Coal On Track To Break Records Despite Efforts To Curb Production

Yves here. So much for decarbonizing. King Coal is still on his throne.

By Felicity Bradstock, a freelance writer specialixing in Energy and Finance. Originally published at OilPrice

  • Coal has experienced a dramatic rebound this year, with production levels set to hit an all-time high in 2021.
  • The surge in demand is largely due to the faster-than-expected global economic recovery following the Covid-19 pandemic.
  • China and India are the world’s two largest coal producers, making up two-thirds of global coal demand.

Coal production is set to hit an all-time high according to the International Energy Agency (IEA) despite the curbing of production across several countries and aims for decarbonization following COP26.  Coal demand has continued to increase through 2021 mainly due to the needs of large Asian countries that still rely on the fossil fuel, as well as gas shortages forcing European states to shift back to coal.  Coal has experienced a dramatic rebound this year, with production levels set to hit an all-time high in 2021 and demand levels to peak in 2022. Even after worldwide power generation from coal started falling in 2019 and 2020, as many countries shifted away from the energy source, it is expected to rise by around 9 percent this year to reach 10,350 terawatt-hours.

The surge in demand is largely due to the faster-than-expected global economic recovery following the Covid-19 pandemic. Throughout 2020, demand for coal, oil, and gas dropped significantly as countries around the world imposed restrictions on movement. Many organizations saw this as the moment to push for a transition away from fossil fuels to renewable alternatives. However, as the energy demand has risen in 2021, some countries have found it hard to produce enough oil and gas, leading to shortages. Surging fossil fuel prices have also pushed consumers back to coal, which is more competitively priced.

IEA Executive Director, Fatih Birol, voiced his concerns about the trend, “Coal is the single largest source of global carbon emissions, and this year’s historically high level of coal power generation is a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero.”

One of the main problems with coal production is that it doesn’t just release carbon emissions into the atmosphere but also sulfur dioxide, particulates, and nitrogen oxides. In fact, many view coal as the “dirtiest fossil fuel”, which explains why many governments are pushing policies to end coal production in favor of cleaner energy sources.

This may come as a surprise considering the recent participation of many state powers in the COP26 climate summit, which resolidified the Paris Agreement’s aim to curb fossil fuel production as part of a plan to decarbonize. But two of the world’s most populous countries, China and India, still rely heavily on coal to meet their energy needs. In fact, both decided upon a last-minute change of language in an agreement on fossil fuel from the “phase out” of coal to a “phase down”.

China and India are the world’s two largest coal producers, making up two-thirds of global coal demand. Although the two countries have committed to achieving net-zero carbon emissions by 2060 and 2070 respectively, their heavy reliance on coal makes many of their climate aims appear unrealistic. For example, while China announced it would no longer be investing in the construction of new coal plants overseas earlier this year, it is still pursuing plans to build 60 domestic coal plants.

And now it appears that even countries that are already undertaking strategies to phase coal out have experienced a hike in demand this year. Mainly due to low wind volumes and a hike in energy demand, Germany has had to rely on coal and nuclear power for electricity generation throughout 2021. This meant the contribution of coal and nuclear power for energy production reached 40 percent this year, compared to 35 percent in 2020, with renewables accounting for 41 percent compared to 44 percent last year. At present, Germany is planning to end nuclear power production by the end of 2022 and phase out coal by 2030.

Even the U.K., which pledged to end coal production a year earlier than anticipated by 2024, had to fire up coal plants in September to meet electricity demand in the face of gas shortages and surging prices. During this time, coal contributed 3 percent of national power, rather than the average 2.2 percent. This was following a landmark period of time in which the U.K. run coal-free for three days in August.

But many believe that a significant injection of private investment is needed to speed up the phasing out of coal, otherwise, it would already be done. Naturally, companies running coal plants don’t want to shut up shop before they’ve achieved their full potential, even if their operations present a threat to the environment. Unless governments can offer financial incentives for them to stop production, states will require private investment to make this happen. The potential for coal mines to be converted into geothermal energy plants and others for renewable energy uses could provide the opportunity needed to encourage this type of investment. However, without these incentives, coal companies will likely continue operations so long as demand remains high and their leases stay active.

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  1. PlutoniumKun

    This isn’t a particularly good summary of the IEA report or the current power situation (which is highly unusual for a multiplicity of reasons). For one thing, the first bullet point is not correct – coal ‘production’ didn’t hit a high in 2021, the use of coal for electricity hit a high. Overall coal use is below its peak of 2013-2014, although it may hit those peaks again in 2024 on current trends (although the last few years have been so untypical its hard to identify clear trend lines). However, coals percentage of overall electricity use is still on a clear downward trend – 5% below its 2007 peak. As the IEA report points out, while coal prices are very high, futures prices are very low, which means that markets expect a significant drop in demand after 2024. Low futures prices of course mean coal producers will find it hard to fund new mines.

    So while coal is still environmental enemy no.1, and its phasing out is frustratingly slow, its not quite as dire as this article makes out. Coal production and use is at least at a plateau and is likely to drop quite sharply on current projections after 2024. This isn’t nearly fast enough, but it’s misleading to suggest that renewables are not having an impact on coal use.

