The pandemic suddenly slowed down the global coal market. But demand for the world’s dirtiest fuel is expected to skyrocket this year, seriously undermining the chances of staving off the worst effects of global warming.
The burning of coal is the biggest source of carbon dioxide emissions, and after a decline in the pandemic year, demand for coal is expected to increase 4.5% this year, mainly to meet growing demand for electricity, according to data released Tuesday by the International Energy Agency. , just two days before a virtual summit hosted by the White House aimed at rallying global climate action.
“This is a terrible warning that the economic recovery from the Covid crisis is currently anything but sustainable for our climate,” Fatih Birol, the head of the agency, said in a statement.
Coal is at the heart of critical policy decisions government leaders must make this year if they are to make the transition to a green economy. Scientists say greenhouse gas emissions must be halved by 2030 for the world to have a chance to tackle dangerous levels of warming.
In short, it is a historic turning point for coal.
For 150 years, more and more of its soot deposits have been extracted from underground, first to fuel the economies of Europe and North America, then Asia and Africa. Today, coal is still the largest source of electricity, although its share is steadily declining as other energy sources come online, from nuclear to wind.
Global spending on coal projects fell to its lowest level in a decade in 2019. And, in the past 20 years, more coal-fired power plants have been decommissioned or put on hold. The big resisters are China, India and parts of Southeast Asia, but even there the once rapid growth of coal is nowhere as rapid as it was ago. barely a few years, according to a recent analysis.
In some countries where new coal-fired power plants were only recently built by the gigawatts, plans for new plants have been scrapped, as in South Africa, or reconsidered, as in Bangladesh, or faced with funding problems, like in Vietnam. In some countries, like India, existing coal-fired power plants are operating well below capacity and losing money. In others, such as the United States, they are being phased out faster than ever.
However, demand is still strong. “Coal is not dead,” said Melissa C. Lott, research director of the Center for Global Energy Research at Columbia University. “We’ve made a lot of progress, but we haven’t made that curve.”
Coal is the lightning rod for climate diplomacy this year, as countries strive to rebuild their economies after the coronavirus pandemic while avoiding the risks of global warming. The Biden administration has relied on its allies, Japan and Korea, to stop funding the use of coal overseas. And he has repeatedly called on China for its increasing use of coal. China is by far the largest consumer of coal and continues to build coal-fired power plants at home and abroad.
Chinese President Xi Jinping swept aside this criticism on Monday, highlighting the historic responsibility of Western industrialized countries to do more to slow global warming. The United States accounts for the largest share of emissions in history; China now accounts for the largest share of emissions.
“The principle of common but differentiated responsibilities must be respected,” Xi said at his own world summit in Boao city.
‘Growing opposition to coal’
Since the start of the industrial age, coal has been the primary fuel for lighting homes, power plants, and in some places for cooking and heating rooms. For more than a century, Europe and the United States consumed most of the world’s coal. Today, China and India account for two thirds of coal consumption.
Other energy sources have joined the mix as demand for electricity has skyrocketed: nuclear, wind and, more recently, hydrogen. Coal made room for newcomers, but refused to retreat.
Today, several forces stand against coal. People are calling for deadly levels of air pollution, caused by its combustion. Wind and solar power, once much more expensive than coal, are becoming competitive, as some countries face a glut of already-built coal-fired power plants.
So even in countries where the use of coal is increasing, the pace of growth slows down.
In South Africa, after years of lawsuits, plans to build a coal-fired power plant in Limpopo province were canceled last November.
In at least three countries, projects funded by China are struggling or are dead. In Kenya, a coal-fired power plant project has languished for years because of litigation. In Egypt, a coal-fired power plant project is postponed indefinitely. In Bangladesh, the Chinese-backed projects are among 15 planned coal-fired power plants that the Dhaka government is reviewing, with a view to canceling them altogether.
Pakistan, overwhelmed with debt, has announced a vague moratorium on new coal projects. Vietnam, which continues to expand its coal fleet, has scaled back plans for new power plants. The Philippines, under pressure from citizen groups, pressed the pause button on new projects.
