– (The Hill, December 22) – Oil prices are falling, OPEC is in shambles, and the latest round of climate-change talks (the ones in Lima) once again failed to achieve much of anything.
But for all the headlines about oil prices and climate change, the most important energy story — indeed, the energy story of the last four decades – has been the growth in global coal demand. Last Monday, the day after the climate talks in Peru concluded, the International Energy Agency released its annual report on the coal market. Their findings: global coal prices are falling and coal demand is rising.
Since 1973, no other form of energy has grown faster than coal. And the IEA expects that coal demand will continue growing through 2019 by more than 2 percent per year. Perhaps even more astounding is the IEA’s projection that by 2019 or so, on a BTU basis, global coal use will exceed global oil use. To put that in perspective, the last time coal use exceeded oil use here in the United States, Harry Truman was in the White House.
The head of the IEA, Maria van der Hoeven, summarized the agency’s new report by saying “Coal is here to stay for decades to come. Some people don’t like this. But it’s the truth.”
Of course, the vast majority of new coal demand is coming from China and other developing countries. China alone now accounts for more than half of all global coal consumption. In India, where more than 300 million people still lack access to electricity, the IEA is projecting that coal demand will grow by 5 percent per year through 2019. The Paris-based agency expects that India will soon surpass the US to become the world’s second-largest coal consumer.
Demand for coal is also growing in rich countries. The IEA points to new coal-fired capacity coming online in Korea, Japan, and Germany as examples of this trend. The resilience of coal can even be seen here in the US, where environmental groups and the Obama administration have been waging war (with more than a little success) on the coal industry.
No new coal-fired power plants are being built in the US. And it’s unlikely that any will be built in the foreseeable future. Furthermore, it’s obvious that solar energy is growing like kudzu. In 2013 alone, domestic solar-energy capacity nearly doubled and now stands at more than 12 gigawatts. But coal use continues to dwarf the political-energy darlings of the moment.
That can be seen by looking at the latest numbers from the BP Statistical Review of World Energy. In 2013, solar provided about 42,000 barrels of oil equivalent per day to the US economy. For comparison, last year, domestic coal use grew by about 380,000 barrels of oil equivalent per day.
Thus, just the increase in coal use — in a country that is supposed to be going beyond coal — was equal to nine times the contribution of every solar installation in the U.S. combined, including the 3,200 watts of solar panels that sit on the roof of my garage in Austin, Texas.
Why is coal demand growing? The answer is simple: the countries of the world need cheap electricity and coal is the perfect fuel for producing that power. Coal is here to stay because from South Africa to Pakistan, politicians and investors understand that coal can provide the vast quantities of electricity their people need at prices they can afford. And if there’s one undeniable fact in energy economics, it’s this: More electricity use means more wealth.
For that reason alone, we should be cheering the news that coal use is rising. For it means that more people are escaping the darkness and joining the modern world.
Bryce is a senior fellow at the Manhattan Institute. His latest book, Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong, was published in May by PublicAffairs.