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License: All rights reserved. Credit: Greenpeace

IEA slowly recognizes the decline in coal’s fortunes

Lauri Myllyvirta
Lauri is an energy campaigner with Greenpeace
License: All rights reserved. Credit:

Something very dramatic happened last year. After a decade of 5% per year growth, global coal consumption posted a modest 1% increase in 2012, in what seems the first sign of a more permanent downturn. Coal power generation flatlined in China and consumption in the U.S. dropped by an astonishing 11%. The new developments give fresh hope of turning around the global CO2 emission trends, which have been dominated by coal use growth.

The financial industry has been issuing one report after another, predicting a decline in coal’s fortunes globally and in particular in China. While the International Energy Agency (IEA) is traditionally slow to change its forecasts, the agency’s new global energy outlook still offers some fascinating insight into what’s going on.

The IEA highlights that coal use in China, the US, European Union and elsewhere is increasingly determined by policies to tackle air pollution, increase renewable energy and reduce CO2 emissions. In the agency’s central forecast, assuming a cautious implementation of announced energy and environmental policies, industrialized countries’ coal use drops by one third in the next 20 years. So much for the talk about coal bouncing back in Europe and Japan. Even globally, announced policies are projected to slow coal consumption growth down to less than a fifth of recent levels, 0.7% per year.

While the low “business as usual” forecasts are a cold shower for the coal industry on their own right, much more will be needed to avoid the worst effects of climate change: global coal consumption will be cut by one third by 2035 in the IEA projection that is in line with climate targets, seeing “King Coal’s” kingdom shrink to a modest 17% of global energy mix. And that is assuming carbon capture and storage becomes widely adopted in power generation - in the most likely case that the technology remains uncompetitive against renewable energies, the drop in coal use will be even greater.

The report highlights the impacts of China’s air pollution policies on coal consumption and recognizes that “some industry analysts” are projecting a peak coal in China before the end of the decade.

Coal power generation growth is projected to slow down to less than 2% per year, from double-digit growth rates in the past decade. In the U.S. “Renewables and gas are expected to gradually displace coal for electricity generation as environmental restrictions on coal burning become more stringent”.

Bad news for the coal industry is good news for the planet. And for the coal industry, it does not get much worse. The IEA projects that China’s net imports of coal will peak by 2020, highlights increasing operating costs in key coal producers, worsening quality of coal seams in Indonesia, as well as increased opposition to coal export infrastructure in the U.S.

We are definitely not on track to avoiding the worst of climate change. Indeed, the IEA says that announced policies still leave the world on track to 3.6C warming with devastating consequences. Industrialized country emissions are not going down fast enough, while massive coal investments are still being planned in other developing Asian economies besides China. However, while the gap between emission targets and coal consumption growth seemed impossible to bridge just a year or two ago, now it seems that determined action from key countries, along with increasing competitiveness of renewable energy options, could realistically see global emissions peaking well before the end of the decade.



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