Global 2021 Coal-Fired Electricity Generation Surges –

Global 2021 Coal-Fired Electricity Generation Surges

In response to the increasing price of natural gas, coal prices have surged. Front-month coal and gas prices have reached 13-year highs. Meanwhile, hard coal prices have doubled in the past two years. By July 2021, the price of coal in the API 2 index will reach 160 USD/tonne. As a result, coal-fired generators will have to pay higher prices to meet demand.

The underlying cause for this growth is China’s over-reliance on coal. Official messaging on energy security surged in Q4 2021. In response, new approvals for coal power increased – and continued through Q1 2022. So, while China’s transition away from coal is stalled, the coal industry is moving forward full-steam. Unfortunately, the coal industry’s progress is frustrating for both its climate and its energy future.

The rapid economic recovery in the EU has also boosted coal-fired electricity generation. However, higher gas prices have offset the increased demand in many regions. As a result, many countries have opted to indigenize their energy supply and reduce their reliance on imported gas. Meanwhile, governments in Europe are encouraging coal-fired generators to remain in service and prepare for the likely interruption of gas supply in winter 2022/23.

As a result of the economic recovery, the amount of coal used in power production is forecast to hit a new record this year. As coal prices rose, the global demand for coal grew 6% compared to 2020. But the growth was still lower than in the previous year. Moreover, gas prices rose in the second half of 2021, which led to a significant increase in coal consumption.

However, this was not due to an increase in coal production, as the price of natural gas increased, and there was no backstop in place to stop the rebound. But, this result does not bode well for President Biden’s 2030 climate goal. Biden set a deadline of 2030 to reduce US fossil fuel emissions by half from their 2005 levels. But, experts agree that this will not be achieved at current economic growth rates, and policy changes are needed to achieve that goal.

Renewable primary energy sources accounted for 15.6% of global power generation in 2021, a 15% annual growth rate. While nuclear and solar power increased, coal-fired electricity generation remained the dominant fuel in 2021. The global share of coal-fired electricity production rose to 36%, up from 35.1% in 2020. Similarly, the share of natural gas in power generation decreased from 23.7% in 2020 to 22.9%.

Despite the fact that coal will still have a role in Asia’s power generation mix in 2050, it is important to understand how each country plans to transition away from coal. Currently, most countries in Asia are trying to reduce new coal capacity while simultaneously accelerating the retirement of their existing fleets. Currently, the most common method for meeting climate goals is to accelerate coal fleet retirement.

About the Author: Christian Williams

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