Coal use is on the rise despite lower carbon emissions

Fossil fuels and subsidies have taken center stage this week with news that coal use is surging.   

Many political leaders and pressure groups have been touting cleaner energy sources as part of a post-pandemic green recovery.   

But demand for coal — the single largest source of global CO2 emissions — plummeted in the first quarter of 2020 as the COVID-19 pandemic closed businesses and many people stayed at home.  

The International Energy Agency (IEA) reports that by the end of 2020, coal demand had surged above pre-COVID levels. Coal use in the fourth quarter was 3.5% higher than in the same period in 2019.  

Asia drove the resurgence due to a cold December and economies rebounding quickly following lockdowns.  

Coal use up but carbon emissions down 

The increased coal use gets lost among global emission statistics for 2020. The Global Carbon Project estimates the world’s carbon dioxide emissions fell a record-breaking 7% to 34 billion tons in 2020.  

Recent renewable energy success and investment has been lauded recently. Renewable energy sources may account for 95% of the net increase in global power capacity through 2025. That said, challenges remain — like coal’s resurgence — to reach Paris Agreement targets. Participating countries have agreed to limit global temperature rises to 1.5°C by 2050 by cutting greenhouse gas emissions.   

Meanwhile, global energy demands have increased by almost 50% in the last two decades. In 2019, renewables supplied 15.7% of energy demand while fossil fuels contributed 84.3%. 

Moving from fossil fuel subsidies to emissions taxes 

The spotlight on fossil fuels has become even brighter this week. It emerged that 77 fossil fuel companies in the United States took billions in tax breaks yet laid off more than 58,000 workers since the onset of the COVID-19 pandemic.  

The 77 firms work in oil, gas, or coal extraction in the U.S. They received around $8.2 billion thanks to tax-code changes from a major pandemic stimulus bill passed by Congress last year.  

President Joe Biden recently announced more than $2 trillion funding in his American Jobs Plan. Within it, he proposes to “eliminate tax preferences for fossil fuels, and make sure polluting industries pay for environmental cleanup.”   

The American Jobs Plan also notes that the current tax regime “contains billions in subsidies, loopholes, and special foreign tax credits” for the fossil fuel industry. President Biden has committed to a net-zero emission United States by 2050 and claims his tax reform proposal will “eliminate all these special preferences.” 

Plans underway for carbon taxes to net-zero emissions   

Last week, a bill was presented to establish a carbon pricing system, ostensibly flipping potential subsidies to an emissions tax.   

Emitters would be charged $15 per metric ton of carbon dioxide produced, with the price increasing $10 every year. The measure’s sponsors claim it would reduce U.S. carbon pollution by as much as 45% by 2030 and achieve net-zero by 2050.   

The move even has the backing of the American Petroleum Institute (API). Mike Sommers, API president and CEO, has stated: “We urge lawmakers to support market-based policies that foster innovation, including carbon pricing.” 

A mix of policy and energy can help combat climate change   

Coal’s resurgence is a timely reminder that fossil fuels continue to dominate the global energy supply. Any increase in use has significant implications for carbon emissions and climate change.   

Energy demand is likely to increase as the world recovers from the pandemic. The conversation is not only how much we grow, but how we grow. 

 

Opinion writer: Tom Shearman

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