In-depth: New BP data shows emissions flat in 2016 with record rise in renewables

§ Record renewables

Non-hydro renewable energy sources, such as wind and solar, had a record year in 2016, adding 53Mtoe. They were the fastest-growing source of energy, up 14%, in line with average growth of 16% per year over the decade to 2015. Together with nuclear and hydro, low carbon energy supplied more than half of the net increase in global energy demand between 2015 and 2016.

Global energy demand grew 171Mtoe (1.0%), with 87% of this growth coming from developing countries. Oil (up 77Mtoe, 1.8%) and gas (57Mtoe, 1.8%) met the largest portions of this increase.

It’s worth noting that the 1.7% increase in developing country energy demand last year was well below the 3.7% average of the decade to 2015. China was notable for its slow growth of 1.3%, just one-quarter of its decade-long average.

The continuing decline in global coal demand, down 53Mtoe (1.4%) last year and 105Mtoe (2.7%) the year before was picked up by much of the media coverage of the new BP data and is worth exploring in more detail, see below.

§ Demand growth

Despite the rapid growth of renewables, described in a recent Financial Times headline as “unstoppable”, clean energy sources continue to lag well behind fossil fuels (see chart, below).

As the chart shows, however, non-hydro renewables are now approaching the energy output of global nuclear power. At recent rates of growth of 16% per year, these renewable sources would outpace the current output from nuclear by 2019, hydro by 2022 and gas by 2030.

Along with the fall in coal use seen since 2014, renewable growth means fossil fuels’ share of the mix is at a record low of 85.5%, down half a percentage point since last year. This trend away from fossil fuels is accelerating, having been on hold during the 2000s as China’s coal use exploded.

Taking a longer-term perspective, a half century ago, fossil fuels met 94% of global energy demand. Even at the current, more rapid rate of change, they could still be supplying the majority of the world’s energy needs for decades to come – a point made repeatedly in energy outlooks from BP, Shell and the International Energy Agency (IEA), among others.

On the other hand, these outlooks have consistently underestimated the rate of growth of renewables and the decline of coal, with BP, for example, being “surprise[d]” six years running. In its latest energy outlook, BP saw global coal use peaking around 2025-2030, whereas the recent trend suggests a peak could have been reached already in 2014.

The IEA has also come under heavy criticism for continuing to assume linear renewables growth (a steady increase in absolute terms each year), even though the trend has been exponential (a steady increase in percentage terms). This trend is clear in the chart, below.

Energy from non-hydro renewables increased by 14% on a global basis in 2016, with notable outliers including China (up 33%), India (up 29%) and Japan (27%). There was also strong growth in some African countries, including Egypt (36%) and South Africa (26%).

Globally, as for overall energy use, the strongest demand was in developing (non-OECD) nations, where renewables grew 27% between 2015 and 2016. In wealthier OECD nations, renewables grew by 8%, with the US up 17% and the EU up just 0.5%.

§ Decisive decline

The most striking change in fortunes in recent years has been for global coal demand, which fell by 53Mtoe (1.4%) in 2016, marking a second consecutive year of decline. However, this fall, while significant, was only around half the 105Mtoe fall recorded last year, suggesting a rebound in demand is possible.

(It’s worth noting that BP has revised its estimate for the fall in global coal use in 2015, raising it from the 71Mtoe reported at the time. This revision includes larger declines in coal use for China and the US.)

China’s coal use has now fallen for three years running, leaving it down 88Mtoe (4.1%) from a peak in 2013. This peak in Chinese coal use has been the primary driver of declines in global coal use, and also CO2 emissions. It has raised hopes that China can step up its role in tackling climate change, as the US under Donald Trump steps away from the global stage.

As ever, however, it’s worth noting the complexities and uncertainties around Chinese coal data. Earlier this year, Carbon Brief published an in-depth guest article describing what has been going on in the country, which concluded: “Uncertainty is high and the longer-term trend is still unclear”

Along with China, there were also significant falls in coal use in the US (down 33Mtoe, 8.7%) and the EU (down 23Mtoe, also 8.7%). In both cases, this decline was linked to coal-to-gas switching and an increase in renewable energy output.

