BEIJING -- Demand for coal as fuel to create electricity is leveling off, but it will remain a key energy source for decades, no matter how many billions of dollars of investment go into cleaner energy like wind and solar. Too much of the world depends on it now for heating and power generation for some nations to suddenly live without it.
There are vast parts of the developing world that will continue to see growth in demand for electricity, driven by sales of televisions, refrigerators and the construction of highways and malls as incomes increase, said Xizhou Zhou, the China chief for energy consultant IHS Energy.
"The cheapest way to provide electricity in many of these places is still coal-based," Zhou said.
This underlines the challenge facing negotiators who will convene in Paris on Nov. 30 to agree on how to limit emissions of fossil fuels. Scientists say coal, oil and gas emissions, including carbon dioxide and methane, are key drivers of rising temperatures that could lead to intense droughts or flooding of island nations.
Abundant and cheap, coal emits not only soot but double the greenhouse gas emissions per unit of energy of natural gas.
In recent years, slowing economic growth, gains in energy efficiency and advances in renewable-energy production have dampened demand for coal in key markets. Stricter air emissions regulations in Europe, the production of shale natural gas in the U.S. and the restructuring of the Chinese economy away from heavily polluting industries are all weighing on demand.
An analysis released Monday by the Institute for Energy Economics and Financial Analysis suggests coal consumption peaked globally in 2013 and is set to decline a further 2 to 4 percent in 2015 because of declining consumption by China and other big coal consumers.
The institute said China's coal consumption had fallen 5.7 percent from January to September. In the U.S., domestic consumption was down 11 percent and coal's share of the electricity market has fallen to 35 percent, from 50 percent a decade ago. Record-low U.S. natural gas prices, record expansion of renewable energy and a decoupling of electricity demand from economic growth are "permanently eroding" coal demand in the U.S., the Cleveland-based institute said.
Still, coal provides more than 40 percent of the world's electricity and 29 percent of its energy supply, second only to oil at 31 percent, according to the Paris-based International Energy Agency. The agency projects coal consumption to continue growing somewhat in coming years, largely owing to increased coal demand in India and Southeast Asia.
Coal's future is closely tied to China, the world's biggest coal user, producer and importer. It burns 4 billion tons of coal a year, four times as much as the United States.
Coal accounts for nearly two-thirds of China's energy, but in 2014 its coal consumption fell 2.9 percent year-on-year according to official statistics, or 2.6 percent according to the Institute for Energy Economics and Financial Analysis report -- the first annual decrease in 15 years. A revision to official Chinese data released earlier this year showed the country had greatly underestimated its coal consumption from 2000 to 2013, but still showed a dip last year.
China is trying to reduce dependency on coal to ease air pollution by switching to natural gas in its largest cities.
China also has become a leader in clean energy. Last year, it invested more in renewable power and fuels and had more hydropower and wind capacity than any other country, and was second to Germany in solar capacity, according to a report earlier this year by REN21, a Paris-based nonprofit group that promotes renewable energy.
The cost of renewable energy is becoming more competitive every year, while coal-fired power plants are increasingly expensive as air pollution controls grow more stringent.
"You have got a wave of new technologies and investments coming where historically power grids were heavily reliant on coal," said Tim Buckley, a Sydney-based energy analyst with the Institute for Energy Economics and Financial Analysis.
The continued development of wind, solar and hydropower is good for combating global warming, "but that's almost an ancillary benefit -- the key drivers are economics, technology, leadership and energy security and air and water pollution," Buckley said.
Business on 11/17/2015