China and India fuel record high coal prices despite falling US and EU usage
Coal prices climbed to record levels last year driven by rising demand across Asia, according to a new report on global energy trends.
The Energy Institute (EI)’s latest annual survey showed consumption of the world’s most polluting energy source increased four per cent year-on-year in India and one per cent in China, enough to ramp up global production seven per cent over the course of 2022.
Overall, generation soared to a record high of 175 extrajoules (EJ), with 95 per cent of the demand growth coming from China, India and Indonesia.
This caused prices to spike on the spot markets at $294 per tonne in Europe and $225 per tonne in Japan – rising 145 per cent and 45 per cent over 2021 respectively.
While coal consumption declined across Europe (3.1 per cent) and North America (6.8 per cent), this was insufficient to stave off a seven per cent hike in overall production worldwide.
By contrast, renewables met just 7.5 per cent of the world’s energy demand last year – with the growth rate slowing to 14 per cent, compared to a 16 per cent boost in 2021.
The authors of the report – which is published in partnership with KMPG and consultancy Kearney – are now warning more needs to be done for the world to meet its climate goals.
“Despite record growth in renewables, the share of world energy still coming from fossil fuels remains stubbornly stuck at 82 per cent, which should act as a clarion call for governments to inject more urgency into the energy transition,” said Simon Virley, vice chair and head of energy and natural resources of KPMG UK.
EI President Juliet Davenport added: “We are still heading in the opposite direction to that required by the Paris Agreement.”
Coal’s resurgence reflected continued robust demand for fossil fuels – including oil and gas -which make up 82 per cent of the world’s total energy consumption in 2022.
This was in line with the year before, and caused greenhouse gas emissions to rise 0.8 per cent – with overall energy consumption rising 1.1 per cent on the year before.
Europe has sought to bolster renewable generation and slash its dependence on Russian gas following the country’s invasion of Ukraine, which caused gas prices to skyrocket to record highs.
However, some countries including Germany have also turned to coal to reduce its gas reliance, while others such as India have spotted an opportunity for discounted fossil fuels amid European sanctions on Russia.
Meanwhile, China plays a leading role in both fossil fuel consumption and renewables installations – reflecting its influential role in global energy markets.
Looking ahead, the Climate Change Committee is set to publish its progress report later this week which will reveal energy trends across the UK – and whether the government is on course to reach its net zero goals.