Could COVID-19 kill coal?

Where coal loses, renewables gain

Could COVID-19 kill coal?

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Good morning,

This is Katherine, filling in for Eamon from London.

This morning marks the release of the International Energy Agency’s annual energy report. The impact on global oil markets has been well documented, but one of the main takeaways of the report is the extent to which coronavirus pandemic is hitting coal.

The IEA forecasts that coal demand will plunge 8% on-year in 2020, the largest drop since the Second World War, and in the share of the global energy pie, coal’s loss is increasingly renewables’ gain. While that was already a trend before the pandemic sent the world into a near-global lockdown, it looks like that shift has accelerated.

The resulting drop in energy-related emissions this year is expected to be huge: the largest absolute decline on record, far surpassing the one in the financial crisis.

But while that drop can and should be celebrated as a silver lining for the planet (and our lungs), it comes with a laundry list of qualifiers.

The first is that, while the drop in coal has happened nearly everywhere as a result of a near-shutdown of industrial activity, the largest decline has been in China—which consumes half of the world’s coal, using it for the lion’s share of its electricity. The drop in coal consumption was very sharp at the start of the year, during the country’s widespread lockdowns. As the government attempts to fire the economy back up, coal could see a quick comeback.

The drop in coal, and the rise in low-carbon energy, has also received a somewhat ironic boost: mild winter weather across much of the world reduced the demand for heating; in the U.K., sunnier skies this spring have helped produce more solar energy, knocking out coal for a record stretch earlier this week.

The IEA, and many other global institutions, are warning that a recovery from the pandemic must be as “green” as possible. The benefits of cleaner air, suddenly apparent to the residents of polluted regions and cities, seem to help make that argument—as do the emerging links between vulnerability to COVID-19 and air pollution. The increasing affordability of solar power, in particular, has helped lay out how our energy sources could switch—quickly.

The COVID-19 pandemic may not kill coal. But it could certainly hasten its demise.

More below.

Katherine Dunn
katherine.dunn@fortune.com
@katherine_dunn

Source : Fortune More