International Energy Agency wrong to forecast coal’s demise

Environmentalists would have us believe that coal is a dying energy source. But, thankfully for Australia which still gets almost half of its electricity from coal and ships hundreds of millions of tonnes of this black gold around the world, that is not even remotely true. The Kobeissi Letter, an industry-leading commentary on global capital markets, writes that the world is burning more coal now than ever, reaching a record 8.85 billion metric tonnes annual consumption by the end of 2025. Since 2020, annual coal consumption has increased by 1.40 billion tonnes.

Most of this has come from China, of course, which makes up about 55% of global coal consumption (the US makes up about 5% of global consumption). Although the International Energy Agency (IEA) predicts a decline in demand over the next five years, The Kobeissi Letter more realistically predicts that demand will continue to rise, and points out that "past forecasts of peak coal demand have repeatedly proven wrong."

The following graph is available on the IEA's website, illustrating coal consumption (in metric tonnes, Mt) from 2000 to 2022, with estimates for 2024 to 2026, which seem improbable.

Regardless, they write that increased demand for renewables is the primary cause for the estimated decline in coal consumption, and that "Global coal demand is expected to effectively plateau over the coming years, showing a very gradual decline through to 2030." However, they also write that coal use is expected to increase in India by about 3% per year and in Southeast Asia by about 4% per year up to 2030.

In reality, we can't expect China to slow its coal production anytime soon. Currently consuming about 3 billion tonnes annually, they will clearly dominate global trends in coal consumption in the years to come. Although the IEA also expects a slow decline in coal consumption in China over the next five years, with the gradual but marked decline of climate change alarmism worldwide and China's ambition to expand its economy, this prediction doesn't seem to hold much credibility either.

As The Kobeissi Letter writes, coal remains in high demand, and the pipe dream of climate activists to kill coal doesn't account for the security and convenience this energy supply affords us. Like nuclear electricity, another power source that is vital to providing electricity for large portions of the world, the fuel for coal-fired power generation can be stored right on a power plant's site for long periods of time, providing stable energy for society. We especially need coal during deep freezes because natural gas can falter in extreme cold due to "just-in-time" pipeline delivery. Gas flows can slow or freeze entirely, as seen in Winter Storms Uri (2021) and Elliott (2022), leaving grids vulnerable. And, not surprisingly, in each of these storms, wind and solar delivered very little, and sometimes no power at all, causing millions to lose electricity and causing hundreds of deaths from the cold.

CO₂ Coalition energy expert Dick Storm says that "coal is indispensable" and that it is "the lowest cost proven source of primary energy for electricity generation ever in history." The Canadian province of Ontario, where I live, proved this case well. In 2002, coal provided about 25% of the province's power, and we enjoyed very low electricity rates. But then Premier Dalton McGuinty held a news conference and, pointing to the pile of coal beside him, said that this was "old technology" and that, to save the climate and protect the air, Ontario would phase out all coal-fired electricity generation. This made no sense, of course:

1 – Coal is not a technology. It is a resource, and the degree to which it causes pollution when burned depends on the technology used to burn it. Reducing carbon dioxide emissions from a coal plant is unquestionably costly, difficult, and of course, unnecessary. Reducing real pollution is often well-worth the price and far easier to accomplish with a coal station by using the latest pollution control technology.

2 – Seen in a world context, Ontario's emissions are trivial – one-quarter of Canada's 1.6% of global emissions. So, no matter what one believes about the causes of climate change, McGuinty's announcement and the province's painful reduction to 0% coal-fired power were merely virtue signalling and showmanship. It had no impact on climate whatsoever.

It did, however, have a huge impact on consumer electricity rates, which, depending on the year, doubled or even tripled as coal was replaced with more expensive power, including a massive expansion of industrial wind turbines. Of course, soaring power rates are politically problematic, so the government decided to hide the increase in the tax base, and today's rates are merely 50% higher than those in 2002. But we all eventually pay for this massive increase, just not directly on our power bill.