A man takes care of a bag of coal.
Dheeraj Singh | Bloomberg | Getty Images
According to projections by the International Energy Agency, an energy watchdog, coal-fired power generation accounts for 60% of the world’s electricity consumption, which is expected to jump from one-quarter in 2015 to one-third by 2025. Being watched.
Rob Summell, managing director at energy investment management firm Tortoise Capital, said India’s rapid economic growth means the country’s energy needs, including oil and natural gas, will be substantial. Ta.
Ian Roper, commodity strategist at Astris Advisory Japan Co., Ltd., told CNBC: “If India and China continue to grow at a decent pace over the next 10 years, global demand for coal will not disappear any time soon. Probably not,” he said.
The focus is on China and India. This is because these two countries currently use significantly more coal.
Rob Summell
Managing Director of Tortoise Capital
In a recent report, the IEA announced that global coal use will exceed 8.5 billion tons for the first time in 2023, a record high, due to strong demand in emerging and developing countries such as India and China. did.
With no signs of slowing down, the IEA said coal consumption in India and Southeast Asia is expected to “increase significantly.”
India’s coal production rose to 893 million tonnes in the fiscal year ending March 2023, an increase of nearly 15% year-on-year. China’s coking coal production from January to November 2023 increased by 2.9% compared to the same period in 2022.
In contrast, the United States, the world’s second largest coal consumer, is using less coal fuel. According to the Institute for Energy Economics and Financial Analysis, the amount of coal consumed daily by the superpower recorded a 62% decline from 2.8 million tons per day to 1.1 million tons per day.
Globally, carbon emissions from fossil fuels reached record levels last year. India’s emissions are expected to jump 8.2% in 2023, while China’s emissions are expected to rise 4%, according to the latest estimates from the Global Carbon Budget.
“The focus is on China and India, because these two countries are currently using significantly more coal, so their carbon emissions are increasing, not decreasing,” Tummel said. he said.
However, both countries have adopted and set aggressive renewable energy targets.
India has set an ambitious goal of meeting 50% of its electricity needs with renewable energy by 2030, and the South Asian country is making some progress in that effort, with 22% of its electricity generated from renewable sources. It is dominated by available energy.
Smoke billows from an unauthorized steel factory in China’s Inner Mongolia Autonomous Region on November 4, 2016 (foreground).
Kevin Frayer | Getty Images News | Getty Images
Having said that, 75% of India’s electricity comes from coal-fired power plants.India’s power plant inventory will increase 6% year-on-year in 2023, According to a study by Citibank. The country plans to add 80 gigawatts of coal-based power generation capacity over the next eight years.
Similarly, although China is recognized as the undisputed leader in renewable energy expansion, coal accounts for 61% of its electricity generation. The company is adding new projects to the grid at roughly the same rate as the rest of the world combined by 2022, and has ambitions to be carbon neutral by 2060.
However, the lack of reliability of renewable energy means that coal remains a very important alternative option for both countries.
“A few years ago, China was suffering from an electricity shortage.[power’s] It’s been in such decline over the last few years that we’ve had to go back to coal,” Roper noted.
China suffered several months of drought last year, reducing hydropower generation in southern provinces. The country had to rely on coal to keep the lights on and industry going.
The same lack of reliability is likely to extend to India’s renewable energy ecosystem as well.
In October last year, the share of coal in electricity production rose to 80% from 73% in the same period in 2022, as hydropower generation was curtailed by weaker-than-usual monsoon rains. Coal production increased by more than 18% year-on-year in the same month.
This means that both countries will continue to rely on coal as their main source of power generation.
“India’s coal consumption is expected to see a net increase for at least the next 10 years, and so is China,” Roper said.