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World coal production suffers biggest drop on record, BP study says
August 21 2017, 06:41 | Irvin Gilbert
Pool via Getty Images
The report also found that coal production and consumption in the United Kingdom dropped to the lowest levels seen in nearly 200 years, and in April the United Kingdom power sector recorded its first coal-free day.
China still accounted for about half of the coal burned in the world past year, but consumption of the fuel fell 1.6 percent, according to BP's annual Statistical Review of World Energy.
"The new normal is that all of this growth is coming from developing economies", particularly China and India, BP Chief Economist Spencer Dale told reporters. "I think the big story here is coal getting squeezed".
President Donald Trump has made reviving the American coal industry a key tenet of his administration. Chinese coal production fell by 7.9% in 2016, while the price of steam coal increased by over 60%. This assumes importance, given China's aspirations to take over the mantle of global leadership in the fight against climate change following the US's withdrawal from the Paris climate agreement.
Weaker industrial growth meant China's consumption of middle distillate fuels, which include diesel, fell past year for the first time in at least a decade, BP data show.
As oil demand growth continues to outstrip production growth, global oil stocks which have plagued the market since 2014 will start falling "more materially" in the second half of this year, Dale said.
"A particularly extreme example of this long-run movement away from coal was seen in the United Kingdom, where the rise in global coal prices added to the pressure from the recent increase in the UK's carbon price floor". At the root of the recent plateau are weak energy demand growth and a cleaner energy mix thanks to the increasing share of renewable energy.
Wind, solar and and other renewable power sources grew faster than any other fuel at more than 14% in 2016, slightly below the 10-year average. But slowing demand meant that global oil production witnessed its slowest growth since 2013. With these new initiatives, world production of renewable energies is sure to skyrocket in the next few years, and it is possible that soon we will begin to see decreasing levels of Carbon emissions, as this is the third year straight there has been no global growth in emissions.
Natural gas and, to a lesser extent, renewables are replacing coal in the power sector as both become more widely available and cost-competitive. As a result, oil supply and demand came closer into balance previous year. "Any sense of trying to kill tight oil makes no sense". "At the same time markets are responding to shorter-run run factors, most notably the oversupply that has weighed on oil prices for the past three years".
"U.S. tight oil is like a Weeble: It falls off but then it bounces back up again", Dale said.