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Coal Production Drops as China Spurs Shift to Cleaner Energy

Image: Coal Production Drops as China Spurs Shift to Cleaner Energy

Coal feeding machine and conveyor line. (Cnlj918/Dreamstime.com)

Wednesday, 14 Jun 2017 08:33 AM

Coal production dropped last year as China’s domination of energy markets -- long the driver of soaring fossil-fuel consumption and rising carbon pollution -- is now turning the planet in a cleaner direction.

The biggest energy consumer is moving toward the end of an era after it burned the least coal in six years, became the number one producer of renewable energy and even lowered its emissions of climate-warming gases, according to data from BP Plc.

“China matters in a big way to the energy market,” said Giovanni Staunovo, an analyst at UBS Group AG. “There is an aim to move away from coal consumption towards cleaner energy sources.”

China developed a voracious appetite for energy since the turn of the century as its expanding economy burned up huge amounts of fossil fuels to keep factories humming and cars rolling. In the process it helped drive up prices of oil, natural gas and coal, while also becoming the biggest emitter of the greenhouse gas carbon dioxide.

About one in five people lives in China and its growing middle class means the country is using more energy than ever, but patterns of consumption are changing. Money is pouring in to cleaner energy, while coal is discouraged in the fight to improve the air quality in some of the most polluted cities in the world. The Asian giant’s economy is also evolving toward services, which are less energy intensive than heavy manufacturing.

The numbers are striking. China still accounted for about half of the coal burned in the world last year, but consumption of the fuel fell 1.6 percent, according to BP’s annual Statistical Review of World Energy. That compares with an average 3.7 percent annual expansion in the 11 preceding years. Government policy changes resulted in production of the fuel dropping 7.9 percent, compared with a 3.9 percent average gain in the previous decade.

At the same time it dominated renewables, accounting for 40 percent of global growth and surpassing the U.S. to become the largest producer of clean energy, BP data show. The nation’s installed solar capacity rose 79 percent to 78 gigawatts last year and wind expanded 15 percent to 149 gigawatts.

“Chinese hunger for energy is being tempered by moves to a more sustainable growth pathway and the rapid expansion of renewables,” Jonathan Marshall, an analyst at the London-based Energy and Climate Intelligence Unit, said by email. Those trends spell “further trouble for coal in the years to come.”

Weaker industrial growth meant China’s consumption of middle distillate fuels, which include diesel, fell last year for the first time in at least a decade, BP data show.

That “reflects the structural rebalancing of the economy towards more consumer and service-related facing sectors,” Spencer Dale, BP’s chief economist, said at a briefing in London on Tuesday. “But the scale of the slowdown suggests some bounce-back is perhaps likely.”

Increasing prosperity means people are driving their cars further and flying more often, driving demand for gasoline and jet fuel, Dale said.

Total consumption of oil products rose 3.3 percent last year, compared with an average annual expansion of 5.7 percent in the previous decade. Even at that slower rate, China’s additional 400,000 barrels a day of demand was the largest contribution to global growth in 2016, the BP data show.

The slowdown in China is reflected in the world’s carbon emissions, which saw little or no growth for a third consecutive year in BP’s data. Global emissions grew at an annual average rate of about 2.5 percent in the 10 years to 2013.

China has alone helped eliminate most of that growth. The country’s emissions have dropped in the past two years after growing by almost 75 percent in the previous decade, Dale said.

“It’s a new China, a different China, but still very relevant in the energy world,” said UBS’s Staunovo. “The hunger for energy is likely to continue to dominate.”

© Copyright 2017 Bloomberg News. All rights reserved.

 
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Coal production dropped last year as China's domination of energy markets -- long the driver of soaring fossil-fuel consumption and rising carbon pollution -- is now turning the planet in a cleaner direction.
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Wednesday, 14 Jun 2017 08:33 AM
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