Although President Barack Obama of the United States, US may be engaging in a “war on coal” with carbon regulations intended to shrink coal’s share of energy production, but worldwide, coal is in its strongest position in decades.
For instance, in 2013, enough coal was burned to meet 30.1 per cent of the world’s energy demands its highest share since 1970, according to new data reports.
The findings are striking because of trends that appear to be pushing coal to the sidelines. One of such is the abundance of natural gas in the United States which has seen utilities switching away from coal while another is Europe’s efforts to reduce greenhouse gas emissions leading to a high penetration of renewables in the electricity markets as well as China’s efforts in leading the world in the annual installations of solar and wind energy sources.
In spite of these efforts, coal still dominates. In 2013, coal consumption increased by 3 per cent, making it the fastest growing fossil fuel. A large reason for its success is its low cost – coal markets have experienced several years of declines in prices. Also, coal is relatively abundant and found around the world.
And despite the inroads made by natural gas and renewables, coal demand continues to climb in China, India and other fast growing developing countries. Coal has also seen a bit of resurgence in the US and Europe, although its duration is likely to be brief.
But the data shows how tough it will be to replace coal. All the efforts at reducing pollution and finding cleaner alternatives could be overwhelmed by the inexorable growth of the developing world.
For now, coal remains behind oil in terms of its share of global energy demand, capturing 30.1 per cent compared to oil’s 32.9 per cent. But that could change. In a December 2012 report, the International Energy Agency (IEA) predicted that by 2017, coal would become the world’s top source of energy. “Thanks to abundant supplies and insatiable demand for power from emerging markets, coal met nearly half of the rise in global energy demand during the first decade of the 21st Century,” said Maria van der Hoeven, IEA’s Executive Director. “This report sees that trend continuing. In fact, the world will burn around 1.2 billion more tonnes of coal per year by 2017 compared to today – equivalent to the current coal consumption of Russia and the United States combined. Coal’s share of the global energy mix continues to grow each year, and if no changes are made to current policies, coal will catch oil within a decade.”
Still, the future is not entirely rosy for coal and there is nothing sacrosanct about IEA’s prediction.
Its 2013 growth rate of 3 per cent is below its 10-year average of 3.9 percent. And despite the IEA’s projection that coal will move into first place as the world’s top choice for energy, much depends on the determination by major consumers to reduce greenhouse gases. New government regulations in the US, for example, will lead to the shuttering of dozens of coal plants.
But, as with most energy issues, coal’s prospects hinge on what happens in China, which alone, accounts for nearly half of global coal consumption.
In China, while demand is still growing, it is doing so at a much slower rate than previously. The 2013 annual increase in coal burning hit its lowest level in China since 2008. In fact, coal only made up 67.5 percent of total energy demand, still a colossal market share, but the lowest on record. That is due to China’s efforts to rein in pollution and increase the consumption of natural gas. The Chinese government has declared a “war on pollution,” in considerably stronger language than it has used before to describe efforts to reduce smog.
Since China last year accounted for two-thirds of demand growth in coal consumption worldwide, its energy policies have significant impact. If President Xi Jingping succeeds in putting a dent in the rate at which China burns coal, it will have a major effect on global coal markets.