Both coal-fired generation and carbon emissions hit record levels in 2021, according to the IEA
New report highlights the gulf between COP26 promises and the reality of global energy.
Coal generated more power in 2021 than at any other time in history as the energy crisis in Europe and China pushed up power prices and forced a switch back to coal generators, according to the International Energy Agency.
And that pushed up carbon emissions from the world’s electricity networks to record levels, according to the IEA, reversing the trend of the previous two years, as coal-fired generators added an extra 800 million tonnes of carbon dioxide equivalent into the atmosphere.
The latest edition of the IEA’s Electricity market report, released twice each year, says surging electricity demand is putting power systems under strain across the world as economies surge back from the coronavirus pandemic.
Exacerbated by colder than average winters in the northern hemisphere and a warmer summer, demand for electricity rose 6 per cent in 2021 – the biggest jump since 2010, when the last commodities boom was in full swing amid a recovery from the global financial crisis.
And while renewable energy sources also grew by 6 per cent in 2021, their contribution was far outstripped by the coal-fired power stations which stepped up to contribute more than half of the power needed to close the gap caused by “galloping” energy demand.
While demand for cheaper coal-fired electricity surged across most of the world, Australia largely bucked that trend, according to the IEA, with a 1 per cent growth in electricity use largely supplied by additional renewable energy sources.
Australian power networks added 1 .3 gigawatts of new wind capacity and 4.7GW of solar in 2021, with the IEA expecting similar growth in renewables over the next two years as ageing coal-fired generators – such as AGL’s Liddell plant – are retired.
Record gas prices in Europe drove a switch to coal in many countries, the IEA said – despite record-high carbon pricing – as did surging domestic gas prices in the US.
“Coal-fired generation grew by 9 per cent, serving more than half of the increase in demand and reaching a new all-time peak as high natural gas prices led to gas-to-coal switching,” the IEA said in its latest report, released on Friday.
“Gas-fired generation grew by 2 per cent, while nuclear increased by 3.5 per cent, almost reaching its 2019 levels.”
And, while the IEA noted that November’s COP26 climate summit in Glasgow led to a raft of new promised to phase out coal, its projections showed that any real reduction in coal-fired generation is still some years away.
And Australia was not immune to surging gas prices, with gas generation down 16 per cent for the year and the IEA expecting further declines of about 3 per cent each year until 2024.
“Coal-fired generation made up around 53 per cent of electricity generation in 2021. We forecast a slow decline following capacity retirements, its share falling to around 47 per cent by 2024,” the IEA report says.
“Renewable generation grew by around 18 per cent in 2021 year-on-year, and is forecast to continue growing up to 2024 following continued capacity additions.”
Executive director Fatih Biro said last year’s spikes in energy prices – particularly in Europe, China and India – were contributing to social and political tensions, with the IEA price index for wholesale power prices doubling during the year.
And, with the IEA expecting the contribution of fossil fuels to the global energy mix to decline only slowly over the next two years – from 58 per cent in 2021 to about 58 per cent by 2024 – Dr Birol said the promises made in Glasgow look increasingly difficult to realise.
“Emissions from electricity need to decline by 55 per cent by 2030 to meet our Net Zero Emissions by 2050 Scenario, but in the absence of major policy action from governments, those emissions are set to remain around the same level for the next three years,” Dr Birol said.
“Not only does this highlight how far off track we currently are from a pathway to net zero emissions by 2050, but it also underscores the massive changes needed for the electricity sector to fulfil its critical role in decarbonising the broader energy system.”