Forget About Peak Oil - We Aren’t Close To Peak Coal Yet

While the International Energy Agency continues to argue with OPEC on the topic of when the world will reach peak demand for crude oil, the question of when, if ever, the global community will achieve peak coal demand continues to plague efforts to reach the goal of net-zero carbon emissions by 2050, or frankly by any other date.

The world’s two most populated nations, China and India, remain the main stumbling blocks for the central planners of this heavily subsidized energy transition. While western nations like Germany and Britain feverishly work to decarbonize and deindustrialize their economies, destroying economic growth in the process, China, and to a lesser extent, India, continue using rising amounts of coal to power the growth of their own economic engines.

In its annual global survey of coal usage published this month, the Global Energy Monitor finds that worldwide operating capacity for coal rose by 2% last year, led by China’s domestic growth. China accounted for fully 2/3rds of the 69.5 gigawatts (GW) of global coal-fired power generation capacity growth during 2023. And, despite its pledges to focus on reducing its carbon emissions, the Xi Jinping government appears set to exceed the 48.4 GW expansion during 2023 over the course of 2024.

For its own part, India added 5.5 GW of new coal-fired power plants during 2023, despite continuing pledges from Prime Minister Narendra Modi to meet his country’s own stated emissions targets. The Economic Times of India reports that, despite the massive investments India has made in adding new wind and solar fleets to its generating capacity, the power sector has been unable to keep up with the country’s rapid economic growth and the energy demands it requires. India’s consumption of energy rose at a faster pace than any other nation during 2023.

As the two Asian powerhouses continued to exploit the use of cheap, plentiful coal to power their growing economies, global retirements of coal capacity dropped to the lowest level since 2010, with just 21.1 GW retired during 2023. The US led the way, retiring 9.7 GW during 2023, but that number was well down from the 14.3 GW it retired in 2022, and the record high of 21.5 it retired in 2015. The UK led the decarbonization march in Europe, retiring 3.1 GW, far more than the entire European Union combined managed to achieve. That is not surprising given that Germany had to resort to restarting several mothballed coal plants to keep the lights on as its wind industry continued its long record of failure to live up to its promises.

Flora Champenois, GEM Coal Program Director, says the rapid expansion of the global coal fleet during 2023 was an “anomaly,” claiming that “all signs point to reversing course from this accelerated expansion.”

But China doesn’t appear to have gotten that particular memo. Reuters reported April 9 that China’s coal imports during the 1st quarter of 2024 rose to 97.43 million metric tons, up a healthy 16.9% from the same period in 2023. Reuters says that “the consensus of forecasts is for arrivals this year to be in a range between 450 and 500 million tons,” compared to China’s 2023 imports of 474.42 million tons. But a continued rise of 16.9% throughout the full year would bring that country’s imports to a far more robust 554 million tons. Given that China currently has over 70 GW of additional new coal power plants in the construction phase, there seems little real prospect for the country’s coal demands slowing anytime soon.

The Bottom Line

At the same time these reports of rising coal usage by China and India were making news, Texas power grid managers at ERCOT announced on April 15 their concerns they could run short of generation capacity this week, during one of the mildest weather months of the year. Texas has been a national leader in retirements of coal-fired power plants in recent years, with power generators attempting to replace them mainly with intermittent solar capacity. This trend, of course, follows the national mindset of prioritizing emissions targets over energy security needs.

In case some still have not noticed, leaders in China and India are not following that program direction. Both of these rising Asian powers continue to be rational actors in the energy space, prioritizing energy security needs over all other considerations. It is frankly irrational for western and global leaders to expect leaders in developing nations to behave in any other way.

What it all likely means is that, until truly viable, scalable, and affordable alternatives to coal come to fruition, there is no real reason to expect the world to achieve “peak coal” anytime soon.