Released June 26, 2018 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--If you work in the Coal industry, you probably didn't care much for the annual statistical review of world energy prepared by BP Plc (NYSE:BP) (London, England), which was released June 13. In releasing the report, titled "Two Steps Forward, One Step Back," two BP leaders, Group Chief Executive Bob Dudley and Group Chief Economist Spencer Dale, bemoaned last year's increase in coal use around the world. Increased global coal use last year was the "one step back" alluded to in the report's title. The two steps forward were growth in demand for natural gas and construction of renewable power generation.
"At first blush," Dale said in releasing the report, "some of last year's data might seem a little disappointing. Growth in overall energy demand is up; gains in energy intensity are down. Coal consumption grew for the first time in four years. And, perhaps most striking of all, carbon emissions are up after three consecutive years of little or no growth."
Global coal use rose by 25 million tons of oil equivalent (Mtoe) in 2017, a 1% gain and the first increase since 2013, according to the BP report. The gain was driven largely by surging demand in India, though demand also rose in China last year, reversing a three-year trend of declining use, the economist noted. Dale also noted coal production in the U.S. rose last year, as it did in China and the rest of the world ("RoW").
Click on the image at right to see BP's annual data on global coal production and consumption since 2011.
"After several years of free-fall, the coal market experienced a mini-revival last year, with both global consumption and production increasing," Dale said. China's increased use of coal occurred despite "substantial coal-to-gas switching in the industrial and residential sectors. Increases in power demand in China sucked in additional coal as the balancing fuel," he added.
Global production of coal increased 3.2% over 2016, a gain of 105 Mtoe, Dale continued. This gain was driven by "notable increases in both Chinese (3.6%, 56 Mtoe) and U.S. (6.9%, 23 Mtoe) output. Interestingly, the increase in U.S. production came despite a further fall in domestic consumption, with U.S. coal producers instead increasing exports to Asia."
China's increased use of coal was the counterintuitive result of Chinese officials creating price controls on the black rock. When strong demand pushed prices above the target range, Chinese officials reversed course and sought to lower prices by increasing coal production. "The increase in Chinese coal production of over 3.5% last year, its strongest growth for six years, was a direct result of these actions," Dale told an estimated 7,000 people who dialed into the company's webcast.
Although the BP economist cautioned listeners against "being too alarmed by the recent data," he did note last year's "stark" increase in carbon emissions from energy consumption. Carbon dioxide (CO2) emissions rose by about 1.6% in 2017 after three consecutive years of little or no growth in carbon emissions. "So, on the face of it," Dale said, "a pretty big backward step."
Dale asked rhetorically, "How worried should we be? A bit worried, but not overly so. Personally, I am more worried by the lack of progress in the power sector over the past 20 years, than by the pickup in carbon emissions last year."
"Standing back from the detail of what happened last year, the most striking - and worrying - chart in the whole of this [Statistical Review] is the trends in the power sector fuel mix over the past 20 years," Dale explained. He said he used the word "striking" because "despite the extraordinary growth in renewables in recent years, and the huge policy efforts to encourage a shift away from coal into cleaner, lower-carbon fuels, there has been almost no improvement in the power sector fuel mix over the past 20 years. The share of coal in the power sector in 1998 was 38% - exactly the same as in 2017 - with the slight edging down in recent years simply reversing the drift up in the early 2000s associated with China's rapid expansion. The share of non-fossil [fuel] in 2017 is actually a little lower than it was 20 years ago, as the growth of renewables hasn't offset the declining share of nuclear."
Click on the image at right to see BP's estimate of the global fuel mix used to generate electricity.
"I hadn't realized that so little progress had been made until I looked at these data," he commented.
Because the Power Industry accounts for about one-third of global CO2 emissions, Dale said, "to have any chance of getting on a path consistent with meeting the Paris climate goals, there will need to be significant improvements in the power sector." He is referring to lowering the carbon content of the Power sector. "The answer to almost any policy question on how best to reduce carbon emissions from the energy sector over the coming decades is: start with the power sector; then focus on the power sector; and then, if you have any spare policy capacity, push harder in the power sector."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
"At first blush," Dale said in releasing the report, "some of last year's data might seem a little disappointing. Growth in overall energy demand is up; gains in energy intensity are down. Coal consumption grew for the first time in four years. And, perhaps most striking of all, carbon emissions are up after three consecutive years of little or no growth."
Global coal use rose by 25 million tons of oil equivalent (Mtoe) in 2017, a 1% gain and the first increase since 2013, according to the BP report. The gain was driven largely by surging demand in India, though demand also rose in China last year, reversing a three-year trend of declining use, the economist noted. Dale also noted coal production in the U.S. rose last year, as it did in China and the rest of the world ("RoW").
"After several years of free-fall, the coal market experienced a mini-revival last year, with both global consumption and production increasing," Dale said. China's increased use of coal occurred despite "substantial coal-to-gas switching in the industrial and residential sectors. Increases in power demand in China sucked in additional coal as the balancing fuel," he added.
Global production of coal increased 3.2% over 2016, a gain of 105 Mtoe, Dale continued. This gain was driven by "notable increases in both Chinese (3.6%, 56 Mtoe) and U.S. (6.9%, 23 Mtoe) output. Interestingly, the increase in U.S. production came despite a further fall in domestic consumption, with U.S. coal producers instead increasing exports to Asia."
China's increased use of coal was the counterintuitive result of Chinese officials creating price controls on the black rock. When strong demand pushed prices above the target range, Chinese officials reversed course and sought to lower prices by increasing coal production. "The increase in Chinese coal production of over 3.5% last year, its strongest growth for six years, was a direct result of these actions," Dale told an estimated 7,000 people who dialed into the company's webcast.
Although the BP economist cautioned listeners against "being too alarmed by the recent data," he did note last year's "stark" increase in carbon emissions from energy consumption. Carbon dioxide (CO2) emissions rose by about 1.6% in 2017 after three consecutive years of little or no growth in carbon emissions. "So, on the face of it," Dale said, "a pretty big backward step."
Dale asked rhetorically, "How worried should we be? A bit worried, but not overly so. Personally, I am more worried by the lack of progress in the power sector over the past 20 years, than by the pickup in carbon emissions last year."
"Standing back from the detail of what happened last year, the most striking - and worrying - chart in the whole of this [Statistical Review] is the trends in the power sector fuel mix over the past 20 years," Dale explained. He said he used the word "striking" because "despite the extraordinary growth in renewables in recent years, and the huge policy efforts to encourage a shift away from coal into cleaner, lower-carbon fuels, there has been almost no improvement in the power sector fuel mix over the past 20 years. The share of coal in the power sector in 1998 was 38% - exactly the same as in 2017 - with the slight edging down in recent years simply reversing the drift up in the early 2000s associated with China's rapid expansion. The share of non-fossil [fuel] in 2017 is actually a little lower than it was 20 years ago, as the growth of renewables hasn't offset the declining share of nuclear."
"I hadn't realized that so little progress had been made until I looked at these data," he commented.
Because the Power Industry accounts for about one-third of global CO2 emissions, Dale said, "to have any chance of getting on a path consistent with meeting the Paris climate goals, there will need to be significant improvements in the power sector." He is referring to lowering the carbon content of the Power sector. "The answer to almost any policy question on how best to reduce carbon emissions from the energy sector over the coming decades is: start with the power sector; then focus on the power sector; and then, if you have any spare policy capacity, push harder in the power sector."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
