Jul 2

Renewables Jump Has Yet to Dent Coal

Editorial Staff
Jul 22, 2021
Image: Wolfgang Hasselmann via Unsplash

Renewable energy was last year’s feel-good story. And clean energy is going to need that momentum, because it doesn’t yet have enough muscle to take on the elephant in the room: coal.

Renewables had their best year of growth in 2020, with wind and solar in particular defying the Covid “demand shock” to record their largest energy output increases, according to BP’s latest Statistical Review of World Energy

Electricity generation from renewables (including wind, solar, bioenergy and geothermal energy) went up 358TWh last year – predominantly driven by a colossal increase (238 GW) in wind and solar capacity – 50 percent higher than that seen at any other time in history. 

Notably, China accounted for around half of this growth, due in part to changes made to Chinese subsidy and accounting practices that made renewables more attractive. Elsewhere, renewables have grown as they have become more financially viable – costs of onshore wind and solar power having decreased by approximately 40 and 50 percent, respectively, in the last five years.

So the planet’s safer and coal consumption must have fallen, right?  Wrong. It’s gone up.

The “more than doubling” in wind and solar generation over the last five years has barely dented total coal generation, according to the BP report.

There should be no rush to coronate China as the hero for its renewables contribution. The world’s largest coal consumer simultaneously increased its use of coal. Renewables growth figures simply reflect a new entrant into growing overall energy demand.

While Beijing has reduced coal’s share in the nation’s energy mix in recent years, total power consumption has risen so much that its usage has also climbed. In fact, coal remains the dominant fuel throughout the Asia-Pacific region, with Malaysia also boosting its consumption last year by 0.2 EJ.

Last year’s renewables growth trend is certainly encouraging news as the world moves towards meeting global climate targets. But to really make a difference, renewables will need to out-compete coal in the global electricity generation market. And it’s not yet clear whether this recent growth spurt will achieve that.

Even in countries where coal consumption fell drastically in 2020, we can see it already beginning to pick back up. In the U.S., for example, power plants are expected to consume 16 percent more coal this year than in 2020, and another 3 percent more in 2022, according to a recent Bloomberg report.

Global coal consumption, meanwhile, is forecast to increase by 2.6 percent in 2021 as a result of expected increases across every world region. For example, Coal India, the world’s largest producer, expects consumption to rise as industries including steel, cement and aluminium return to pre-virus levels of output. The company this month approved more than $6 billion in investments in new mines and expansions.

The unstable supply of renewable sources like wind and solar, along with inadequate current power storage solutions, mean that although renewables can do a good job meeting base demand when the wind blows and the sun shines, they don’t remove the need for peaking capacity — for which gas remains a better substitute for coal.

In other words, growing renewable energy sources won’t mean that a corresponding decrease in coal consumption will take place. Meanwhile, many are wary of cleaner but certainly not “green” natural gas as a halfway solution. 

Furthermore, there is a sunk cost problem: China has the world’s biggest fleet of coal-fired power plants, more than half of which are less than 10 years old and have several more decades of operational life left. As Bloomberg notes, it’ll hit the wallet hard for Beijing to shift to alternatives quickly.

Taking these factors into account, it is easy to see why the BP report concludes that “it will take more than just strong growth in renewable energy to remove coal from the global power sector, especially at the pace it needs to happen.” 

There really isn’t a silver bullet for climate change, or a quick way around increased costs. Coal remains a colossus of power.

That said, the growth of renewables in the pandemic year shows real determination and momentum in the green energy shift — and we’re only at the beginning.

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