Coal still has a bright future ahead of it

Posted on Dec. 2020 at 7:00Updated Dec 18. 2020 at 9:40

The Covid-19 pandemic has caused global coal consumption to plummet, but this decline will not last. This is bad news for global warming, revealed this Friday by the International Energy Agency (IEA) in its annual report on this source of energy, the most harmful among all means of electricity production. Driven by the demand for electricity in emerging countries, the decline of the “king coal”, which generates nearly half of the planet’s CO2 emissions, is still not in sight.

The past two years have seen an unprecedented decline in coal consumption since World War II. In 2019, the decline was close to 2%. This was the consequence of weaker growth in electricity demand, and a drop in gas prices, itself driven by an increase in natural gas production capacity.

Gas substitution

This trend has encouraged the substitution of gas for coal to generate electricity. In the United States and Europe, the decline of coal was unprecedented last year. Even in India, consumption fell for the first time in more than forty years. The rise of renewable energies has only accentuated the phenomenon.

This year, global coal consumption has fallen again by 5%, estimates the IEA, this time because of the health crisis. Demand has fallen both in industrial applications, particularly steelmaking, and in power generation.

Restart the economy

The rebound will be clear from 2021, when global demand is expected to increase by nearly 3%. The trends at work over the past two years are indeed going to return: economic growth, increase in the price of gas. The decline will continue in Europe and the United States, but at a slower pace. And consumption will be on the rise again in China, India, Southeast Asia.

However, emerging countries are decisive in this market. China alone absorbs more than half of world consumption. “Everything that happens in this country is therefore crucial,” said Carlos Fernandez Alvarez, analyst at the IEA. Beijing and Chinese local authorities seem to be betting on coal to restart the economy as quickly as possible after the health crisis. In the first nine months of the year, 27 gigawatts of new coal-fired power generation capacity were approved, seven times more than in 2019.

More efficient plants

Every year, China opens around 30 gigawatts of new coal-burning power plants. Or a new power station every two weeks. “It is the equivalent of half of the French nuclear fleet more each year”, points out Carlos Fernandez Alvarez. The only good news is that the new installations are more efficient and emit less CO2. But faced with such a mass, the boom in renewable energies, however powerful in China, is not enough. “Coal will continue to be the cornerstone of the electricity supply for the next decades,” warns the Agency.

Coal consumption will also pick up next year in other Asian countries. It would then stagnate over the next five years thanks to the decline in demand in rich countries. And it would probably never return to the peak of 2013. But of real decline, there is still no question of a foreseeable horizon.

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