BP: Global coal use fell by largest recorded margin in 2015

Global coal use fell by more than 70 million tonnes of oil equivalent (Mtoe) – a 1.8% decline – in 2015, the largest annual reduction in records going back half a century, according to BP.

The data, from BP’s statistical review of world energy 2016, shows a declining role for coal as oil, gas and renewables all gain ground. Coal is one of the most polluting sources of energy and limiting its use will be key to achieving the aims of the Paris Agreement on climate change.

Indeed, global energy-related CO2 emissions stopped growing last year, BP says, and the record reduction in coal was a key factor. Carbon Brief explores why coal use fell so much last year.

Record coal drop

The reduction in global coal use last year is unprecedented during the 50-year dataset of BP’s statistical review. The 71Mtoe fall is the largest recorded in tonnes, and also in percentage terms.

This striking reduction has been reported by the Financial Times and the Telegraph. Spencer Dale, BP chief economist, called it an “annus horribilis” for coal, the Times adds. But why did it happen?

Only a handful of other years have seen a year-on-year drop in global coal use. Typically, these have followed recessions, such as those in the early 1990s, the 1997 Asian financial crisis and the 2008 global financial crisis. In contrast, the global economy grew an estimated 3% during 2015.

Year-on-year changes in global coal use in millions of tonnes of oil equivalent (Mtoe, blue bars, left axis) and % (red line, right axis). Source: BP statistical review. Chart by Carbon Brief.

It’s interesting to note that the record fall in coal use came despite falling prices. Global coal prices have roughly halved since 2012, after four straight years of declines. The global coal trade has also cooled, with volumes falling for that past two years.

China and US plummet

The global reduction in coal demand was driven by the US, where it fell by 58Mtoe (12.7%) and China, down 29Mtoe (1.5%). These reductions were only partially offset by rising coal use in India, up 19Mtoe (4.8%).

The EU saw a relatively small 5Mtoe reduction in coal demand, while the rest of the world was flat. Strong, 15% growth in Malaysia, Vietnam and Indonesia was offset by sharp falls elsewhere, particularly a 5% reduction in former Soviet states, struggling with the financial impact of cheap oil.

Year-on-year changes in coal use in millions of tonnes of oil equivalent (Mtoe) in the US (dark blue bars), EU (light blue), China (red), India (yellow) and the rest of the world (grey). You can drag the mouse to zoom in and show or hide countries by clicking on the legend. Source: BP statistical review. Chart by Carbon Brief.

For the US, a continuing shift towards gas-fired power generation along with growth in renewables, electricity demand in long-term decline and the closure of older, more polluting coal plants is behind the reduction.

With President Obama’s clean power plan on hold, probably until after the US election, this progress is not guaranteed to continue, though US gas prices are likely to remain low as gas output continues to surge.

Meanwhile, in China, economic wobbles, renewables and its air pollution drive have been key factors in reducing coal demand. After renewed economic stimulus this year, China’s coal imports have finally picked up, but this, too, could be temporary.

Despite increases in some countries, Asian coal demand growth appears to be slowing, with question marks hanging over the region’s significant coal expansion plans. For instance, India recently said it does not need any new coal power capacity for the next three years, beyond what is already being built.

Changing places

These annual changes should be viewed in the wider context of overall coal demand, where coal is still the world’s second-largest source of energy and China still accounts for around half the world total.

After two years of accelerating declines, the future path for China’s coal demand will be closely scrutinised. Further declines, or at least a peak in Chinese demand, hold the key to continued reductions in global coal use. They are also a must if China, and the world, are to actually cut CO2 emissions, rather than simply stopping them from increasing.

Also of note is that India overtook the US last year to become the world’s second largest consumer of coal, measured in energy content terms (Mtoe). India has posted steady growth in coal demand for years, though the pace remains far below that achieved by China in the decade from 2002.

Countries’ coal use in millions of tonnes of oil equivalent (Mtoe). Source: BP statistical review. Chart by Carbon Brief.

Coal in context

Coal was the only global energy source to decline last year, with oil, gas and renewables all continuing to grow strongly. Fossil fuels’ share of the global energy mix declined to 86%, the lowest level recorded by BP, though still only eight percentage points lower than the 1965 peak of 94%.

Renewables other than hydro increased their share from 2.4 to 2.8% of the global energy mix, while coal’s share fell to 29.2%, the lowest for a decade. Hydro and nuclear were essentially flat.

Note that these statistics are based on shares of primary energy use inputs rather than shares of useable final energy outputs. The majority of primary energy from fossil fuels is wasted as heat during the conversion to useful chemical or electrical energy.

Primary energy use supplied by oil (dark blue), coal (red), gas (light blue), nuclear (yellow), hydro (grey) and other renewables (orange) in millions of tonnes of oil equivalent (Mtoe). Source: BP statistical review. Chart by Carbon Brief.

Rise of renewables

Renewables still only meet a relatively small share of global energy needs, but annual growth has been accelerating for most of the past decade and is now on a par with other sources of energy. Even so, renewables are behind the trajectory needed for a 2C path, set out by the International Energy Agency.

The amount of non-hydro renewable energy added last year (48Mtoe) was the largest ever increase, yet was still surpassed by oil (80Mtoe) and gas (54Mtoe).

It’s also notable to see how unusual last year’s reduction in coal use really is, when set against 50 years of variation across all energy sources. Only the 2008 financial crisis (for all fossil fuels) and the 1979 Iranian revolution (for oil) have precipitated similarly large annual declines of an energy source.

Year-on-year changes in primary energy supplies from different sources (Mtoe). Source: BP statistical review. Chart by Carbon Brief.

Conclusion

This year’s BP review shows, as was the case last year, that energy-related CO2 emissions stalled at the global level. This must go much further, with serious cuts in CO2 output, if the world is to achieve the Paris goal of keeping warming “well below 2C” and aiming for no more than 1.5C of warming this century.

Nevertheless, this year’s data reveals some promising developments, particularly in relation to falling coal use.