Dr. Nejat Tamzok
Although it was known by humankind for thousands of years, intensive use of coal emerged during the nineteenth century. By the turn of twentieth century, sixty percent of all energy consumed in the world was produced from coal. In a short span of time, it has become an indispensable input for many industries, especially for the transportation and iron and steel. It was gradually started to be used for domestic heating a lot more. The economies of today’s developed countries were almost exclusively dependent on coal until the introduction of oil.
Initially, the discovery of oil did not shake the kingdom of coal too much. However, the discovery of new oil fields in Texas and the Middle East in the 1920s, and in particular the rapid increase in the use of petroleum in the transportation sector, became the first signs of the process that will shake the throne of coal. The oil was the winner of the fierce competition between the two fossil fuels. Coal left its victory rostrum to oil from the middle of 1960s. The second strike to coal came from natural gas, once again as from 1960s. Then, the propaganda of the rising environmental movements on demanding to limit the coal consumption in the same years cut the breath of coal thoroughly.
As the result of the mentioned developments, coal’s share in the total global energy consumption dropped to 25 percent in 1970s and remained within the 24-26 percent band until 1990s. By the end of the last century, coal’s share dropped to 22 percent. When viewed from those years, it was not easy to predict that the share of coal in the global energy equation would increase in the future. The estimates made were pointing a continuous decline in the global coal consumption.
However, subsequent developments regarding the coal were quite the contrary to the expectations. All the predictions pointing out that the global coal consumption entered a period of decline crashed with the twenty-first century. Then, there was an explosion in coal production and consumption. New age almost became a “Coal Age” from the beginning until today.
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Annual global coal production navigating between 4.0 to 4.8 billion tons since 1980s and was 4.7 billion tons at the end of the last century continuously increased each year for fourteen years since 2000. It surpassed 5 billion tons in 2003, 6 billion tons two years later and reached to the level of 8 billion tons in 2013.
While global energy consumption increased by only 36 percent in the first 13 years of the new century, the increase in coal consumption was realized at a much higher level with 63 percent. In the same period, the performance of the coal’s rivals was far more behind: The growth rate in the global oil consumption was only 17 percent and the increase in global natural gas consumption was 39 percent.
In this first period of twenty-first century, the competition in the global energy wars has been between the fossil fuels as it was in the previous century, despite the intense environmentalist movements and the whole climate change debates. In 2013 fossil fuel maintained its share within the global energy consumption which was 87 percent at the beginning of the century. Despite the significant progress in the use of renewable energy sources in recent years, except hydro power, today the share of these resources in total increased to a level of 2.2 percent, while it was around 0.5 percent at the beginning of the century.
In this period, coal’s performance was much higher against its arch rivals, oil and natural gas in the race between the fossil fuels. Coal grabbed a serious chance to recapture the victory rostrum. The difference of 1.8 points between global coal and natural gas consumptions at the beginning of the century increased to 6.4 points in 2013. During this period, the share of natural gas in total consumption stagnated. The share of oil in global energy consumption in this first part of the new century fell stable and fast. The difference of 13.3 points between global oil and coal consumptions in 2000 was made up quickly and fell to 2.8 points in 2013. Meanwhile, the number of analyses pointing out that the coal consumption will surpass the oil consumption within a few years increased year after year.
Figure: Shares of energy sources in global energy consumption
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The explosion in coal consumption mainly stemmed from the energy demand of Asia, especially China to be the first. China’s coal consumption increased by 185 percent in the period between the years 2000 and 2013. In the same period the total consumption growth in Asia-Pacific region was at the level of 145 percent. While about one half of the whole coal produced in the world was consumed in Asia-Pacific region at the beginning of the century, this proportion increased to 70 percent in 2013. Today, China alone is consuming nearly one half of the whole coal.
United States’ coal consumption fell significantly during the same period. Especially “shale gas revolution” emerged after 2008 dramatically accelerated the relatively slow decline in U.S. coal consumption. United States that consumed approximately one-quarter of global coal production at the beginning of the century could consume only one-tenth in 2013.
Coal consumption of European countries also decreased significantly in the period between 2000-2013, with the exception of Italy, the Netherlands and Turkey. In this period, the total coal consumption of the member countries of the European Union declined by 11 percent. Privatization and liberalization processes in the energy markets of these countries were effective in reduction of coal consumption. However, at the end of the process, serious energy supply security problems emerged in European countries resulting from the dependency on Russian natural gas. Coal prices declining as the result of the efforts to solve the supply security problems on one hand and “shale gas” production boom in the United States in the same period on the other hand, stopped the decline in Europe’s coal consumption. Significant increases are recorded especially in coal consumptions of Germany, Spain, Portugal and UK in the last three years.
