Coal has more mileage
ARE the ‘‘economic fundamentals of coal under siege’’? Is coal ‘‘in structural decline’’?
These questions, and many like it, followed last week’s shot across the bows of the coal industry from Newcastle City Council.
If Labor and the Greens hoped it would draw widespread attention to their actions, their wish was granted.
There is no doubt that the world energy market is in the midst of a period of profound change, and that the age of renewable energy is upon is. But the existence of one thing – in this case, a rise in renewable energy – does not necessarily result in the demise of something else, in this case, the coal industry.
If energy consumption is increasing globally – and it most certainly is – then the two types of energy could live side by side for some time, certainly for many decades to come.
The statistics I will use here come from the International Energy Agency, which was formed after the oil shock of 1974. The agency has ‘‘evolved and expanded’’ since then, and is widely regarded as objective in its outlook.
On August 6, the agency released a news report, headed ‘‘Renewable electricity generation climbs to second place after coal’’.
The agency tends to aggregate its data into OECD and non-OECD categories.
The OECD (Organisation for Economic Co-operation and Development) has 34 member nations in Europe, the Americas, and Australasia, together with Turkey, Japan and South Korea. The non-OECD is, logically, the rest of the world, with China and India the big drivers in power trends.
Electricity demand in the OECD nations rose steadily from 4000 terrawatt hours in 1973 to about 11,000 terrawatt hours in about 2007. It has since declined very slightly.
In the non-OECD world, usage went from less than 2000 terrawatt hours in 1973 to match the OECD level in about 2008, before continuing to rise, but more slowly, to the 12,000 terrawatt hours hit in 2013.
And renewable energy use is certainly growing.
Globally, renewable energy produced 22per cent of the world’s electricity in 2013, but three-quarters of that came from hydro.
Non-hydro renewables, mainly wind and solar, produced just 5.4per cent of global electricity in 2013. That is the latest figure available, and, yes, it will have risen since then.
But a graph of world electricity production by source between 1973 and 2013 puts all of these figures into perspective.
In 2013, coal generated almost 10,000 terrawatt hours of electricity, or almost twice the 5000 terrawatts or so produced by each of its second and third-placed rivals: renewables (including hydro) and natural gas.
Nuclear power has been flat for years at between 2000 and 3000 terrawatt hours, with oil similarly flat at about 1000 terrawatt hours.
The latest version of the agency’s annual energy outlook is due in November, but the 2014 edition predicts that by 2040, the world’s energy mix will divide ‘‘into four almost equal parts: oil, gas, coal and low-carbon sources’’.
It predicts a 15per cent increase in coal demand by 2040, with much of this growth happening in the coming decade.
Today, China uses more than 45per cent of the world’s coal and this is expected to hit 50 per cent by 2030, and then fall back.
Demand for coal will ‘‘plunge’’ by more than one-third in the OECD, but it will continue to increase in non-OECD countries, with India to overtake the US as the world’s second-largest coal consumer after 2020.
‘‘Current low coal prices have put pressure on producers worldwide to cut costs, but the shedding of high-cost capacity and demand growth are expected to support an increase in price sufficient to attract new investment,’’ the agency says.
That’s just a snapshot, admittedly. And the agency says this mix of energy will result in a temperature increase of 3.6degrees – well above the IPCC target of 2degrees.
Some will say this invalidates everything the agency is predicting. Others will say it’s the IPCC that needs to accept its targets will not be met. Either way, the agency’s figures show that while renewable energy is growing, so too is the total demand for energy from all sources.
And the demise of the coal industry?
Death, exaggeration, etc.