food, water and medicine; stunting education; and cutting lives short,” Boyce told an ECO:nomics session moderated by The Wall Street Journal, excerpts of which were released by Peabody. “Every one of the U.N. Millennium Development goals depends on adequate energy, yet today one out of every two citizens lacks adequate energy and over 4 million lives are lost yearly due to the impacts of this scourge.”

But critics say such statements, coming from an executive whose primary job description is to expand coal markets globally to Peabody’s benefit, are disingenuous, and even harmful, to efforts by the United Nations, the International Energy Agency, scores of nonprofit organizations, volunteer groups and public health experts who have committed billions of dollars and hours to helping improve quality-of-life measures in the world’s poorest countries.

Justin Guay, associate director of the Sierra Club’s International Climate Program, likened Peabody’s effort to cast itself as a steward of energy security and public health to the tobacco industry’s efforts to refute scientific evidence linking cigarette smoking to lung cancer and other fatal diseases. “This is a clear-cut case of a company trying to rebrand a deadly, toxic product into a something that’s a global imperative,” Guay said in a telephone interview. “It’s anything but a panacea to our energy poverty problems.”

In fact, Guay said, many experts who have studied energy poverty in developing countries believe the better path forward is to invest in smaller-scale distributed-generation systems that put the means of energy production and distribution in the hands of local and regional collectives.

Such systems have been successfully deployed in villages in sub-Saharan Africa, for example, using solar power. And while many current systems remain too small to power significant numbers of homes, they could be effectively scaled with the right levels of investment and know-how, Guay said.

“If you go and talk to policy people who are in the weeds working on energy poverty today,” Guay added, “I guarantee you won’t find a single person talking about building huge coal plants and expanding the grid.”

Indeed, the “grid” as most Americans understand it does not exist across broad swaths of the developing world. While urbanization is resulting in more and more people congregating in cities where electricity is provided by mostly government-owned utilities, the vast majority of the 1.3 billion people who currently have no access to electricity live in rural areas, according to the International Energy Agency.

But progress toward bringing reliable electricity to the global poor has been made in some areas, and the desire to do more is great.

Problems with grid financing

Todd Moss, a senior fellow and director of the Emerging Africa Project for the Washington, D.C.-based Center for Global Development, said that demand for electricity across much of the continent is so great that policymakers would be receptive to almost any form of energy that can be built and operated at scale, including baseload natural gas and coal plants.

And while transmission and distribution issues remain a substantial hurdle across much of Africa, an equally difficult obstacle for would-be power plant developers is navigating the complex web of finance, logistics and political relationships that are essential to bringing such projects to reality. In fact, few large infrastructure projects in developing countries get built without an infusion of country-specific international aid or backing from global lending institutions such as the World Bank.

Increasingly, however, such lenders are refusing to back energy projects that come with environmental downsides, especially coal plants that emit millions of tons of carbon dioxide into the air. The World Bank, the U.S. Export-Import Bank and the European Bank for Reconstruction and Development have all tightened restrictions on lending to coal-fired power projects (ClimateWire, Dec. 16, 2013).

The Obama administration also implemented a policy last year to lend money for new coal plants in developing countries only “in rare circumstances” and after other low-carbon or no-carbon options have been exhausted. Seven other nations, including the primary Nordic countries, along with the United Kingdom and the Netherlands, adhere to similar policies.

Moss said that he believes coal-fired power could see marginal expansion in some countries, especially those that have readily available coal resources and a robust financial sector, such as South Africa. Prospects for coal generation in Africa’s interior may be dimmer, however.

“I do believe that most governments are pretty plugged into international circles, and I think they would see coal as a last resort,” he said.

Svec said that Peabody’s goal is not to promote coal at the expense of other energy fuels or electricity generation technologies, including renewables like solar and wind power. But, he argued, advanced coal-fired power generation, including “clean coal” technologies, deserves to be considered for its energy, economic and environmental benefits in countries where energy poverty remains a major problem.

Svec also said the company appreciates the efforts and concerns of other groups that are deeply invested in alleviating energy poverty throughout the developing world.

“We understand and applaud the organizations and individuals who have spent time on this issue,” he said. “But we are attempting to highlight the issue in much larger forum. We also recognize that there are multiple elements to the solution, and we think coal should be part of it.”