Was COP21 The Final Nail in Coal’s Coffin?
Whether the climate agreement signed at the COP21 talks in Paris becomes reality or becomes stifled in national capitals worldwide, the fact remains that conference has increased awareness about the risks that stem for climate change. The shift towards cleaner sources of energy, however, have already been underway. Even before COP21, more global corporations, along with national and regional governments, have been making new commitments to use renewables and decrease greenhouse gas emissions. Here in the U.S., natural gas has become the fuel of choice for new power plants connected to the grid. China, the world’s largest coal producer and consumer, appears to be burning less coal—although some experts suggest the country is under-reporting its coal consumption.
Whether the Chinese government is fudging the data or not, however, coal is slowly on its way out—not as fast as some advocates would like, but the evidence suggests this trend is indeed occurring. At least, such an outlook is according to Cleveland-based Institute for Energy Economics and Financial Analysis (IEEFA), which suggests that China already reached peak coal in 2014.
According to the IEEFA’s latest report, in addition to other commentary, the coal industry is in “deep structural decline.” Despite the fear that accelerated demand for energy in China and India would have a debilitating effect on the world’s climate, IEEFA’s analysts insist that the world’s largest economies have already moved past peak coal. According to their data, China’s coal production has peaked in 2013 and imports have continued to decrease; India’s demand for thermal coal imports likely peaked earlier this year; and Japan’s energy struggle post-Fukushima notwithstanding, that nation’s thermal coal imports probably peaked last year as well.
In a press release issued last week, IEEFA bluntly described the global coal industry as one in demise: “declining demand, excess supply, under-utilized coal-related rail and port infrastructure, relentless cost down initiatives, excessive financial leverage, asset write-downs and unprecedented stranded assets shareholder wealth destruction.” Post-COP21, investors in the global coal industry have responded in kind—the larger coal companies have witnessed a huge hit to their stock prices and overall financial performances, anywhere from 10 to almost 40 percent.
Granted, this outlook is coming from an organization that has been quick to stand up to the American coal industry in recent years. IEEFA has opposed bailout plans for coal-fired plants in Ohio and West Virginia; has led the charge to close what it describes as aging and obsolete coal fired plants across the country; and has documented what it alleges are spikes in electricity prices in regions where new coal burning plants were launched.
For those advocates who insist that the increased deployment of clean energy projects is the best path to limiting climate change this century, the IEEFA’s gives them more ammunition--not to mention an early Christmas gift in the form of continued momentum post-Paris. Meanwhile, the increased adoption of clean energy worldwide, despite the current low costs of fossil fuels worldwide, suggests that coal is in for an even rougher year in 2016.
Image credit: Flickr (Oatsy40)
Published earlier today on Triple Pundit.