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Page added on December 18, 2015
China Might have Passed ‘Peak Coal’ in 2013
China possibly saw its coal consumption peak in 2013, according to the International Energy Agency (IEA).
The seismic shifts underway in China have global implications for both coal use and emissions.
Global coal use fell by 0.9% in 2014, the first fall this century, says the IEA’s Medium Term Coal Market Report 2015. It says demand is “likely” to fall again in 2015, echoing reports that global emissions will fall this year as coal use declines.
As a result, the IEA’s 2020 demand coal forecast is now 10% lower than its previous outlook. Even so, it sees rising demand between now and 2020, reversing the current two-year decline.
Paris perspective
Before getting into the details of the IEA’s coal market report, it’s worth noting that it was written before the Paris climate deal was agreed.
Anticipating that an agreement might be reached, however, the report lays out a series of trends likely to weigh increasingly on coal demand over the coming years.
These include the falling cost of renewables, the spread of CO2 pricing and coal taxes, the divestment movement and development banks and export credit agencies restricting coal finance.
Fatih Birol, the IEA’s chief executive, writes in a foreword to the report that the business case for coal use is diminishing. He writes: “The window of opportunity for high-carbon sources is closing.”
A feature article for the New York Times this week looks at the mass layoffs facing China’s coal mining industry. One miner tells the paper: “There is no future in coal.”
While some reports suggest the Paris deal depressed coal stocks, views differ on its significance for fossil fuel interests. Nonetheless, it would be hard to argue coal’s prospects have improved.
With that in mind, let’s turn to the forecasts in the IEA’s medium-term coal market outlook.
Peak coal
Over the next five years, the IEA thinks coal generation will fall by 1.5% a year in Europe, with coal demand facing “inevitable” decline in the US.
India, the only major economy set to see strong growth out to 2020, is “not the new China”, the IEA says. With other southeast Asian countries, it “will not compensate” for China’s new path.
Birol writes in the foreword:
China has definitively entered a new era in which its economic growth is slowing down, the energy intensity of that growth is declining, and coal dependency is lessening, largely driven by environmental considerations, such as air pollution and CO2 curtailment.
While today’s report continues to insist that Chinese coal demand will grow out to 2020 after falling for two successive years, the IEA seems to be growing increasingly bearish in its views.
In its November World Energy Outlook, it said only a “dramatic slowdown” in GDP growth, or an “unprecedented pace” of economic restructuring, could trigger sustained coal reductions in China.
Now, the IEA says “a ‘peak coal scenario’ in China is probable”. The only real question for coal demand and global emissions is when this peak will happen.
Chinese coal demand fell in 2014 and the IEA says the trends behind this fall have accelerated in 2015. It says it is therefore “feasible” that China already passed peak coal in 2013.
The report takes account of the various revisions to Chinese coal data over the past year, though it notes that recent statistics are still preliminary and subject to change.
War on pollution
As with its global outlook, the IEA notes various factors weighing on Chinese demand.
These include weaker economic growth, structural reforms that are “gathering momentum” and downward revisions for output in energy-intensive industries.
Air pollution, the IEA notes, has become “one of the highest political priorities for the government, which has officially declared a war against pollution…It is clear that coal will be the main target.”
It’s worth noting that the UK reached peak coal in 1956, the same year that parliament passed the Clean Air Act.
If the IEA’s peak coal scenario for China proves more accurate than its central case, it could mean peak coal for the world.
The chart below shows the IEA’s forecast of changes in demand between 2014 and 2020, in its central (below left) and China peak coal scenarios (below right).
Change in coal demand between 2014 and 2020 in selected countries and regions, under the IEA’s central scenario (left) and its China peak coal scenario (right). The two outlooks for China make the difference between global growth to 2020 and a small decline. Source: IEA Medium Term Coal Market Report 2015. Charts by Carbon Brief.
As you can see from the charts above, the IEA expects strong growth in coal demand from India and southeast Asian countries, such as Vietnam and the Philippines.
The IEA notes however that “India is not the new China”. As such, it is unlikely to replicate the massive surge in coal use that propelled Chinese economic growth through the 2000s.
It’s also worth noting that the IEA does not expect India to meet its ambitious targets for solar power. However, after a recent visit, the Council on Foreign Relations’ Varun Sivaram argues India “could actually meet its audacious solar targets”.
