Global emissions associated with coal burning are on track to hit a new record in 2022, underscoring the challenge of phasing out the world’s most carbon-intensive fuel.
Coal generation needs to fall precipitously for the planet to have a chance at reaching net-zero emissions. But 2022 has seen rising coal generation in Europe and India, as both regions struggled with the fallout of Russia’s invasion of Ukraine. Global coal generation likely would be even higher if not for an economic lull in China, the world’s largest coal market. The United States is the sole major economy to continue to see sharp declines in coal use.
The figures highlight a difficult truth for the world’s climate efforts: While the fuel’s decline in the United States and Europe over the last decade has generated a tidal wave of headlines, global coal use has remained largely flat due to a growing fleet of coal plants in Asia.
“Global coal use and emissions have essentially plateaued at a high level, with no definitive signs of an imminent reduction,” the International Energy Agency concluded in a report released this month. Climbing coal use in 2022, the agency added, is “a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero — especially the narrow but achievable goal of doing so by 2050.”
Coal is the leading source of carbon dioxide emissions globally. In 2022, coal is on track to produce 15.1 billion metric tons of CO2, compared with 12.1 billion tons for oil and 7.9 billion tons for natural gas, according to the Global Carbon Project, an academic initiative. The previous record for coal emissions of slightly more than 15 billion tons was set in 2014.
That has made the fuel a target of international climate efforts. Nearly 200 countries agreed to phase out coal at global climate talks in Scotland.
Those efforts were always going to be difficult. Global coal capacity has doubled in the last two decades, with the majority of new plants built in Asia, according to IEA. Today, the average age of a coal plant in China is 13 years, while the average coal facility in Vietnam is 8 years old.
Russia’s invasion of Ukraine has made the task more difficult. European coal generation was up 8 percent through September compared to the same time last year, according to Ember, a clean-energy think tank. The spike represented a reversal from the steady declines in coal use Europe has posted over the last decade, and came as the continent rushed to replace gas shipments from Russia.
Europe also has looked to liquefied natural gas to fill that gap, pushing up LNG prices globally. The impact has been felt in nations such as India, where high gas prices forced the world’s second largest coal burner to double down on the fuel. Indian coal generation is up 9 percent through September, according to Ember.
India’s coal binge has even created an opportunity for U.S. coal miners. Pennsylvania-based Consol Energy Inc. told investors it was bullish on exports to India, where the company’s coal is being burned in the industrial sector.
“There’s still strong demand coming out of India,” Bob Braithwaite, a Consol executive, told financial analysts in a recent earnings call. “I still think that long-term that is certainly where the majority of our exports will end up going.”
Even so, global coal use this year could have risen even more had China — which accounts for 55 percent of the world market — not encountered a slowdown in its construction and real estate sectors.
Electricity demand has been relatively weak as a result, though coal generation did climb in recent months to help offset a fall in hydro output stemming from a historic drought, said Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air.
What happens next in China will determine the trajectory of the coal industry globally. China has 196 gigawatts of coal capacity in various stages of development — nearly as much as remains in the United States today.
But there are signs change is afoot. Though Chinese electricity demand has grown less this year, it is still up. And most of that demand has been met by renewables. Reuters recently reported that renewables met almost 75 percent of additional electricity demand so far this year.
“In a more structural sense, we’ve been on a long, bumpy plateau since 2013, and it will take further acceleration in clean energy investment to turn this into a structural decline,” Myllyvirta said. “That acceleration is now definitely happening in China and starting to happen elsewhere as well in response to the sky-high prices. Once the expansion of clean energy manufacturing that is currently in the works comes online, there’s no going back.”
Indeed, nowhere is coal’s decline more evident than in the United States. Other large economies such as Japan and South Korea have posted slight declines in coal generation this year, but those pale in comparison to the 10 percent drop in U.S. coal generation through September, according to Ember’s figures.
The drop is especially notable as it comes at a time when coal companies are generating mountains of cash. A run-up in coal prices has padded miners’ balance sheets, enabling them to pay down debt and plow money back to shareholders in the form of share buybacks.
One thing coal companies aren’t doing: Investing in more mining production. What money is being spent is largely being directed toward metallurgical coal used in steel production.
Peabody Energy, long America’s largest miner by tonnage, is spending money on beefing up a metallurgical mine in Australia for coal used in steel production. Consol is opening a small metallurgical mine in West Virginia.
Investments in thermal coal used for power have been limited. Consol is restarting a longwall mining unit at its large Pennsylvania mine, and Alliance Resource Partners LP is investing in some marginal mine upgrades.
“There are no more battles for market share or market supremacy” with natural gas, said Andy Blumenfeld, an analyst who tracks the industry at IHS Markit. “Everyone is looking at their own assets and trying to figure out what they can get out of them.”
The lack of new investment points to a larger challenge for the U.S. coal industry. A decade has passed since the United States last completed a major new coal plant, and the average American coal facility is now around 47 years old, said Paul Lang, CEO of Arch Resources, a St. Louis-based coal company that has long ranked among the country’s largest.
“This thing is heading towards a pretty fast decline rate,” Lang told financial analysts recently. He said the company remains committed to winding down the Black Thunder Mine in Wyoming, the second largest coal mine in America.
“I think we can have, and the industry can have on the thermal side, a very profitable period of time where this coal is going to be needed, and will do very well,” Lang told analysts. “But what we’re not gonna do is invest anything to increase production.”
If the world is to meet its climate goals, others will need to follow suit.