    The key issue of course is China and India and their domestic economic policies. Its clear they don’t see phasing out coal as in their interests (although the Chinese would certainly like to do this). Much depends on Chinese domestic infrastructure policy and the overall ‘real’ growth of both those countries. As we’ve seen, there is no point to increasing the use of renewables if the overall demand for energy keeps increasing, we are just running to stand still.

    1. coboarts

      Every bit of recoverable coal, oil and gas, whether economically feasible or not, will get burned – and don’t be the nation that doesn’t – you’ll get overrun.

    2. James Simpson

      If the world continues with capitalism as its main model for societies and economies, the demand for energy will indeed continue on its current steep upward curve. The ruling class in most countries is deeply tied to capitalism for its own prosperity, so that is unlikely to change without a huge effort by the numerically superior working class. It’s up to us.

  2. Louis Fyne

    If fission is absolutely forbidden (see Germany, US), of course the fall back is coal.

    Even the UN IPRCC reports in its baseline scenario assumes that fission has to be expanded to address CO2.

    Either fission + other strategies or have the 1/6 the resource footprint that an American has right now. Mandate that footprint (barring tech leaps) and Dems. (or whatever remains of the center left, post-Covid) lose at the ballot box for 30 years.

    Everyone throws out the slogan to “follow the science” when it suits their own biases.

    PS, I live downwind from 4 reactors. I’ll take my chances with them than more mercury and PM2.5 emissions from coal.

    1. IMOR

      Well, you’ve got skin in the game, anyway. And will you retire next to a cooling water pond or waste disposal site? The problem with fission reactirs to this pount is that the risks are on a time scale that renders our usual personal judgment of risk (me amy kids) less than relevant. The skill factor is, but the rest of the package is not comparable to 1,000 sky dives, bungie jumps, scuba dives or exposures to potentially deadly diseases.

  3. Solarjay

    While I agree with much that PK adds to
    the article, I disagree with his “not as dire as the article makes out”. I’d argue it’s worse.
    Given the way too slow removal of coal and it’s marginal at best replacement by methane/NG GHG will only go up. Not to mention all the cars and trucks that are not going away anytime soon.
    It’s odd that people will quote the IPCC all day long about how quickly we need to reduce GHG but not also acknowledge their requirements of active GHG removal.

    The world needs active GHG removal machines. Even if we got rid of coal
    and NG tomorrow we have to remove legacy CO2 and that is going to be a long long process.
    Yes it’s difficult to remove CO2. Does that mean we just give up because it’s hard? Or do we make the tools to get it done? Am I to believe that billions of dollars/pounds/euros/etc seeded to every engineering college, lab, etc can’t come up with a good or great solution?
    Here in NM we have a few of the best labs in the world, Sandia snd los alamos, with almost unlimited budgets. Put those people to a new task, instead of making, designing bombs to destroy, let’s do something more productive.

    1. drumlin woodchuckles

      GHG removal machines should certainly be studied. In the meantime, we already have a GHG-removal life form. We call it “plants”. We could certainly manage our growth and handling of “plants” to foster more carbon-scrubbing growth of “plants”.

      We could, for example, abolish agriculture on every former wetland that was drained for agriculture, and we could re-flood and un-drain all those former wetlands and turn them into active GHG-removal wetlands again.

    2. Bazarov

      I have a friend who worked for years at one of those major national labs. His expertise is liquid interaction with porous materials. It’s an extremely complicated field, and he’s regaled me on the topic. It’s really shocking how little we understand about the behavior of liquids (the way he tells it solids and gases are very, very, very well understood compared).

      Anyway, one project he worked on for quite awhile involved studying carbon sequestration by injecting the stuff at high pressure into the porous bedrock. His boss, the leading expert in charge of the project, was adamant that it was a total waste of money–a true pipe dream.

      The message from my friend, after many discussions on the topic, was this: If we’re betting the house on carbon sequestration, prepare to be homeless.

  4. lance ringquist

    free trade is simply horrendous environmental and human degradation to enrich a few! as long as we free trade, coal will be king. free trade is a race to the bottom. the author ignores the massive pink elephant standing right next to her.

    china and india will produce all that the free traders want, with the lowest cheapest common denominators. and we will have no say what so ever in how the cheap consumables are produced.

    markets are not the answer, the private sector is not the answer. the answer is sovereignty, democratic control, and driving out the free trading idiots that do not understand how to govern.

    1. Valerie Long Tweedie

      I tend to agree with you, Lance. Years ago, I had a friendly argument with a higher up at Intel. I criticised the corporation for their exploitation of Third World workers. He replied, honestly and not with any pleasure, “We aren’t there to exploit workers – That is just icing on the cake. We are in the Developing World to pollute.” As long as we rely on Developing countries to give us cheap products, we will continue to go down the climate crisis rabbit hole.

  5. Dave in Austin

    As usual PK strikes the right note of anti-panic.

