Good news on less global coal usage in 2016

Production of the fossil fuel coal dropped by a record amount in 2016, according to BP Plc’s annual review of global energy trends. China, the world’s biggest energy consumer, burned the least coal in six years and use dropped in the U.S to a level last seen in the 1970s, the company’s data show.

However, BP indicates that global coal consumption fell by 53 million tonnes of oil equivalent (mtoe), or 1.7%, the second successive annual decline.

Coal’s decline has been driven largely by competition from cheap shale gas, prompting skepticism that the country’s withdrawal from the Paris climate agreement will do much to halt the slide.

U.S. demand for coal fell by 33.4 million tons of oil equivalent last year to 358.4 million, the biggest decline in the world in absolute terms, BP data show.

Global consumption dropped 1.7 percent last year compared with an average 1.9 percent yearly increase from 2005 to 2015, according to BP. China, which accounted for about half of the coal burned in the world, used 1.6 percent less of the fuel, compared with an average 3.7 percent annual expansion in the 11 preceding years.

Consumption of coal fell in every continent except Africa, the BP data show. Germany, Europe’s biggest user, consumed 4.3 percent less coal. U.K. demand fell 52.5 percent, the biggest percentage decline among the world’s major economies, according to BP’s data.

This brake in China’s energy consumption partly reflects the gradual slowing in economic growth, but it has been greatly compounded by pronounced weakness in China’s most energy intensive sectors, particularly iron, steel and cement, which together account for around a quarter of China’s total energy consumption.

Some of the weakness in these sectors, which drove China’s rapid growth and industrialization over much of the past 15 years, reflects the structural rebalancing of the economy towards more consumer and service facing sectors.

But the scale of the slowdown – with output in iron, steel and cement below 2014 levels – suggests that some bounce-back is perhaps likely.

In Asia, China’s decline was partially offset by higher consumption in India and Indonesia, where the fuel is still so cheap and readily available that utilities prefer it over natural gas for electricity generation.

“Chinese hunger for energy is being tempered by moves to a more sustainable growth pathway and the rapid expansion of renewables, which spells even further trouble for coal in the years to come,” Jonathan Marshall, an analyst at the London-based Energy and Climate Intelligence Unit, said by email.

Global carbon emissions, which grew at an annual average rate of about 2.5 percent in the 10 years to 2013, remained stagnant in the past three years, Dale said. While some of this reflects weaker economic growth, the majority reflects faster declines in “the average amount of carbon emitted per unit of GDP,” he said.

The US Energy Information Agency is projecting some increase in coal use and production in 2017 and 2018 in the USA.

EIA expects the share of U.S. total utility-scale electricity generation from natural gas to fall from an average of 34% in 2016 to less than 32% in both 2017 and 2018 as a result of higher expected natural gas prices. Coal’s forecast generation share rises from 30% in 2016 to 31% in 2017 and 2018. Nonhydropower renewables are forecast to provide 9% of electricity generation in 2017 and nearly 10% in 2018. The generation share of hydropower is forecast to be nearly 8% in 2017 and 7% in 2018. The nuclear share of generation remains just under 20% in both 2017 and 2018.

Coal exports for the first quarter of 2017 were 58% higher than in the same quarter last year, with steam coal exports increasing by 6 million short tons (MMst). Coal producers that have completed bankruptcy reorganizations and companies that purchased bankrupt assets have increased both exports and production in 2017. EIA expects growth in coal exports to slow in the coming months, with exports for all of 2017 forecast at 72 MMst, 11 MMst (19%) above the 2016 level. The increase in coal exports contributes to an expected 8% increase in coal production in 2017.”

The EIA projects and increase in US CO2 in 2018. After declining by 1.7% in 2016, energy-related carbon dioxide (CO2) emissions are projected to decrease by 0.7% in 2017 and then increase by 2.2% in 2018. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices.

The EIA also projects increased coal usage til the early 2020s before a sustained decline because of increased natural gas and renewables.

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