The IEA view
The IEA tends to be conservative in its outlook. It has been criticised for underestimating the pace of clean energy developments, as well as for its links to the coal industry.
The coal market report was authored by IEA officials. However, these authors express “gratitude” to the government of Poland, who “supported our job”. They also thank Brian Ricketts, head of European lobby group Euracoal, for “useful comments”.
Ricketts recently complained that his industry would be vilified like “slave-traders”, following the Paris Agreement on climate change. The IEA also thanks organisations including Peabody Energy, Rio Tinto and Anglo American for providing comments, data or advice for the report.
Some analysts appear to view coal’s prospects less optimistically than the IEA.
In a briefing timed to coincide with the IEA report, the Institute of Energy Economics and Financial Analysis (IEEFA) argues that Paris will mean an accelerated shift away from fossil fuels like coal.
IEEFA points to its November report that had already called peak coal for China in 2013 and says the rate of decline in Chinese consumption doubled between 2014 and 2015.
14 Comments on "China Might have Passed ‘Peak Coal’ in 2013"
Davy on Fri, 18th Dec 2015 8:07 am
We know there are many reasons why coal consumption is stagnating in some places. We also see many countries especially in Southeast Asia like the Philippines, Vietnam, and India expanding coal use. Coal is a much better indicator of economic activity than oil in regards to product growth.
Consumers use oil for discretionary and nondiscretionary reasons. There are so many areas in which oil use can expand or contract with price. Electricity consumption is more inelastic than oil on the consumer side. How many people leave the TV on because electricity is cheap? It happens more out of stupidity than a conscious effort to enjoy lower prices.
Coal is primarily used for grid base load. We can determine coal substitution on the grid by alts and gas to determine how much of the drop in coal consumption is because of lower economic activity by industry by nation. We know when coal fired plants are built. Coal is large scale and easy to monitor compared with oil that is dispersed. In the next year we should be watching coal closely to determine economic activity.
PracticalMaina on Fri, 18th Dec 2015 8:31 am
Davy, I wonder how much coal prices have moved in China compared to oil in recent quarters. I was reading an article about the Chinese government getting ready to lay off a huge workforce of coal miners, 100,000 are on the chopping block this round, all well paying big money for imported coal. I am wondering if the EROEI on certain coal mines is starting to fall significantly, I am sure they still have some fairly easy to extract reserves, but it seems like they would not be sending money to other country’s for there coal exports, paying for shipment halfway around the world, instead of supporting jobs in there own country during there recent economic turmoil.
rockman on Fri, 18th Dec 2015 9:26 am
“While today’s report continues to insist that Chinese coal demand will grow out to 2020 after falling for two successive years, the IEA seems to be growing increasingly bearish in its views.”
They seem to have great difficulty explaining how the EIA thinks Chinese coal consumption has “peaked” while also predicting it will begin increasing in a couple of years.
I suspect that they are trying to avoid clearly saying what they may see as the reality: Chinese coal consumption may have reach the “undulating plateau” that we’ve other dynamics reach. IOW for as far into the future they do not see a significant decrease in Chinese coal consumption. What they are really highlighting is a potential in a slower RATE OF INCREASE or no increase at all. But that would imply that GHG emissions from Chinese coal burning will remain around current levels. Thus whatever increase in consumption from India et al in the future global coal consumption may also be on a long term (i.e. many decades) undulating plateau of obal coal consumption. Which obviously does not do much to address climate change.
GregT on Fri, 18th Dec 2015 9:41 am
The net climate impact of coal-fired power plant emissions
NASA Goddard Institute for Space Studies and Columbia University, New York, NY, USA
Received: 1 September 2009 – Published in Atmos. Chem. Phys. Discuss.: 9 October 2009 Revised: 23 March 2010 – Accepted: 24 March 2010 – Published: 6 April 2010
Without substantial pollution controls, we find that near term net global mean climate forcing is negative due to the well known aerosol masking of the effects of CO2.
