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Global Coal Consumption Likely Has Peaked, Report Says

Coal still provides about 40 percent of the world's electricity, but it is "increasingly likely" that global consumption of the fossil fuel peaked in 2013, according to a new forecast based on recent trends in China, the world's biggest coal consumer, and the 11 other largest users.

An analysis by the Institute for Energy Economics and Financial Analysis showed that worldwide coal consumption is likely to decline 2 to 4 percent in 2015, despite near decade-low coal prices. That's on top of 2014's 0.7 percent decline, estimated in BP's World Energy Outlook.

"This new analysis illustrates that an epoch-defining shift is shaping the global outlook for coal," said Tim Buckley, the lead author of the report and IEEFA's director of energy finance studies for Australian and Asian markets, in a statement. "The global peak reflects a remarkable peak and decline in Chinese coal consumption."

Countries are following the Chinese trend, the report said. China, which uses half the world's coal, reduced its consumption of the fossil fuel by 5.7 percent in the 12 months through September. Other countries with declining coal use in 2015 were the U.S. (down 11 percent year over year), as well as Germany, the U.K., Japan, Canada, Turkey, Indonesia, Mexico and Russia. South Korea's coal consumption stayed flat. Among the biggest coal consumers, only India and Australia saw growth.

he IEEFA projection of declining coal consumption contrasts with a recent forecast of increasing demand over the next five years from the International Energy Agency, based on older data.

The briefing is one of a flurry of reports timed to the start of the Nov. 30-Dec.11 Paris climate negotiations. China overtook the United States in recent years to become the largest contributor of global warming pollution, and its backing away from coal is seen as critical to the world's ability to reverse global warming.

The analysis attributed China's coal decline to an economic shift away from heavy industry and toward less energy-intensive sectors, as well as its rapid adoption of clean energy and a national outcry over pollution. In the U.S. and European countries, a combination of environmental policies, low natural gas prices and plunging renewable energy costs are beginning to shrink coal demand, the report said. (Recession drove the decline in Russia.)

"I see this as technology-driven," Buckley told InsideClimate News. "Almost all analysts are projecting that solar and battery technologies are going to keep advancing rapidly, and that the deployment costs are going to drop probably more than 10 percent annually over the next decade."

Although India's use of coal is expected to increase, its large-scale investments in renewable energy are a step in the right direction, Buckley said, adding that India is in a position to bypass traditional carbon-based energy sources and leapfrog to renewable energy. Scientists have long raised concerns that as the world's population continues to grow and developing nations work to lift millions of people out of poverty, they will increase reliance on coal and cement a carbon-intensive future.

China, India and the U.S. account for about 70 percent of global coal consumption.

"With all three of [the largest coal consumers] now moving to rapidly implement aggressive policies to drive a sustained decarbonization of their grids, progress is assured," Buckley said.

In a recent analysis, the International Energy Agency estimated that global demand for coal would continue to increase over the next five years. But Buckley said the IEA’s forecasts were based on data from 2013, while his group's analysis took coal use from 2014 and the first nine months of 2015 into consideration. In addition, the IEA doesn't account for government policy positions or clean energy cost trends, Buckley said. For example, solar costs are dropping by 10 to 20 percent each year in India, he said, and companies have invested $100 billion in solar projects there.

Laszlo Varro, the head of the gas, coal and power division at the IEA, agreed that the IEA's forecasts were based on old data and said the agency was revising its estimates. "There is no doubt that the rapid growth of Chinese coal demand is over," he said.

source: http://insideclimatenews.org