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BP: Coal fills rising share of global energy demand

06.16.2014  | 

The findings from BP's annual review could be another indication that consumers are prioritizing cheap fuels over efforts to rein in greenhouse gas emissions blamed for global warming.

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By NIDAA BAKHSH
Bloomberg

Coal dominated world energy markets last year by supplying the biggest share of demand since 1970, making it the fastest growing fossil fuel, according to an annual review by BP.

Consumption grew 3% last year, driven by coal use in developing nations, according to a statement today from Europe’s third-largest oil company. Use of renewables such as solar and wind also reached a record, accounting for 2.7% of all energy demand.

The findings are another indication that consumers are prioritizing cheap fuels over efforts to rein in greenhouse gas emissions blamed for global warming. Coal is the dirtiest fossil fuel, and use of it expanded at utilities from China to Germany.

Europe is increasing its carbon emissions because it’s using too much coal because it’s cheap,” Royal Dutch Shell chief financial officer Simon Henry said in an interview.

Coal’s share of global energy use reached 30.1%, just below the 32.9% share for crude oil, which lost market share for a 14th consecutive year. China was the world’s biggest coal consumer, followed by the US and India.

China’s Coal

In China, coal accounted for 67.5% of the total energy demand, the lowest on record because of new measures to combat pollution. Carbon dioxide emissions from fossil fuels use grew by 4.2%, or 358 metric tons, the slowest in five years, the report showed.

“The big story in coal markets is China,” Christof Ruehl, BP’s chief economist, said at a presentation in Moscow. “New policies to combat local pollution by shutting down coal- intensive production and encouraging coal substitution may have played a part” in cutting the fuel’s dominance to the lowest on record.

Natural gas consumption rose 1.4%, below the historical average of 2.6%, to account for 23.7% of world primary energy use. Gas demand growth was below average everywhere but North America, where hydraulic fracturing technology opened new supplies.

That so-called fracking technique also helped boost oil supply in the US, which had record output, a trend that will continue this year, Ruehl said.

Oil Supply

Disruptions in oil-producing nations such as Libya, Sudan and Nigeria were offset by the increase in US production from shale and other “tight” geological formations where supplies are difficult to extract with traditional techniques.

“This underlines the importance of continuing to secure these new supplies through continued access to new resources, policies to encourage markets and investment, and the application of new technologies worldwide,” BP's CEO Bob Dudley said in the statement.

Worldwide, energy consumption rose 2.3% in 2013, faster than the 1.8% pace of the year before but below the 10-year average of 2.5%, BP said. Emerging economies accounted for 80% of demand growth.

China’s energy consumption rose by 4.7%, below the 10-year average of 8.6%, BP said.



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Richard W. Goodwin
06.18.2014

Recent Foresight Energy IPO and Dunkirk Dual-firing of Natural Gas/Coal suggests that Coal as a Base Load Fuel Source remains viable

Please refer to The Wall Street Journal’s “Foresight Energy IPO: Gold in Coal?” {J.W. Miller, June 18, 2014). Foresight has raised $350 million for an Initial Public Offering [IPO] in expectation of the lower cost associated with mining its IL basin coal i.e. one-third cost of Appalachian coal. Although IL coal has three times more Sulfur the use of FGD systems offers a more economic approach on a levelized basis. IL Basin coal production is expected to increase from 102 MT [2013] to 185 MT by 2020.

Dual Firing Capability Satisfied Carbon Limitations and Economics

The Dunkirk plant conversion will have capability to generated 435 MW using either Natural Gas or Coal. For the immediate future, this conversion address the USEPA proposed Carbon Emission Limitations. In the longer term, should Natural Gas prices exceed $6/MMBTU (i.e. tipping point for firing using coal rather than Natural Gas), Dunkirk’s generation cost or customer cost should become excessive – circa 2008 with exceeding high electrical costs.

The EIA suggests a USA coal usage of about 35% by end of this decade. So given the short term cost of coal vs. natural gas less coal will be used. But as the 60 GW of coal plants are retired and a majority are converted to natural gas plus exportation of LNG to cost of natural gas will increase. Coal usage will remain are stable component of USA energy mix.

Richard W. Goodwin West Palm Beach FL 6/18/14

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