Coal-fired power has been dying everywhere except where it poses the greatest threat. Draw a line down the world around the longitude of the Nile. The region to the west — encompassing Europe, Africa and the Americas — has seen coal consumption drop by a quarter over the past decade. In the U.S., demand fell 43% on an energy-equivalent basis between 2009 and 2019, according to BP Plc’s latest statistical review of energy. In Europe, it slipped 23%. The U.K., cradle of the coal-fired industrial revolution, saw a 79% decline that has left its few remaining thermal plants barely operating since spring.
The trouble is what’s happening east of the line. Consumption there rose by a quarter over the same period, and since the region already accounted for about 70% of coal demand, that has driven the global tally up by nearly 10%. If Asia — and in particular China, which accounts for about half the world’s coal consumption — can’t break the habit, devastating climate change will be unavoidable.
The Best of Times, the Worst of Times
Coal consumption has fallen by a quarter west of Cairo over the past decade. East of there, it’s risen by about the same amount
Source: BP Statistical Review
On that front, good news may finally be emerging. Beijing is lifting its energy-transition ambitions in its 14th five-year plan, running from 2021 to 2025, people familiar with the matter have told Bloomberg News. A plan to derive 20% of its primary energy from non-fossil fuels may be brought forward by five years from 2030 and the share of coal in the energy mix cut to 52% by the same date from 57.5% this year, according to the report.
Adjust the figures according to those rules of thumb, and things come more into focus. Electricity accounts for about 48% of China’s final energy mix. If 20% is going to come from non-fossil fuels, that means about 42% of China’s grid in 2025 will be renewable- or nuclear-powered, up from about 32% at present.
Sunrise
Installations of wind and solar generation in China may have to sharply accelerate under its 14th five-year plan
Source: BloombergNEF, Industrial Securities, Bloomberg Opinion calculations
Note: “Five-year plan” denotes the upper end of Industrial Securities’ estimates of required capacity build-out.
Assuming current rates of electricity demand growth of about 5% or so a year continue, that’s going to require a blistering build-out of wind, solar, nuclear and hydro-electric generation — especially the first two. At present, China has about 241 gigawatts of wind turbines, 180GW of utility-scale solar and 86GW of rooftop photovoltaic panels. The government’s target would require 80GW to 115GW of new solar to be installed every year, as well as 36GW to 45GW of wind, according to a note from Industrial Securities Co. No wonder shares of Chinese renewables companies have been surging as reports of the plans have spread.
China already has more than a third of the world’s wind and solar generation capacity. Meeting those levels of installations would almost double its installed wind base in five years, and leave solar facilities more than three times the size of the current utility-scale fleet.