Most recently, new construction in China and India has increased rapidly with minimal application of pollution controls. Continuation of this trend would add negative near term global mean climate forcing but severely degrade air quality.
http://atmos-chem-phys.org/10/3247/2010/acp-10-3247-2010.pdf
Apneaman on Fri, 18th Dec 2015 9:47 am
A Filthy History
Interactive map: Which countries have emitted the most carbon since 1850?
http://www.slate.com/articles/technology/future_tense/2014/05/carbon_dioxide_emissions_by_country_over_time_the_worst_global_warming_polluters.html
Apneaman on Fri, 18th Dec 2015 9:51 am
Have we hit “the end of the fossil fuel era”? Not even close.
http://www.vox.com/2015/12/14/10121638/fossil-fuel-dominance
Kenz300 on Fri, 18th Dec 2015 10:23 am
If the world is to have any hope of dealing with Climate Change countries need to stop building anymore coal fired power plants and begin to shut down the oldest and dirtiest ones.
ghung on Fri, 18th Dec 2015 11:00 am
More than 2,400 coal-fired power stations are under construction or being planned around the world, a study has revealed two weeks after Britain pledged to stop burning coal.
Davy on Fri, 18th Dec 2015 11:09 am
Sobering, G-man, this is either the classic tragedy of the commons or the extend and pretend policy of “we will fix it latter with more knowledge and technology”. I think it will not matter until an economic crisis ends growth and brings on a sharp contraction. At that point there will be little need for so much capacity because economic activity will not warrent it.
Apneaman on Fri, 18th Dec 2015 11:23 am
Kenz, there is no hope. We would have needed to have started 30-40 years ago on every aspect of overshoot. 30-40 years ago was when the neoliberal revolution started. That’s like starting a diet by going to an all you can eat buffet every night. They won. It was a fucking slaughter, but we got some really cool gizmos out of the deal eh?. It cannot be blamed for our inherent rapicious behaviour. It just helped speed things along. Only one week till we celebrate consumer orgy day Kenz. Try and enjoy it. All those over populated, uneducated third worlders slaved away real hard so we could enjoy our toys at low low prices. Try and show a little gratitude fer christ’s sakes.
ghung on Fri, 18th Dec 2015 11:26 am
Here’s the paper:
http://climateactiontracker.org/assets/publications/briefing_papers/CAT_Coal_Gap_Briefing_COP21.pdf
GregT on Fri, 18th Dec 2015 11:48 am
“Here’s the paper:”
Still using the 2 degree C upper limit, with no consideration given to positive self re-enforcing feedback mechanisms. 350ppm atmospheric CO2 levels have already been passed. We are at 400ppm and rising. While in the long term burning coal is a very bad thing, in the interim, burning coal is actually masking the effects of climate change. It has been shown in numerous peer reviewed papers that the immediate cessation of coal burning would increase global mean temperature rapidly. Either way we’re in for a whole world of hurt. We should have listened to our scientific community 40 years ago, but we didn’t. Even if we completely stopped burning all fossil fuels today, we would still need to immediately undertake a massive effort to reduce the CO2 accumulations that have already been released. It should be fairly obvious by now, that neither is happening. Given the fact that we have been releasing CO2 at an exponentially increasing rate over time, expect the climatic systems to respond accordingly.
makati1 on Fri, 18th Dec 2015 6:05 pm
Lots of hot air that will change nothing. Humans will burn all of the hydrocarbons they can afford to pry/suck out of the ground. Afford, meaning profitable.
We in the 1st world are screwed by our own greed and addiction to our energy slaves and we are taking the rest of the world under with us. This cannot go on for much longer as the world economy is already shrinking and there cannot be many more financial ‘miracles’ to save us. Collapse is coming. The sooner the better, I think.
makati1 on Fri, 18th Dec 2015 10:24 pm
BTW:
US coal production in 2014 ~ 924 million tons.
US coal consumption in 2014 ~835 million tons.
Total world coal production in 2014 ~8 billion tons, of which the Us ~4% population consumed 10%+ of the production. (Not counting the ‘coal’ embedded in the production of all of the US Imports from paces like China and India.)
https://yearbook.enerdata.net/#coal-and-lignite-production.html
That’s 2 1/2 tons per person in the US.
When the SHTF, are you going to take your family to the mines to dig your allotment of coal? That’s 10 tons for a family of 4. Your share of the total consumption in the Us.
The Ps uses ~200 lbs per person or 4/10 ton per family of 4. A days work in the mines at best. LOL