FUTURES & COMMODITIES
World’s two largest coal consumers won’t be weaning off the fossil fuel anytime soon
PUBLISHED WED, JAN 10 20246:10 PM EST
Lee Ying Shan@LEEYINGSHAN
KEY POINTS
- Both countries are the world’s largest consumers of the dirtiest fossil fuel, and continued modernization puts their energy consumption on a rapid growth trajectory.
- Global coal use in 2023 has hit a record high, surpassing 8.5 billion tons for the first time, on the back of strong demand in countries like India and China, said IEA.
China and India’s growing economies will continue to fuel demand for coal even as they set ambitious renewable energy targets, according to experts.
While China
is the world’s largest energy consumer, India is ranked third globally, and both countries are the top consumers of coal as they strive to fuel economic growth.
China’s share of global electricity consumption,
60% of which is generated by coal, is set to jump to one-third by 2025, compared with a quarter in 2015, according to projections by
energy watchdog International Energy Agency.
India’s rapidly growing economy also means the country’s demand for energy including oil and natural gas will be significant, said managing director of energy investment management firm Tortoise Capital, Rob Thummel.
“If India, China are still growing economically at decent rates for the next decade, we’re not going to see coal demand disappearing anytime soon, globally,” Ian Roper, commodity strategist at Astris Advisory Japan KK, told CNBC.
The bullseye is on China and India, because those two countries right now use substantially more coal.
Rob Thummel
MANAGING DIRECTOR OF TORTOISE CAPITAL
Global coal usage in 2023
hit a record high, surpassing 8.5 billion tons for the first time, on the back of strong demand in emerging and developing countries such as India and China,
IEA said in a recent report.
There are no signs of a slowdown, with the IEA saying coal consumption in India and Southeast Asia is projected to “grow significantly.”
India’s coal production rose to 893 million tons during the financial year ending March 2023, jumping nearly 15% from a year earlier. China’s raw coal production
from January to November in 2023 went up by 2.9% compared with the same period in 2022.
By contrast, U.S., which is the world’s second largest consumer of coal,
has seen a decrease in its usage of the fuel. According to the Institute for Energy Economics and Financial Analysis, the amount of coal that the superpower consumes each day recorded a 62% drop from 2.8 million to 1.1 million tons a day.
Setback to emission cuts?
Globally, carbon emissions from fossil fuels
reached record levels last year. India’s emissions are projected to have spiked 8.2% in 2023, while China’s are expected to have climbed 4%, according to the latest estimates by
Global Carbon Budget.
“The bullseye is on China and India, because those two countries right now use substantially more coal. And so their carbon emissions are on the rise, not on the decline,” Thummel said.
The two countries, however, have been adopting and setting aggressive renewable energy targets.
India has
set an aspirational target of meeting 50% of its electricity demand from renewables by 2030, and the South Asian nation has made some headway in its efforts, with
renewables accounting for 22% of its power generation.
That being said,
75% of India’s power is derived via coal-fired plants. Inventories at Indian power plants swelled 6% in 2023 from the previous year
, according to a Citibank research. The country is also slated to
add 80 gigawatts of coal-based thermal capacity over the next eight years.
Similarly, coal
accounts for 61% of China’s power generation, even though the country is
recognized as the indisputable leader in renewable energy expansion. It has been adding new projects to the grid
almost as fast as the rest of the world combined in 2022 and has
ambitions of becoming carbon neutral by 2060.
But the lack of reliability of renewables means coal has still very much been a critical fallback option for the two countries.
“China was suffering power shortages a couple of years ago, hydro[power’s] been very weak the last couple of years, so they’ve had to revert back to coal,” Roper pointed out.
That being said,
75% of India’s power is derived via coal-fired plants. Inventories at Indian power plants swelled 6% in 2023 from the previous year
, according to a Citibank research. The country is also slated to
add 80 gigawatts of coal-based thermal capacity over the next eight years.
Similarly, coal
accounts for 61% of China’s power generation, even though the country is
recognized as the indisputable leader in renewable energy expansion. It has been adding new projects to the grid
almost as fast as the rest of the world combined in 2022 and has
ambitions of becoming carbon neutral by 2060.
But the lack of reliability of renewables means coal has still very much been a critical fallback option for the two countries.
“China was suffering power shortages a couple of years ago, hydro[power’s] been very weak the last couple of years, so they’ve had to revert back to coal,” Roper pointed out.
https://www.cnbc.com/2024/01/11/china-and-india-cant-wean-themselves-off-coal-anytime-soon.html