On the COP26 and coal's phase-out agenda: Striking a balance among the environmental, economic, and health impacts of coal consumption

Abstract

Economic and environmental policy actions are often substitutionary in their impacts, as one man's food could be another's poison. One of the critical emphases at the recent Conference of Parties 26 (COP26) is the need for coal to be phased out in the energy consumption basket of nations to achieve environmental sustainability, but this could be at the expense of the positive performance of other socio-economic fundamentals. The best bet could then be to maintain an optimal consumption level to strike a balance. Relying on this, we examine the environmental, economic, and health impacts of coal consumption in the world's highest coal-consuming countries, putting the latter's threshold level into consideration. In summary, we find that there is a trade-off between pushing for a sustainable environment through a reduction in coal consumption and achieving better growth and health status. This implies that phasing out of coal totally will have severe economic and health costs. However, based on our threshold regression model results, it is most reasonable to maintain a lower level of coal use in the overall energy mix of these countries. This will definitely yield a relatively low level of carbon, but will still assure a certain level of economic growth and health performance. As such, reducing the intensity of coal gradually and simultaneously providing a substitute that can also serve economic and health needs are encouraged.

Keywords: COP26; Coal phase-out; Economic growth; Environmental sustainability; Health performance; Threshold regression.