Global coal consumption remained low in 2016; as the fuel mix shifted away from coal towards lower carbon fuels.
World’s total coal consumption has fallen for the second successive year according to the BP Statistical review of World energy.
Total energy consumption increased by 1.3% Y-o-Y to 13276.3 MnT of oil equivalent in 2016. Oil provided major increment to energy consumption at 77 MnT of oil equivalent, followed by natural gas 57 MnT of oil equivalent and renewable power 53 MnT of oil equivalent.
While consumption of all the fuel sources increased during the year, Coal Consumption fell by 1.7% Y-o-Y to 3732 MnT of oil equivalent in 2016 compared with 3784.7 MnT of oil equivalent in 2015. As a result, share of coal in global energy consumption fell to 28.1%, the lowest since 2004.
Declining coal consumption was driven primarily by the United States, whose consumption was down by 8.8% Y-o-Y to 358.4 MnT of oil equivalent in 2016, and China, whose consumption decreased by 1.6% Y-o-Y, from 1913.6 MnT of oil equivalent in 2015 to 1887.6 MnT of oil equivalent in 2016.
Other significant decline was seen in UK’s coal consumption which dropped more than halved (52.5% Y-o-Y) during 2016. UK coal consumption has fallen to levels last seen at the start of the Industrial Revolution around 200 years ago. The UK power sector recorded its first ‘coal-free’ day in Apr’17.
Growth in global coal consumption was hindered by a number of factors: competitiveness from natural gas, growth in renewable source of energy combined with government pressure to shift towards cleaner, lower carbon fuels.
The impact of these factors were seen in Chinese coal market, where measures were taken to reduce coal capacity in least productive mines and to increase the improve productivity and profitability of remaining mines.
In addition, the government further constrained production by restricting coal mines to operate for a maximum of 276 days, down from 330 days.
Resulting impacts of these measures had drastic effect on Chinese coal production which fell 7.9% Y-o-Y or by 140 MnT of oil equivalent and the coal prices increase by over 60% during the year.
The rise in global coal prices further depressed global coal demand, particularly in power sector, with natural gas and renewable energy benefiting from the decline.
As a consequence, Global coal production also fell by whooping 231 MnT of oil equivalent or by 6.2% Y-o-Y in 2016.
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