World’s two largest coal consumers won’t be weaning off the fossil fuel anytime soon

China
and
India’s
growing
economies
will
continue
to
fuel
demand
for
coal
even
as
they
set
ambitious
renewable
energy
targets,
according
to
experts.

While
China

is
the
world’s
largest
energy
consumer,
India
is
ranked
third
globally,
and
both
countries
are
the
top
consumers
of
coal
as
they
strive
to
fuel
economic
growth. 

China’s
share
of
global
electricity
consumption,

60%
of
which
is
generated
by
coal,
is
set
to
jump
to
one-third
by
2025,
compared
with
a
quarter
in
2015,
according
to
projections
by

energy
watchdog
International
Energy
Agency.

India’s
rapidly
growing
economy
also
means
the
country’s
demand
for
energy
including
oil
and
natural
gas
will
be
significant,
said
managing
director
of
energy
investment
management
firm
Tortoise
Capital,
Rob
Thummel.

“If
India,
China
are
still
growing
economically
at
decent
rates
for
the
next
decade,
we’re
not
going
to
see
coal
demand
disappearing
anytime
soon,
globally,”
Ian
Roper,
commodity
strategist
at
Astris
Advisory
Japan
KK,
told
CNBC.

Global
coal
usage
in
2023

hit
a
record
high,
surpassing
8.5
billion
tons
for
the
first
time,
on
the
back
of
strong
demand
in
emerging
and
developing
countries
such
as
India
and
China,

IEA
said
in
a
recent
report. 

There
are
no
signs
of
a
slowdown,
with
the
IEA
saying
coal
consumption
in
India
and
Southeast
Asia
is
projected
to
“grow
significantly.”

India’s
coal
production
rose
to
893
million
tons
during
the
financial
year
ending
March
2023,
jumping
nearly
15%
from
a
year
earlier.
China’s
raw
coal
production

from
January
to
November
in
2023
went
up
by
2.9%
compared
with
the
same
period
in
2022.

By
contrast,
U.S.,
which
is
the
world’s
second
largest
consumer
of
coal,

has
seen
a
decrease
in
its
usage
of
the
fuel.
According
to
the
Institute
for
Energy
Economics
and
Financial
Analysis,
the
amount
of
coal
that
the
superpower
consumes
each
day
recorded
a
62%
drop
from
2.8
million
to
1.1
million
tons
a
day.

Globally,
carbon
emissions
from
fossil
fuels

reached
record
levels
last
year.
India’s
emissions
are
projected
to
have
spiked
8.2%
in
2023,
while
China’s
are
expected
to
have
climbed
4%,
according
to
the
latest
estimates
by

Global
Carbon
Budget. 

“The
bullseye
is
on
China
and
India,
because
those
two
countries
right
now
use
substantially
more
coal.
And
so
their
carbon
emissions
are
on
the
rise,
not
on
the
decline,”
Thummel
said.

The
two
countries,
however,
have
been
adopting
and
setting
aggressive
renewable
energy
targets.

India
has

set
an
aspirational
target
of
meeting
50%
of
its
electricity
demand
from
renewables
by
2030,
and
the
South
Asian
nation
has
made
some
headway
in
its
efforts,
with

renewables
accounting
for
22%
of
its
power
generation. 

That
being
said,

75%
of
India’s
power
is
derived
via
coal-fired
plants.
Inventories
at
Indian
power
plants
swelled
6%
in
2023
from
the
previous
year,
according
to
a
Citibank
research.
The
country
is
also
slated
to

add
80
gigawatts
of
coal-based
thermal
capacity
over
the
next
eight
years.

Similarly,
coal

accounts
for
61%
of
China’s
power
generation,
even
though
the
country
is

recognized
as
the
indisputable
leader
in
renewable
energy
expansion.
It
has
been
adding
new
projects
to
the
grid

almost
as
fast
as
the
rest
of
the
world
combined
in
2022
and
has

ambitions
of
becoming
carbon
neutral
by
2060.

But
the
lack
of
reliability
of
renewables
means
coal
has
still
very
much
been
a
critical
fallback
option
for
the
two
countries.

“China
was
suffering
power
shortages
a
couple
of
years
ago,
hydro[power’s]
been
very
weak
the
last
couple
of
years,
so
they’ve
had
to
revert
back
to
coal,”
Roper
pointed
out.

Last
year,
China

suffered
from
drought
for
several
months,
which
reduced
hydroelectric
power
generation
in
its
southern
provinces.
To
keep
the
lights
on
and
the
industries
going,
the
country
had
to
turn
to
coal. 

The
same
lack
of
reliability
can
be
extended
to
India’s
renewables
ecosystem.

Last
October,

coal’s
share
of
electricity
generation
rose
to
80%
compared
with
73%
in
2022
during
the
same
period,
as
lower-than-usual
monsoon
rains
curtailed
hydro
generation.

Coal
production
for
that
month
grew
over
18%
year
on
year. 

This
means
the
two
countries
will
continue
to
rely
on
coal
as
its
primary
source
of
power
generation
for
years
to
come.

“There’s
still
a
net
growth
in
India’s
coal
consumption
coming
up
for
at
least
a
decade,
and
China
as
well,”
Roper
said.