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Coal Stays Strong Despite Efforts for Transition

by Krystal

While many reports celebrate the shift toward renewable energy, the reality tells a different story. Coal remains a dominant force in the energy sector, and this trend is unlikely to change soon.

Recently, Reuters highlighted that India’s coal power generation dropped for the second consecutive month in September. This decline was attributed to increased solar energy production and reduced electricity demand. However, this decline in generation coincided with a significant rise in India’s coking coal imports, reaching a six-year high in the first half of the current fiscal year.

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In neighboring China, coal continues to be the primary source of energy, even as the country leads the world in wind and solar capacity development. Current production and demand figures indicate an increase in coal usage, which accounts for 60% of China’s power generation. This dominance shows no signs of diminishing in the near future.

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Both India and China have made it clear that they do not plan to follow the UK’s lead in shutting down coal power plants anytime soon. Both nations prioritize energy supply security and affordability over reducing emissions, even as they work to diversify their energy sources. Ironically, coal power supports the energy transition by providing affordable energy for manufacturers of wind and solar components, as well as electric vehicles (EVs). Furthermore, the rising demand for electricity from data centers may boost coal demand in regions where natural gas is not as economically viable.

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The International Energy Agency (IEA) recently released its World Energy Outlook, praising the energy transition and predicting that future energy demand will be met entirely by wind and solar energy. The IEA reported that the combined capacity of these sources would increase from 4,250 gigawatts (GW) today to nearly 10,000 GW by 2030. This increase, they suggest, will be enough to meet the growth in global electricity demand and lead to a decline in coal-fired generation.

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However, the IEA’s full report reveals a more complex picture. It states that, at least until 2030, coal demand is not expected to decline, contradicting its earlier projections. The agency has revised its coal demand outlook upward for the next decade due to updated electricity demand projections from China and India. Total coal demand is now expected to be 300 million tonnes of coal equivalent higher in 2030 than previously predicted. Although the IEA anticipates an average annual decline of 2% in coal demand through 2050, this represents a significant acknowledgment of a miscalculation regarding coal’s future.

The IEA is recognizing that its previous assumptions about coal’s decline were incorrect. While it concludes this year’s report on a positive note regarding the energy transition, it may have to revise its forecasts again next year. Countries outside of Europe and the Anglosphere are not reducing their reliance on coal, particularly to continue supplying the components needed for the electrification efforts of these regions. As Bloomberg’s Javier Blas noted, the energy transition is heavily reliant on coal.

It has become evident that the anticipated electrification of all sectors would rely on increasing wind and solar capacity, which would need to provide energy when demand is high. However, China has realized that this will not always be feasible. While building extensive solar and wind farms, it has also invested in coal power plants. India is currently following a similar path, focusing on meeting the energy demands of its economy and citizens rather than solely addressing carbon emissions.

Meanwhile, the UK is facing potential blackouts after shutting down its last coal power plant, which significantly reduced its baseload capacity. Billions are being allocated to invest in energy storage solutions like batteries and flywheels for wind and solar installations. However, the UK government, like its European counterparts, has yet to grasp that these systems cannot function without reliable baseload capacity. The need for energy stability highlights a critical lesson that both China and India have already embraced.

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