Global Coal Consumption Heads for Biggest Decline in History

Bloomberg Businessweek
Coal consumption is poised for its biggest decline in history, driven by China’s battle against pollution, economic reforms and its efforts to promote renewable energy.

Global use of the most polluting fuel fell 2.3 percent to 4.6 percent in the first nine months of 2015 from the same period last year, according to a report released Monday by the environmental group Greenpeace. That’s a decline of as much as 180 million tons of standard coal, 40 million tons more than Japan used in the same period.

The report confirms that worldwide efforts to fight global warming are having a significant impact on the coal industry, the biggest source of carbon emissions. It comes a day before the International Energy Agency is scheduled to release its annual forecast detailing the ways the planet generates and uses electricity.

“These trends show that the so-called global coal boom in the first decade of the 21st century was a mirage,” said Lauri Myllyvirta, Greenpeace’s coal and energy campaigner.

The decline in coal use will help reduce greenhouse-gas emissions that are blamed for heating up the planet. To limit the rise in global temperatures to 2 degrees Celsius (3.6 degrees Fahrenheit) — the level scientists say cannot be exceeded if the world is to avoid catastrophic climate change — emissions from coal must fall 4 percent annually through 2040, according to Greenpeace.

“As policymakers are getting serious about climate change, we expect to see step up in coal-to-gas switching by power generators,” said Elchin Mammadov, an analyst at Bloomberg Intelligence in London. “Thus, we are likely to see more and more stranded coal assets — both mines and coal-fired power plants.”

China Declining

In China, responsible for about half of global coal demand, use in the power sector fell more than 4 percent in the first three quarters and imports declined 31 percent, according to the report. Since the end of 2013, the country’s electricity consumption growth has largely been covered by new renewable energy plants.

“The coal industry likes to point to China adding a new coal-fired power plant every week as evidence that coal demand will pick up in the future, but the reality on the ground is rather different,” according to the report. “Capacity utilization of the plants has been plummeting. China is now adding one idle coal-fired power plant per week.”

U.S. Electricity

The share of coal used to generate electricity in the U.S. will fall to 36 percent this year from 50 percent a decade ago. More than 200 coal-fired power plants, with total capacity of 83 gigawatts, have been scheduled for retirement, including 13 gigawatts expected to retire this year.

Coal consumption in the 28-nation European Union was flat in the first nine months, after declining a record 6.5 percent in 2014, according to Greenpeace.

In India, domestic coal production has been on the rise, with sales by Coal India increasing 7 percent in the first nine months, and consumption increasing about 5 percent. India’s efforts to promote renewable energy is also eating into demand for coal, and stockpiles in the country have increased sharply.

“Coal is in terminal decline, and those countries investing in coal for export markets are making reckless decisions,” Myllyvirta said.