Coal Continues to Dominate Despite Energy Transition Efforts
Despite the global push towards renewable energy sources, coal remains a dominant player in the energy sector. This is particularly evident in India and China, two countries that have made it clear they have no immediate plans to follow the UK's example and shut down their coal power plants.
Coal power provides affordable energy that manufacturers of wind, solar components, and electric vehicles (EVs) in China and other Asian countries rely on to keep their products cost-effective. These countries are expected to drive the demand for coal in the near to medium term.
Coal Power in India and China
While reports highlight the progress made in energy transition efforts leading to record wind and solar electricity generation, the reality behind the scenes is different. Coal continues to be a major player, and this is not expected to change in the near future.
India's coal power generation fell for the second consecutive month in September due to increased solar output and lower electricity demand. However, India's coking coal imports surged to a six-year high over the first half of the country's latest fiscal year.
In China, coal remains the largest contributor to the country's power supply, despite being the world's largest developer of wind and solar capacity. Coal accounts for 60% of China's power generation, and this is not expected to change soon.
Both India and China have prioritized energy supply security and affordability over emissions, even as they both pursue a more diverse grid.
Coal Power Fuels the Energy Transition
Interestingly, coal power is essentially fueling the energy transition. The cheap energy it provides is used by manufacturers of wind and solar components and EVs to keep their products affordable. Additionally, the surge in demand for electricity from data centers is likely to boost coal demand in some parts of the world where natural gas is not as cheap as it is in the United States.
International Energy Agency's World Energy Outlook
In its latest World Energy Outlook, the International Energy Agency (IEA) praised the energy transition and predicted that future energy demand growth would be met entirely by wind and solar capacity.
However, the IEA also admitted that coal demand is not expected to start declining until at least 2030, despite its own projections that demand for all hydrocarbons would be in decline before 2030, stifled by wind and solar growth.
Coal Demand Growth Driven by India and China
India and China are expected to drive coal demand growth over the near to medium term. These countries understand that supplying the power that their economies and voters demand is more important than counting CO2 molecules.
Meanwhile, the UK is preparing scenarios for blackouts as its baseload capacity has been significantly reduced with the shutdown of the country's last coal power plant. Billions are being slated for investment in things like batteries and flywheels to store energy from wind and solar installations, but the realization that this cannot work without baseload capacity has yet to dawn on the UK government.
Bottom Line
It's clear that despite the global push towards renewable energy sources, coal continues to play a significant role in the energy sector, particularly in countries like India and China. As the world continues to grapple with the challenges of transitioning to renewable energy, the role of coal in this transition cannot be ignored. What are your thoughts on this issue? Share this article with your friends and let us know your views. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
