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Coal demand on track to reach record high in 2022 after rising in 2021

Tuesday, January 11th 2022, 1:53 pm - Nearly 80 per cent of coal emissions must be phased out by 2030 to reach Paris Agreement targets, the IPCC states.

The filthiest of fossil fuels is on the rise. The amount of power generated from coal rose to a record high last year, according to an arresting report by the International Energy Agency (IEA). Overall coal demand is also increasing, and could reach its own all-time high in 2022.

The findings, part of the IEA’s annual market report, determined that coal power generation surged by 9 per cent worldwide in 2021, to a record of 10,350 terawatt-hours.

When other uses of coal beyond power generation are factored in, such as the manufacture of steel and cement, growth in demand was found to be 6 per cent. Pricing and other factors could see overall coal demand continue to rise in the coming years and break the previous high set in 2014.

Analysts are concerned with this output and trajectory of coal, the fossil fuel that most impacts climate change.

“This year’s historically high level of coal power generation is a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero,” stated Fatih Birol, IEA Executive Director. “Without strong and immediate actions by governments to tackle coal emissions…we will have little chance, if any at all, of limiting global warming to 1.5°C.”

Coal being transported by rail in Utah, U.S. (George Frey/ Bloomberg/ Getty Images) Coal being transported by rail in Utah, U.S. (George Frey/ Bloomberg/ Getty Images)

Anna Drazkiewicz, Communications Manager of the Powering Past Coal Alliance, told The Weather Network (TWN), “The latest science is clear that keeping global temperature increase to 1.5°C requires rapid coal phase-out in OECD countries over this decade and in the rest of the world by 2040.”

Dave Jones, Global Lead at Ember, agreed. “The fall of coal needs to happen quickly, and the record coal burn is a real wake-up call that the world is not on track. The main political factor is to realize this urgency — COP26 went a little way to ‘consigning coal to history,’ but really the hard work is still left to do,” Jones told TWN.

The rise in coal demand is the result of a return to normal after months of economic contraction due to the COVID-19 lockdowns throughout 2020, when worldwide demand for coal dropped 4.4 per cent, “the largest decline in decades.”

Since then, an increase in natural gas prices and the inability of renewable energies to keep up with electricity demand — despite “impressive” and “rapid expansion” of global wind and solar offerings — has caused the price of coal to rise, leading to the growth in that sector.

The campaign to phase out coal faces many political hurdles. A recent report from Reclaim Finance (RF) analyzed the efforts of 47 power and mining companies that have seen pressure from financial institutions to institute phase-out plans.

Despite a “dismal” record and plans that are “failing across the board,” according to the RF report, the power and mining companies “continue to benefit from a high level of support from financial institutions.”

The largest banks demanding coal phase-out plans provided these companies with more than $9 billion in new financing.

The RF report found that 95 per cent of the power and mining companies analyzed have no viable plan for transitioning out of coal and as many as a third of them are continuing even now to develop new capacity.

“The finance community is shunning coal, making it harder to invest into coal, but companies — like governments — are being too slow and lacking in ambition,” Jones told TWN.

Another challenge is the fact that there are vast regional disparities in coal use, with demand for coal dropping by almost 20 per cent in the EU and US during the pandemic but rising 1 per cent in China.

“Asia dominates the global coal market, with China and India accounting for two-thirds of overall demand,” according to Keisuke Sadamori, IEA Director of Energy Markets and Security. “These two economies — dependent on coal and with a combined population of almost 3 billion people — hold the key to future coal demand.”

A final obstacle is managing the transition for workers in the coal industry. Birol has noted that such a transition must be “fair, affordable, and secure for those affected.”

Drazkiewicz told TWN, “The transition away from coal power needs to be both timely and socially just.”

“Coal phase-out plans need to be accompanied with transition support, to manage negative impacts for affected workers and communities, such as job losses, and to reap opportunities for sustainable development of regions to diversify their economies and improve the quality of life,” she added.

Nevertheless, the path to phasing out coal is in place.

“The solutions are obvious and well-documented, and will be largely driven by wind and solar,” Jones said. “In the IEA's Net Zero scenario, three-quarters of all the new electricity by 2040 will be from wind and solar alone. The remaining quarter of the pie, they model, will be for nuclear, bioenergy, CCS, hydrogen, and hydropower.”

“Coal’s future looks bleak due to the falling costs of renewables: new renewable energy is already cheaper than continuing to operate coal plants in much of the world,” Drazkiewicz told TWN. “Governments and companies who do not exit coal are set to lose billions in stranded assets.”

“Thanks to the momentum created by COP26 last year, countries have put in place important building blocks for progress which will inevitably lead to a decline in coal power in the coming years.”

The question is whether these solutions will be adopted fast enough. The IPCC has determined that to reach Paris Agreement targets nearly 80 per cent of coal emissions must be phased out by 2030, with the IEA calling for the closure of all “unabated” coal plants by 2040.

Most bluntly, Antonio Guterres, Secretary-general of the UN, stated last year that phasing out coal “is the single most important step to get in line with the 1.5°C goal.”

Thumbnail credit: Monty Rakusen/ Image Source/ Getty Images

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