    But the Chinese and Indian numbers speak for themselves. In both cases national security and national energy self-sufficiency are the real issues. India lacks foreign exchange to buy the LNG and oil it needs from the Gulf and has a large supply of low-quality, very dirty coal to mine on the Deccan plateau. China, if it has a confrontation over an attack against Taiwan, faces a long sea blockade which would cut off oil and coal supplies.

    China and India are not only using 2/3 of the world coal supply but probably are responsible for more than 2/3 of the resulting air pollution. The coal they use is often low BTU coal and the pollution control systems (air bags and precipitators) are minimally effective, often not large enough or are simply not maintained. These systems do not meet the standards demanded in the industrial democracies.

    And we in the industrial democracies are also culpable. We have out-sourced the production of iron and steel to Asia to reduce local pollution in places like Pittsburgh and to lower the costs in much the same way that California has cut pollution by outsourcing the production of gasoline and industrial chemicals to Texas.

    There are are no free lunches either economically or geo-politically. As long as the public is willing to buy the propaganda campaign about the US “going green”, “getting to net zero by” (fill in the blank), and “We are doing our part” (while buying 5,000 lbs pickup trucks made from Chinese steel), the charade will continue.

    1. drumlin woodchuckles

      Has anyone done a study of how much of China’s coal use is used to produce things to sell outside of China? It would really be nice to know what that figure or that percentage actually is.

      Because if we knew what percent of China’s coal use is used to make things to export to non-China, then the non-China outside world would know how much it could help China reduce China’s coal use by not buying a single thing from China any more ever again. If the outside world could do that ( not buy a single thing from China any more ever again), then the outside world could reduce China’s coal use by just the amount China currently uses to make things for sale to non-China.

      The same principle holds true for India, though India is a vastly tinier global carbon dumper than China is.

      But that can’t happen unless we abolish Free Trade all over the world first.

    2. drumlin woodchuckles

      No. We in the industrial not-democracies-anymore are not culpable. Our Economic Treason Occupation Governments are the sole and only culpable perpetrators here. They invented Free Trade and they forced it on their captive populations, namely us.

      Since I have been instructed to dial it down, I have nothing to say about how to solve the problem of the pro-Free-Trade social class occupation governments which have conquered us and our countries from “within”.

      1. lance ringquist

        always give credit, where credit is due.

        nafta billy clintons free trade killed general electric, in fact, its killed america

        General Electric has tried everything, except investing in American workers

        nafta billy clintons hedge funds control G.E., and are bleeding it dry handing it to the chinese

        General Electric has tried everything, except investing in American workers
        Chris Shelton
        Wed, December 22, 2021, 4:04 PM

      2. James Simpson

        Wasn’t there a continual political argument over free trade in the 19th century in Europe and the USA? Different environment then, but many of the arguments are still relevant. It’s not a new problem and nor are our governments newly undemocratic. We’ve never even tried democracy, just as we’ve never tried socialism. We’re tied to the capitalist model which is dragging us ever closer to the edge of the cliff.

      3. No it was not, apparently

        “No. We in the industrial not-democracies-anymore are not culpable. Our Economic Treason Occupation Governments are the sole and only culpable perpetrators here.”

        Yeah? Really, DW?

        So, you want to work in a sweatshop? At poverty wages?

        Let’s not forget, “services based economy” is one large make-work project for western self-licking bull**it jobbers. It is possible only if someone else does all the work (i.e. China and the third world).

        So sorry if your government decided to share the wealth with upper classes only and left you out, but let’s not pretend anyone actually wants a real job (in a factory/mine/gutter/etc).

        Cancellation of “free trade” at this point is a sure fire way to explode poverty as prices rise into the sky and economic deficiencies cripple local economies.

        Anti-China lobby is insane and those following them are unwittingly participating in propaganda assisted suicide.

        1. lance ringquist

          REALLY, you mean all of the poverty that has exploded in america has nothing to do with free trade, YOUR JOKING CORRECT?

          you mean the exploding prices we see today has nothing to do with free trade, and that the poor are being pummeled twice, lost their jobs producing, then get part time jobs unloading trucks full of products they used to make, at wages that will not support them, then try to eek out a living at the dollar stores, which just registered a 25% increase in prices because of free trade, YOU MEAN THOSE HIGH PRICES?





          i am not the anti-china lobby, i understand that china was handed americas wealth on a silver platter. i would have taken nafta billy clinton on it to.

          the anti china lobby are the dim wits that figured out they had been had. the dim wits never understood that if its to good to be true, then its not true.

          tough s##t for them. the only problem is we cannot even make a loaf of bread, a aspirin, a computer chip, cars, airplanes, rockets because of free trade, the whole country is a poverty basket case now.

          time for your type to come down from them ivory towers and figure it out. if you do not, you think people are radicalized now, you ani’t seen nothing yet.

    1. drumlin woodchuckles

      The worst carbon skyflooder today is China. And China plans to become worser and worser and then even more worserer over the decades to come.

      At least China will sleep in the same bed it is hoping to make for the rest of us. So there will be Darwinian Climate Justice in the end.

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