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Thus, twenty-first century showed a “Coal Age” characteristics in respect of its first 13 years. During this period, global coal consumption grew more faster compared with total energy consumption or competitor energy resources. Now the matter of curiosity is how the global energy equation will be shaped in the rest of the century. Will the rise of coal continue at the same rate? Which will be the winner of the competition between fossil fuels? And most importantly, what will be the level of competition chances of alternative or clean energy sources against the fossil fuels?
By various international organizations it is tried to find answers to these questions which are vital for the future of our earth. For example, the prediction studies which are repeated each year by the International Energy Agency and the U.S. Department of Energy are the most accepted ones on this subject. It is not possible to find clear indicators in the estimates made by these institutions showing that the global energy equation will be changed much at least until the mid-century. For example, according to the International Energy Agency’s reference scenario, the share of fossil fuels will not fall below 79 percent and the share of coal alone will not fall below 29 percent until 2035. Global coal consumption will exceed oil consumption and regain the title of being the most consumed source of energy in the world after almost 70 years. The share of renewable sources except hydraulic power will not exceed 3 percent even in 2035.
According to the U.S. Department of Energy’s prediction study dated 2013, it is estimated in the reference scenario that the demand for fossil fuels will not fall below 78 percent while global coal demand will not fall below 28 percent at least until 2040. United States Department of Energy’s estimates relating with renewable energy sources are similar to the International Energy Agency’s estimations.
When the aforementioned study is examined more closely, it is noteworthy that the estimations are revised each year in favor of coal. While it is estimated in the reference scenario studies made by these institutions at the beginning of this century that the global coal consumption will be around 20 percent level in 2030, in recent studies the predictions are approaching to 30 percent level.
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When the estimates of abovementioned two institutions are taken into consideration, it is understood that the twenty-first century will resume its “Coal Age” characteristics at least until the middle of the century. However, the estimates mentioned above are the reference scenario predictions of these organizations. The emergence of political, environmental or technological developments that can change the current energy equation is always within the bounds of possibility. Environmental factors are extremely important in this respect. It is clear that there will be a final cost of fossil fuel use. Global carbon dioxide emissions that showed 19 percent increase in the last 13 years of previous age increased as double than the level in the first 13 years of the twenty-first century during which coal consumption had peaked.
Except the environmental ones there are also other factors that may be effective on the equation. The drastic increase in global coal production especially in recent years led to a rapid decrease in economically exploitable coal reserves at the same time. Coal widely characterized as an abundant, cheap and reliable source of energy until the recent past seems to have lost these features significantly in recent years after a period of rapid consumption. As a consequence, lifetime of coal reserves decreases and costs increase. Coal is increasingly becoming a more precious and strategic raw material.
Speed and direction of the technological developments will also be effective in the energy war. The coal industry which is at the focus of the climate change debates connected its future prospects mainly to the development of gasification and carbon capture-storage technologies. In general, it can be said that there is a general consensus in the world of energy technologies that it may be possible to use these technologies on a commercial scale, but it may take quite a long time. However, it should also be mentioned that the aforementioned time will also be valid for the development of technologies related with the coal’s rival energy sources and therefore today it is difficult to predict the one that will breast the tape in final.
Coal maintained its feature to be the most fundamental energy source for a period of almost two centuries. In this process, despite the emergence of many new energy sources and although it is being intensively discussed in recent years especially because of its environmental impacts, we clearly face the reality that the humankind will not easily give up the use of coal. The signals to return to coal observed in Europe because of the increase in energy supply security problems on one hand and Southeast Asian countries’ never-ending hunger for coal, especially China and India to be the first, who do not intend to give up high economic growth rates on the other hand, will cause the mentioned energy source to be used increasingly more in the future.
It is clear that in addition to many other parameters, the coal’s future direction depends on the future developments related to its rival energy sources. However, when viewed from today, the main factors that will determine the future of coal is likely arise from the own internal dynamics of the coal industry. In this context, to make an analysis about the future of coal which played a decisive role in the world economy for about two hundred years can only be possible through the examination of a number of parameters that can be collected under the general headings such as geopolitics, environment and technology which are independent but continuously interact with each other by cause-effect relationships.
Ankara/August 2014