Coal decline spurs decarbonisation

1st November 2016

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William Willis

A reduction in coal use has boosted decarbonisation in the G20, particularly in China and the UK, according to consultancy PwC.

The consultancy’s latest annual Low Carbon Intensity Index (LCEI), which tracks the progress G20 countries have made to decarbonise their economies since 2000, revealed that China’s carbon intensity fell by 6.4% between 2014 and 2015, with most of the reduction due to declining coal consumption.

China consumes half the global output of coal, so changes that affect use in China have global significance for the coal market and emissions. In 2015, coal consumption in China fell by 1.5% or 29 million tonnes of oil equivalent (Mtoe), which compares with total UK use of 23Mtoe last year.

The fall has been the most significant factor in levelling China’s emissions and is partly the result of policies to improve air quality and power plant efficiency, PwC found. Solar power grew by 70% in 2015 in the country.

Despite the decline in coal use, China had the second highest carbon intensity in the G20, at 475 tonnes CO2 per $ million. South Africa had the highest. By contrast, the UK had the third lowest carbon intensity of the G20, at 157 tonnes CO2 per $ million, achieving a 6% reduction between 2014 and 2015.

Jonathan Grant, sustainability and climate change director at PwC, said: ‘The decarbonisation of the UK’s economy is well established now, and underlined by recent announcements on adopting the fifth carbon budget, the approval of the Hinkley C nuclear power project and confirmation of the government’s intent to ratify the Paris Agreement.’

For the second year running, the UK’s consumption of coal fell by over 20%, he added.

According to PwC, this decline is largely the result of the EU’s Large Combustion Plant Directive and the domestic policy to close all coal-fired power plants by 2025.

Coal makes up around 12.2% of the UK energy mix, the consultancy said, while generation from renewable sources has risen to 9.1%. Two years ago coal’s share of the energy mix was more than three times that of renewables, PwC noted.

It highlighted the rise of the service sector as an important factor in reducing the UK’s carbon intensity. Services now account for 80% of total UK jobs and is expected to continue growing, whereas manufacturing has declined, with output falling in 2015 after being relatively flat since early 2011.

Richard Black, director of the Energy and Climate Intelligence Unit (ECIU), said the results of the PwC index demonstrated the importance of falling coal use in decoupling economic growth from the rising greenhouse-gas emissions. ‘The success has largely come from reducing use of coal, especially in China which has taken extraordinary steps this year to clean up its act and is now erecting two wind turbines every hour. And that is very significant, because climate science is unequivocal in showing that switching away from coal is an essential first step in keeping climate change within “safe” limits,’ he said.

Overall, the world’s major economies achieved a decarbonisation rate of 2.8% rate between 2014 and 2015, exceeding the 2.5% growth of the global economy over the same period, Black added.

However, an annual decarbonisation rate of 6.5% is needed to stay within the two degree limit, PwC calculated.

Carbon intensity rose in Indonesia, Brazil, Saudi Arabia and Italy between 2014 and 2015.

Click here for an interactive graphic of PwC’s findings.


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