Global demand for coal falls in 2016 for second year in a row

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Wind, solar and and other renewable power sources grew faster than any other fuel at more than 14% in 2016, slightly below the 10-year average.


Powered by Guardian.co.ukThis article titled “Global demand for coal falls in 2016 for second year in a row” was written by Adam Vaughan, for The Guardian on Tuesday 13th June 2017 17.00 UTC

Global demand for coal has fallen for the second consecutive year, according to a BP study, helped by the US and China burning less of the dirtiest fossil fuel.

The UK was described as the “most extreme example” of the trend away from coal, which has resulted in use of the fuel returning to levels not seen since the start of the industrial revolution.

The 1.7% fall in worldwide consumption in 2016 marks a striking reversal of fortune for coal, which was the largest source of energy demand growth until four years ago, BP said.

Coal consumption globally – chart

Presenting the 66th edition of BP’s annual statistical review of energy, the oil company’s chief economist, Spencer Dale, said: “It feels to me like we’re seeing a decisive break with coal, relative to the past. I think the big story here is coal getting squeezed.”

In the US, coal has been crowded out in power generation by cheaper, cleaner gas from the fracking boom and even US coal executives believe Donald Trump’s promise to bring back jobs in the industry cannot succeed.

Coal consumption has now been declining for three years in China, as its economic boom and output has tailed off in energy-intensive sectors such as iron, steel and cement.

The country’s decreasing reliance on the fuel, large population and enormous investment in renewables mean it is increasingly being seen as a global leader on climate change, after the US withdrew from the Paris agreement earlier this month.

In the UK, three major coal power stations were wound up last year after a carbon tax was introduced and the last three underground coal mines closed.

British coal consumption fell by 52.5% in 2016 and the trend away from the fuel has continued this year, with the first coal-free day since the 19th century.

Dale said: “UK coal has gone through a complete cycle from the 1800s to now. I know it’s popular to criticise the UK [on energy policy] but part of this [decline in coal] is the rise in the carbon floor price introduced in 2015 and continued in 2016. The message from that is prices work.”

Dr Jonathan Marshall, an analyst at the Energy and Climate Intelligence, a UK-based thinktank, said the shift away from coal was striking. “The US saw an astonishing 9% fall in demand, while 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,” he said.

UK coal consumption and production graph

Coal has also been squeezed globally in recent years by the rapid growth of renewable power generation, which BP found had continued apace last year.

Wind, solar and and other renewable power sources grew faster than any other fuel at more than 14% in 2016, slightly below the 10-year average.

However, energy demand growth globally was weak, at only 1%, almost half the 10-year average. Nearly all the growth came from developing countries, with China and India accounting for around half of new demand.

As a result, global carbon emissions flatlined for the third year in a row. BP called the stalled emissions “a very significant break from the past”, but acknowledged that they would need to fall if countries are to meet the Paris deal’s goal of keeping temperature rises in check.

Worldwide, oil consumption grew by 1.5%, driven by stronger-than-usual growth in rich countries, but production growth was weak in the face of low oil prices. As a result, oil supply and demand came closer into balance last year.

The economist said he believed the recent deal by members of the oil cartel Opec to continue cutting output would begin to make inroads into global oil stocks towards the end of 2017.

However, a new report by the major oil producers admitted that the rebalancing of supply and demand had happened at “a slower pace” because the US was producing more oil on the back of higher prices.

Dale compared US oil production to a 1970s toy, the Weeble, whose slogan was “Weebles wobble but they don’t fall down”. While the American oil industry had cut back rapidly in the face of low oil prices last year, it was now also bouncing back fast, he said.

The price of a barrel of oil stood at $48.28 on Tuesday, compared to an average of $53 this year.

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