Peak coal

From The Guardian

The size of the global coal power fleet fell for the first time on record over the first six months of the year, with more generation capacity shutting than starting operation.

Global Energy Monitor, a US research and advocacy group that tracks fossil fuel development, found the closure of coal generators, mostly across Europe and in the US, outstripped stations being commissioned, largely in Asia.

China, the world’s biggest annual greenhouse gas emitter, continues to dominate coal power development, having built nearly two-thirds of the world’s operating plants and being home to almost 90% of generators under construction. It is home to half the world’s operating coal-fired electricity capacity.

But the monitor’s global coal plant tracker database found the amount of coal power commissioned in China to the end of June was more than 40% below the same stage last year – 11.4 gigawatts compared with 19.4GWs – because of the coronavirus pandemic.

While China continues to build coal, construction has ground to a near halt in India, which shut more capacity than it opened. New Delhi oversaw the commissioning of 0.9GWs of coal generation – less than half the size of Australia’s largest coal plants – while 1.2GWs were closed and more than 27GWs of proposals were cancelled.

Christine Shearer, Global Energy Monitor’s coal program director, said the global decline was due to both the economic shock of the pandemic and record retirements in the European Union after an increase in the carbon price and tightening of pollution regulation. It follows coal-fired generation falling by an estimated 3% last year.

China and India had a glut of coal-fired power capacity, with fleets running at barely half capacity before the pandemic struck. Despite this, Chinese provinces were granting permits for construction at the highest rate since 2016. In contrast, Vietnam, Bangladesh and Egypt had promised or proposed significantly scaling back construction plans and backed renewable energy and gas development.

Shearer said India had “radically reduced” the amount of coal it planned to build as the fuel struggled to compete with new solar and wind: “They don’t have anyone to sell the power to because there are cheaper alternatives.”

Analysis of Intergovernmental Panel on Climate Change scenarios suggests coal power generation will need to fall 50% below current levels by 2030 to put the world on a path to keeping global heating within 2C of pre-industrial levels. About 75% will need to shut over the decade to stay below 1.5C.

To repeat what I've said before:

1. New-build renewables are now cheaper than coal almost everywhere in the world.  In some countries the cost of new-build solar is close to the operating cost of coal.
2. Getting rid of coal is critical to meeting Paris climate goals.
3. Cutting emissions in China is vital, because it's the world's largest polluter.  We don't know what the next 5 year plan in China will be, but it will have a huge influence on the world.

It is now crystal clear that (thermal) coal demand has peaked.  And the ongoing declines in the costs of wind, solar and batteries mean that this decline will accelerate, because the gap between the cost of new-build coal and new-build renewables will go on widening.  And that is why the coal price continues to trend lower, even as the iron ore price recovers (China is a major consumer of both)