This New Decade: Era of Coal 2.0?


"Could India possibly be heading to a coal energy vs. oil energy ratio like China's, at 3.75?"

The energy source of choice in the developing world remains coal. And, as I have argued, unless the developed world undertakes energy transition now, it too will be forced back into coal as the decade progresses.

It's worth taking a look at the countries that are the top consumers of coal, which I call the Coal 7: China, USA, India, Japan, Russia, South Africa, and Germany. I like to use the BP Statistical Review for global energy data which helpfully translates all units of energy measurement—in addition to barrels, tonnes, and bcf—into mtoe or million tonnes oil equivalent. This unit, mtoe, allows us to see that China, for example, is using 3.75 times as much coal energy as oil energy. Compare that to India, whose consumption of coal energy is only 1.58 times its use of oil energy.

While both India and China were steadily growing consumers of coal in 1990s, consumption ramped pretty hard in both countries in the recent decade. Here is the latest available data for India:

China is a younger user of oil, with lots more to come. But on a proportional basis, unlike India, which I see as moving much more heavily into coal in the years ahead as its oil demand growth slows, I see China maintaining a coal to oil energy relationship not very far from its current 3.75 ratio.

Could India possibly be heading to a coal energy vs. oil energy ratio like China's, at 3.75? It seems quite likely. Not that the developing world needs extra help in building coal-fired power generation, but the world bank is helping speed up the process. As for climate change legislation, one reality that's shared by all leaders whether in the developing or the developed world is that the optimal approach politically to carbon reduction is to 1) enter into weak agreements, and then 2) not adhere. That's exactly what I expect in the next decade, as the Era of Coal 2.0 unfolds.

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