In the US, where president Donald Trump has promised to revive the fortunes of coal, it’s worth noting that demand is down by two-fifths in the past decade. Recent analysis suggests this trend is unlikely to be reversed, regardless of Trump’s efforts.

India, now the world’s second-largest coal consumer after China, continues to increase demand, up 15Mtoe (3.9%) last year. Its planned new coal plants could single-handedly jeopardise the 1.5C warming limit, though doubts are gathering over how many of the planned plants will be built.

In analysis published alongside the figures, Spencer Dale, BP chief economist writes:

“The fortunes of coal appear to have taken a decisive break from the past. This shift largely reflects structural factors: the increasing availability and competitiveness of natural gas and renewables, combined with government and societal pressure to shift towards cleaner, lower carbon fuels.”

§ Supply and demand

One intriguing dynamic last year was the divergence between coal production and use. The BP figures show production fell by a record 231Mtoe (5.9%), whereas demand fell by only 53Mtoe. This split drove a huge rally in coal prices, with supply and demand out of balance.

Coal production saw the largest year-on-year declines on record for both China (down 140Mtoe, 7.7%) and the US (84Mtoe, 18.8%). The US fall is particularly striking, given Trump’s promises to the industry.

US coal output in 2016 was the lowest ever recorded by BP, in figures going back 35 years. The decline slowed through 2016, however, having been down 26% in the first half of the year, as operators responded to rising prices. Output is expected to increase slightly this year.

The decrease in China’s coal production from 2015 to 2016 was nearly four times larger than the decrease from 2014 to 2015. Both production and consumption of coal in China are now back below 2011 levels.

The fall in Chinese production was driven by restrictions on coal mining operations, limited to 276 days per year last spring before being eased later in the year. It is also conducting a war on pollution, forcing hundreds of steel and coal companies to close or reduce output.

§ Flat emissions

The record year for renewables, coupled with a second year of declines for coal, saw global CO2 emissions remain flat for the third year in a row, the BP figures show, increasing by just 0.1%. This confirms independent analyses published by the Global Carbon Project and the IEA.

This emissions flatline follows a decade of increases at an average rate of 2.5% per year. According to BP, the break in this trend can be traced back to China and reflects a combination of long-term structural change and short-term cyclical factors. Again, it’s worth looking back on Carbon Brief’s recent in-depth guest article on China.

In Asia, CO2 emissions continued to fall in China (down 41 million tonnes of CO2, MtCO2, 0.7%) and Japan (down 15MtCO2, 1.5%). These falls were slightly outweighed by increases in many other Asian countries, notably Indonesia (up 39MtCO2, 7.6%), India (114MtCO2, 5%) and Pakistan (up 16MtCO2, 8.5%).

In the US, emissions fell by 95MtCO2 (3.7%) whereas in the EU, they were up 8MtCO2 (0.2%). (Note that the European Environment Agency estimates that EU emissions fell slightly in 2016, by 0.4%. Either way, power sector emissions fell due to switching from coal to gas, while emissions from transport and heating increased slightly).

Given recent boasts from US secretary of state Rex Tillerson, it’s worth taking a longer-term view on these emissions, however, with the US 3.7% above 1990 levels and the EU 19.6% below. Over the past 10 years, the EU has cut its emissions by 19% against just 11% for the US.

§ Conclusion

The latest BP figures reveal another remarkable year for global energy in 2016, with a “decisive” turn away from coal and another record for renewables keeping CO2 emissions flat. There was also a record decline in global coal production, driven by low prices globally and then mining controls in China, which saw coal markets rally.

Clean energy supplied more than half of the increase in global demand, increasing its share of the energy mix. Nevertheless, fossil fuels still supply the lion’s share of demand, at 85.5%, down less than 10 percentage points from the 94% recorded half a century ago.

These trends illustrate the scale of the challenge if the world is to meet the goals of the Paris Agreement on climate change, which will require emissions to not just remain flat, but to fall to net-zero soon after 2050.