: Dirty coal powered the COVID recovery and could hold its status as natural-gas prices soar
If there was a teaching moment on combating climate change from a leaner COVID-19 economy, the lesson did not stick.
Earth-warming global carbon emissions tied to the energy sector rose by 6% in 2021 to 36.3 billion metric tons, their highest ever level, as the globe put the worst moments of the pandemic behind it, powering homes, businesses, cars and more.
Notably, much of the world powered that rebound by turning back to high-emissions fuel sources, namely coal for electricity, because of cost savings.
Combined with the methane emissions estimates that the IEA published last month and estimates of nitrous oxide and flaring-related CO2 emissions, the new analysis shows that overall greenhouse gas emissions from energy also hit a record last year.
These figures and analysis are according to a new report from energy-industry watchdog, the International Energy Agency, released Tuesday.
The numbers make it clear that the global economic recovery from the COVID-19 crisis has not been the sustainable recovery that IEA Executive Director Fatih Birol called for during the early stages of the pandemic in 2020. Other select world leaders had also urged that any COVID relief funds go to support a “greener” recovery by fostering smarter commuting habits and a more robust clean-energy and energy-efficient buildout.
The IEA famously toughened its talk on the fossil-fuel industry it largely backs in a release last year. The world must stop investing in new oil and gas wells in order to hit ambitious climate goals by 2050, the group said.
Read: As prices top $4 a gallon, should you consider an electric vehicle? One consideration: They’re more expensive to insure and repair. Here’s why.
“The world must now ensure that the global rebound in emissions in 2021 was a one-off, and that an accelerated energy transition contributes to global energy security and lower energy prices for consumers,” IEA’s Birol says.
The increase in global CO2 emissions of over 2 billion metric tons was the largest in history in absolute terms, more than offsetting the previous year’s pandemic-induced decline, the IEA analysis shows. The recovery of energy demand in 2021 was compounded by adverse weather and energy market conditions — notably the spikes in natural gas prices
Natural gas volatility left the electricity sector in search of a replacement, and it largely reverted to coal. Coal is the heavy-polluting fuel knocked out of favor first when natural gas became more abundant and cost-effective, including from U.S. shale, and later, when alternative, climate-friendly fuel sources came on line at scale. But last year, coal use was renewed in the power sector despite renewable sources
— wind, solar, nuclear and other means that can also power electricity — registering their largest ever growth collectively. Renewables alone just couldn’t match demand, the power industry says.
“‘The world must now ensure that the global rebound in emissions in 2021 was a one-off.’”
IHS Markit analysts expect coal to remain a global power source, led by Asian usage, until at least 2050, as MarketWatch’s Myra Saefong has reported.
Coal accounted for over 40% of the overall growth in global CO2 emissions in 2021, reaching an all-time high of 15.3 billion metric tons. CO2 emissions from natural gas rebounded well above their 2019 levels to 7.5 billion metric tons. But at 10.7 billion metric tons, CO2 emissions from oil
remained significantly below pre-pandemic levels because of the limited recovery in global transport activity in 2021, mainly in the aviation sector
Renewables put up their best year yet
With eyes still trained on the renewables sector, 2021 put up some respectable numbers.
Renewable energy sources and nuclear power combined provided a higher share of global electricity generation than coal in 2021. Renewables-based generation reached an all-time high, exceeding 8,000 terawatt-hours (TWh) in 2021, a record 500 TWh above its 2020 level.
Output from wind and solar PV increased by 270 TWh and 170 TWh, respectively, while hydro generation declined due to the impacts of drought, notably in the U.S. and Brazil.
And now: Russia
The use of coal for electricity generation in 2021 was intensified by record high natural gas prices, driven there after the snap back from the worst of the pandemic and as Europe shivered from the cold unexpectedly early.
Gas-to-coal switching pushed up global CO2 emissions from electricity generation by well over 100 million metric tons, notably in the U.S. and Europe where competition between gas and coal power plants is tightest.
Read: Don’t rule out natural gas in the clean-energy transition, trade group says
And as 2022 kicks off, which the report did not cover, high natural gas prices and other rising energy costs remain top of mind.
The Russian invastion of Ukraine and subsequent impacts to piping gas and oil from the region, continues to push natural gas futures prices
up more than 70% from where they stood a year ago. President Biden on Tuesday announced the U.S. will ban Russian oil imports.
Read: Republicans urge U.S. oil and gas ‘stability’ from new drilling as answer to Russia, other security threats
Opinion: ‘Drill, baby, drill’ is back amid the energy crisis, and that puts ESG efforts on the back burner
China and India: reliant on coal
Most major nations use coal to some degree, but China and India notably pursuaded last year’s powerful Conference of Parties (COP26), part of the big U.N. climate event in Glasgow, to water down coal phaseout language.
China’s emissions are up by 750 million metric tons between 2019 and 2021, the IEA says. China was the only major economy to experience economic growth in both 2020 and 2021, during which the pandemic gripped the globe.
With electricity demand growth outstripping the increase in supply from low emissions sources, coal was used to meet more than half of the rise in electricity demand. This was despite the country also seeing its largest ever increase in renewable power output in 2021.
Read: U.S. vs. China on climate change — what investors need to know
Further, CO2 emissions in India rebounded strongly in 2021 to rise above 2019 levels, driven by growth in coal use for electricity generation. Coal-fired generation reached an all-time high in India, jumping 13% above its 2020 level. This was partly because the growth of renewables slowed to one-third of the average rate seen over the previous five years.