Coal-fired generation and CO2 emissions hit record high

coal plants (coal-fired generation)

Coal-fired power generation hit its highest levels in history in 2021, subsequently pushing CO2 emissions through the roof, according to the International Energy Agency.

Driven by the rapid economic rebound, and more extreme weather conditions than in 2020, including a colder than average winter, last year’s 6 per cent rise in global electricity demand was the largest in percentage terms since 2010 when the world was recovering from the global financial crisis. In absolute terms, last year’s increase of over 1,500TWh was the largest ever, according to the January 2022 edition of the IEA’s semi-annual Electricity Market Report.

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The steep increase in demand outstripped the ability of sources of electricity supply to keep pace in some major markets, with shortages of natural gas and coal leading to volatile prices, demand destruction and negative effects on power generators, retailers and end users, notably in China, Europe and India.

Around half of last year’s global growth in electricity demand took place in China, where demand grew by an estimated 10 per cent. China and India suffered from power cuts at certain points in the second half of the year because of coal shortages.

“Sharp spikes in electricity prices in recent times have been causing hardship for many households and businesses around the world and risk becoming a driver of social and political tensions,” IEA executive director Dr Fatih Birol said.

“Policy makers should be taking action now to soften the impacts on the most vulnerable and to address the underlying causes. Higher investment in low-carbon energy technologies including renewables, energy efficiency and nuclear power—alongside an expansion of robust and smart electricity grids—can help us get out of today’s difficulties.”

The IEA’s price index for major wholesale electricity markets almost doubled compared with 2020 and was up 64 per cent from the 2016-2020 average. In Europeaverage wholesale electricity prices in the fourth quarter of 2021 were more than four times their 2015-2020 average. Besides Europe, there were also sharp price increases in Japan and India, while they were more moderate in the United States where gas supplies were less perturbed.

Electricity produced from renewable sources grew by 6 per cent in 2021, but it was not enough to keep up with galloping demand. Coal-fired generation grew by 9 per cent, serving more than half of the increase in demand and reaching a new all-time peak as high natural gas prices led to gas-to-coal switching. Gas-fired generation grew by 2 per cent, while nuclear increased by 3.5 per cent, almost reaching its 2019 levels. In total, carbon dioxide (CO2) emissions from power generation rose by 7 per cent, also reaching a record high, after having declined the two previous years.

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“Emissions from electricity need to decline by 55 per cent by 2030 to meet our Net Zero Emissions by 2050 Scenario, but in the absence of major policy action from governments, those emissions are set to remain around the same level for the next three years,” Dr Birol said.

“Not only does this highlight how far off track we currently are from a pathway to net zero emissions by 2050, but it also underscores the massive changes needed for the electricity sector to fulfil its critical role in decarbonising the broader energy system.”