“Generally speaking, there is growing opposition to coal and much closer scrutiny right now,” said Daine Loh, energy specialist in the energy sector in Southeast Asia. at Fitch Solutions, an industry analysis company. “It’s a trend – moving away from coal. It’s very gradual.
Money is part of the problem. Development banks are avoiding coal. Japan and Korea, two major coal financiers, have tightened restrictions on new coal projects. Japan is still building coal-fired power plants at home, rare among industrialized countries, although Prime Minister Yoshihide Suga said in October that his country would aspire to reduce its emissions to net zero by 2050.
There are big exceptions. Indonesia and Australia continue to exploit their abundant coal deposits. Perhaps the strangest thing is that Britain, which is hosting the next international climate talks, is opening a new coal mine.
And then there are the biggest consumers of coal in the world, China and India.
The Chinese economy rebounded in 2020. Government stimulus measures encouraged production of steel, cement and other industrial products that use energy. The demand for coal has increased. The capacity of China’s coal-fired power plant fleet increased by 38 gigawatts in 2020, making up the vast majority of new coal projects in the world and offsetting roughly the same amount of coal capacity that has been withdrawn globally. (One gigawatt is enough to power a mid-sized city.)
The future of coal in China is at the center of a vigorous debate in the country, with prominent policy advisers pushing for a near moratorium on new coal-fired power plants and state-owned enterprises insisting that China must burn more coal for years to come.
India’s coal fleet is also growing, funded by public lenders. There isn’t much signal from the government that it wants to reduce its dependence on coal, even though it is looking to develop solar power. The New Delhi government is allowing some of its oldest and most polluting coal-fired power stations to remain open, and it is looking for private investors to mine the coal. If Indian economy recovers this year, demand for coal is expected to increase 9%, IEA says
But even India’s coal fleet is not growing as fast as it was just a few years ago. On paper, India plans to add some 60 gigawatts of coal-fired power capacity by 2026, but given the number of existing plants operating at barely half of their capacity, it’s unclear how many new ones will eventually be built. A handful of state politicians have publicly opposed the new coal-fired power plants in their states.
How much extra coal India needs to burn, said Ritu Mathur, an economist at the Energy and Resources Institute in New Delhi, depends on how quickly its demand for electricity is increasing – and it could grow very quickly if India pushes electric vehicles. “To say that we can get rid of coal or that renewables can meet all of our demand,” Dr Mathur said, “is not history”.
“ The big question is about gas ”
What has replaced coal most quickly in many countries is this other fossil fuel: gas.
From Bangladesh to Ghana to El Salvador, billions of dollars, some of which come from public funds, are being invested in the development of pipelines, terminals and storage tanks, with the number of countries importing liquefied natural gas having doubled in less than four years. Gas now provides almost a quarter of all energy in the world.
Its proponents argue that gas, which is less polluting than coal, should be promoted in energy-intensive countries that cannot afford a rapid scale-up of renewables. Critics say multibillion-dollar investments in gas projects risk becoming stranded assets, as coal-fired power plants already are in some countries; they add that methane emissions from gas combustion are incompatible with the Paris Agreement’s goal of slowing climate change.
Gas supplies an increasing share of electricity in the United States (35%) and Europe (20%).
The United States, driven by the boom in hydraulic fracturing, is one of the world’s leading gas exporters, alongside Qatar, Australia and Russia.
US companies are building a gas import terminal and power station in Vietnam. Demand for gas is rising sharply in Bangladesh as the government seeks to move away from coal to meet its galloping energy needs. Ghana this year became the first country in sub-Saharan Africa to import liquefied natural gas. And the US Agency for International Development has promoted gas as a means of electrifying homes and businesses across Africa.
And there is the catch for the Biden administration: although it is committed to being a global climate leader, it has yet to explain its policy of promoting gas exports – particularly on the use of gas. public funds to build gas infrastructure abroad.
“There is a fairly strong consensus around coal. The big question is about gas, ”said Manish Bapna, interim president of the World Resources Institute. “The climate community as a whole is starting to think about what a gas transition looks like.”
Julfikar Ali Manik and Hiroko tabuchi contribution to reports.