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Haley Zaremba

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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China’s Clean Energy Pivot Could Be The Death Knell For Coal

The coal industry is hurting. While the emissions heavy fossil fuel has been falling out of favor for quite a while now, this year has been particularly brutal. In no small part thanks to the spread of the novel coronavirus and the ensuing drop in energy demand, the nuclear sector is in big trouble. For just a taste of the kind of summer coal has had, here is just a small selection of the nearly uniform doom-and-gloom headlines on offer: Renewables surpass coal in US energy generation for first time in 130 years” from the Guardian, “Coal’s Decline Continues with 13 Plant Closures Announced in 2020” from Scientific American’s E&E Energy News platform, and “The U.S. Coal Industry Is Declining Irreversibly” from us here at Oil Price. But this disaster has been decades in the making. Between the years of 2009 and 2019, coal demand plummeted 43 percent by an energy-equivalent metric, as reported by BP Plc’s most recent statistical energy review. In Europe, coal demand dropped 23 percent. The UK experienced a stunning 79 percent decline and the few active coal-fired plants it has left are growing less active all the time. 

However, this trend has not been the case around the world. “Coal-fired power has been dying everywhere except where it poses the greatest threat,” Financial Review reported this week. “Draw a line down the world around the longitude of the Nile. The region to the west – encompassing Europe, Africa and the Americas – has seen coal consumption drop by a quarter over the past decade. [...] The trouble is what’s happening east of the line. Consumption there rose by a quarter over the same period, and since the region already accounted for about 70 percent of coal demand, that has driven the global tally up by nearly 10 percent.” 

The opinion piece written for the Financial Review by David Fickling contends that if Asia, and particularly the industrial giant that is China doesn’t begin to move away from coal in a hurry, the impact will be devastating for the global effort to combat catastrophic climate change. And, in fact, it does look like Asian energy mixes are beginning to transition away from coal, bit by bit. 

Related: Why Russia Is Pushing Unneeded Nuclear Power Plants On Egypt

China is reportedly planning to ramp up its energy transition strategy in Beijing’s 14th five-year plan, which sets the nation’s goals for 2021 through 2025. “A plan to derive 20 percent of its primary energy from non-fossil fuels may be brought forward by five years from 2030 and the share of coal in the energy mix cut to 52 per cent by the same date from 57.5 per cent this year,” Fickling writes, based on insider information published in a recent Bloomberg report.

While these numbers may seem somewhat modest compared to the coal falloff in Europe and the UK, these deceptively modest numbers add up in a hurry when we’re talking about China. What’s more, this will be paired with a pretty significant boon to the renewable energy sector, as the new five year plan will reportedly mandate the annual addition of 80GW to 115GW of new solar and 36GW to 45GW of wind power. “No wonder shares of Chinese renewables companies have been surging as reports of the plans have spread,” Fickling writes, citing a July article that details the phenomenon. 

While it’s good news for all of us that more world leaders are starting to take climate change more seriously and take action, it also just makes good economic sense to stop holding onto coal. Even in Asia, where exporters have long been able to rely on China and India for demand, sellers are having a harder and harder time finding a market for their coal. 

Coal exporters should brace for disappointment,” Asia Times reported earlier this month, reporting that “Asian thermal coal exporters are fighting an uphill battle even in new markets.” Now China and India are working to become less reliant on imports on top of making plans to transition toward cleaner alternative energies. Indonesia, the world’s single-biggest thermal coal exporter, has targeted Bangladesh, Pakistan and Vietnam as potential new markets, but those prospects are also looking grim.

In fact, as Fickling argues, when--not if--China, “coal’s last refuge,” stops relying on the dirty fuel source as a pillar of its energy mix, it will more than likely take the entire global coal industry down with it. The old markets are moving on, and the new markets are uninterested. It may just be the final nail in coal’s coffin. And, as Fickling points out, as coal crumbles, “the prospect of keeping the world’s emissions within more manageable limits looks a little brighter.”

By Haley Zaremba for Oilprice.com

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