4 min read.Updated: 19 Mar 2021, 08:19 PM ISTBloomberg
US power plants are going to consume 16% more coal this year than in 2020, and then another 3% in 2022, the Energy Information Administration said
While India has implemented an ambitious rollout of solar power, coal continues to account for around 70% of its electricity generation
The world’s three biggest consumers of coal, the dirtiest fossil fuel, are getting ready to boost usage so much that it’ll almost be as if the pandemic-induced drop in emissions never happened.
US power plants are going to consume 16% more coal this year than in 2020, and then another 3% in 2022, the Energy Information Administration said last week. China and India, which together account for almost two-thirds of demand, have no plans to cut back in the near term.
This means higher emissions, a setback for climate action ahead of international talks this year intended to raise the level of ambition from commitments under the Paris Agreement to reduce greenhouse gases. In the US, the gains may undermine President Joe Biden’s push to reestablish America as an environmental leader and raise pressure on him to quickly implement his climate agenda.
“We’re going to see a really marked increase in emissions," with coal consumption at US power plants returning almost to 2019 levels, said Amanda Levin, policy analyst at the New York-based Natural Resources Defense Council. But if Biden implements green-energy policies as expected, “we could actually see changes pretty quickly."
The US increase stems from higher natural gas prices and the recovery from the pandemic. For China and India, it’s a reflection of rising electricity demand that’s keeping coal as the dominant source of power generation even as they add vast amounts of solar and wind capacity.
While Biden’s Covid stimulus didn’t focus on green energy, a pending infrastructure bill is expected to include plans to fulfill his campaign pledges on climate change, making the US best poised to salvage progress in reducing global emissions. Biden has said the US will target carbon neutrality by 2050, and is convening an April meeting that’s expected to include China and India.
China’s President Xi Jinping surprised the world with his promise last year to achieve net-zero emissions by 2060. India has yet to make any similar commitment.
In China’s latest five-year plan announced March 5, Premier Li Keqiang didn’t set a hard target for emissions reduction, and said coal would remain a key component of the electricity strategy. More detailed energy plans to be published later in the year could include specific steps on curbing fossil fuel consumption.
While Beijing has reduced coal’s share in the nation’s energy mix in recent years, total power consumption has risen, so its usage has also climbed. Complicating the picture is that China also has the world’s biggest fleet of coal-fired power plants, and more than half of them are less than 10 years old. Because they can run for several more decades, it’ll be tough to shift to alternatives.
“All of that installed capacity doesn’t go away overnight," said Dennis Wamsted, an analyst for the Institute for Energy Economics and Financial Analysis.
Though a recovery in energy-intensive sectors like construction and metal production is currently boosting short-term coal demand, consumption will fall in the years ahead as China acts on climate promises, said Tang Daqian, an associate director at Fitch Bohua.
India too is a very long way from a clean grid, even as Prime Minister Narendra Modi said this month he’s ahead of schedule for meeting the initial carbon-reduction pledges under the Paris Agreement, reducing emissions intensity 33% to 35% from 2005 levels by 2030.
While the country has implemented an ambitious rollout of solar power, coal continues to account for around 70% of its electricity generation. Consumption at power plants will rise 10% this year, and is set to increase every year through at least 2027, according to Bloomberg Intelligence.
In the US, coal is rebounding after the coronavirus pandemic curtailed electricity usage and cut demand for the fuel by 19% last year. It’s also the result of gains in natural gas prices, which are up more than 40% from a year ago. When gas gets more expensive, utilities will often start burning more coal to bring down costs, even though it puts out twice the emissions. The EIA expects gas prices to remain high into 2022, pointing to strong demand for coal next year.
In the longer term, coal’s prospects are bleaker. While top users’ consumption might be rising in 2021, emerging markets that once seemed like the brightest spot for long-term demand are turning their back on the fuel as financing becomes more difficult and alternatives like gas and renewables are getting more accessible and cheaper. Bangladesh is abandoning almost all of its planned projects and the Philippines last year declared a moratorium on new coal-fired power plants.
“The trend is down, down and continuing to go down," said IEEFA’s Wamsted.
But first, the fuel is poised for a revival that’ll lift overall global demand this year after two successive annual declines, according to the International Energy Agency. Its projection for a 2.6% increase in consumption this year reflects expectations for a pickup in every region of the world.
Coal India, the world’s largest producer, expects consumption will be boosted as industries including steel, cement and aluminum return to pre-virus levels of output. The company this month approved more than $6 billion in investments in new mines and expansions.
“There are climate-change issues about coal, but India’s energy needs won’t allow it to dump the fuel instantly," said Binay Dayal, the firm’s technical director.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!