Increasing Coal-Fired Power Generation Threatens Net-Zero Targets
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A recent decree by France follows the IEA report on an increase in the use of coal
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Demand for coal is expected to reach an all-time high; China, India, and the US are propelling the demand
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Rising awareness about sustainability and investment flows in renewables will help us see a better tomorrow
Increasing Coal-Fired Power Generation Threatens Net-Zero Targets
Demand for Coal Rises Again
Coal is considered the most carbon-intensive fuel used to produce electricity, resulting in 30% of the global CO2 emissions. But the recent energy shortage across Europe is expected to increase the demand for coal. On December 30, 2021, France submitted a draft decree for public consultation, according to which the country will increase the use of coal at least in January and February 2022 to ensure the security of electricity supply in the winter. A recent report from the International Energy Agency (IEA) states that the demand for coal is back to the pre-pandemic level and will soon reach an all-time high in the coming years. However, to reach net-zero targets by 2050, IEA determines that current coal use should fall by 24% by 2030.
Despite the global consensus that the use of coal has been harmful, our data shows that coal consumption has always seen an annual upward trend, except in 2020. The decline in 2020 could be attributed to the COVID-19 lockdowns, which affected businesses, slowed down economic engines and brought down energy consumption globally. However, in 2021, coal consumption reached pre-pandemic levels and is expected to increase in the coming months. The power industry propels the demand for coal in China, the US, and India. On closer look, we can see that power consumption by China is almost double that of the US, which is more than three times that of Indian power consumption. Consequently, these countries also top the chart of transmission and distribution losses.
Coal-fired Power Generation
The sprinting development of the Chinese and Indian economies made these countries power-hungry. In 2021, 65% of the power generated in China was from thermal sources, of which 91% was coal-fired. The world's largest coal-fired power plant, Tuoketuo, and Zhejiang Xiajing & Waigaoqiao support the energy demands of major cities such as Beijing and Shanghai. India shows a similar picture, with 76% of the power generated in the country in 2021 coming from thermal sources, of which 94% was coal-fired. Indian coal-fired power generation is dominated by NTPC, Adani Power, and Tata Power Co Ltd. Both countries have taken steps to increase their renewable energy generation capacities despite the higher consumption of coal in recent years. However, these measures fall short of meeting their energy requirements.
In developed countries such as the US, thermal coal consumption is relatively lower. In 2021, 58% of the country's energy was generated from thermal sources, of which 34% was from coal. However, the coal consumption in power generation in the US declined gradually. According to the US Energy Information Administration (EIA), between 2011 and 2019, about 121 coal-fired power plants in the country were replaced with other types of fuels, mostly with natural gas, due to challenges from emission standards, coupled with low prices of natural gas. The country has also continuously increased its renewable energy capacity, with upcoming power plants such as Eolus Solar Park and Port of Corpus Christi Solar PV Park. Meanwhile, in Europe, France, which drew attention with its latest decision, has only 7% of its power coming from thermal sources, of which 5% is from coal. However, the country has significant exposure to nuclear power, which has also become controversial, given the recent changes in the EU energy taxonomy.
Although global coal consumption is rising, we can expect a better tomorrow. The year 2021 saw a rise in investments focused on renewable energy. Despite challenges such as construction delays, drop in electricity demand, and supply chain constraints due to the pandemic, renewables experienced tailwinds of long-term contracts, priority access to the grid, and new upcoming plants. Indeed, "phasing out" coal is a herculean task, but efforts are being taken to "phase down" the use of coal.
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