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Europe and China warned they must kick the coal habit

Industry leaders warn over the impact on climate change

Europe and China must cut their coal consumption and focus on developing natural gas and nuclear power or face catastrophic climate change, energy industry leaders warned.

Speaking in Amsterdam, Dieter Helm, a professor of energy policy at Oxford University, said rising coal consumption was Europe's dirty secret and that efforts to cut carbon emissions have had “almost no effect whatsoever”. “Any suggestion that we're seriously interested in climate change and prepared to devote considerable economic capital to (tackling it) is completely inconsistent with increasing coal burning and locking in new coal power,” Helm said. “The reality and the perception of European (energy) policies are two separate things.”

Global coal consumption, which is responsible for around 40% of total carbon dioxide (CO2) emissions, increased by over 5% year-on-year in 2011, to 3.7 billion tonnes of oil equivalent (toe), according to Cedigaz. Total global consumption of crude oil and natural gas however increased by just 0.7%, to 4.09bn toe, and 2%, to 2.9bn toe, respectively.

The European Commission wants Europe to reduce its greenhouse gas emissions by 20% from the 5.5bn tones recorded in 1990, by 2020. As part of its 20-20-20 targets, it aims to ensure that 20% of Europe's energy is derived from renewable sources and that a 20% increase in energy efficiency is achieved within the next seven years.

But despite these green intentions, Europe is now the second-fastest growing market for coal in the world. When it burns, coal emits around twice as much CO2 as natural gas. Europe consumed 499.2 toe in 2011, according to Cedigaz, up from 483.3 toe in 2010. Germany alone is expected to bring around 5,300 megawatts of new coal capacity online this year to offset its loss of nuclear power. The German government decided to shut down all of its existing nuclear capacity by 2022 following the Fukushima nuclear disaster in 2011.   

On top of this, those countries hardest hit by the financial crisis have turned to cheaper coal to meet electricity demand. Spain's coal use soared by 80%, to 5.8m tonnes in the first five months of last year, according to Barclays bank, while the UK's rose by more than a 25% year-on-year to 6.3m tonnes.

This has had a devastating effect on the continent’s carbon emissions. According to a 2012 European Commission report global CO2 emissions increased by almost 5% in 2010, to 31.8bn tonnes, and by a further 3% in 2011 reaching an all-time high of 33bn tonnes.

The five largest carbon culprits in 2011 were China, which was responsible for 29% of global emissions, the US (16%), the European Union (11%), India (6%) and the Russian Federation (5%). These were closely followed by Japan, which was responsible for 4% of global CO2 emissions.

Over the past decade, total global CO2 emissions have increased by around 2.7% a year, the report says, and that will only increase if global consumption continues at its current rate.

But it is China which is the largest global consumer of coal, and thus a major driver of global CO2 emissions. China alone was responsible for almost half of total global coal consumption in 2011. The country’s coal use has risen from 720.8m toe in 2001 to over 1.8bn toe in 2011, according to Cedigaz figures. It rose by almost 10% between 2010 and 2011 alone and China's electricity council says this figure could soar to 4.3bn tonnes by 2015.

Helm said if both China and India continue to record GDP growth at recent rates of around 9% and 6% a year respectively, between 400-600 gigawatts worth of new coal will be consumed by 2020.“That is a disaster from a climate change point of view,” Helm said. “That tells you we're doomed on the 2 degree pathway and that (the) Kyoto (protocol) isn't going to close that gap.”

Victor Gao, director of the China National Association of International Studies, said China must “pause and reflect on its energy strategy” and to focus on developing natural gas and nuclear power instead.

Coal accounts for around 70% of China’s energy consumption while natural gas is around 4%. China is also the largest coal producer in the world, producing almost 2bn toe in 2011- half the global total. China wants to increase its energy efficiency and cut carbon emissions by increasing gas production.

The Chinese government set a target to raise non-fossil fuel energy consumption to 11% of its energy mix by 2015 as part of its new 12th Five Year Plan. It is also targeting unconventional gas production of 1,060 trillion cubic feet a year by 2015.

Gao said, however, that by around 2015 only 18% of people in China will use natural gas because of vast distances between production and demand hubs and limited pipeline infrastructure.

Fatih Birol, the IEA's chief economist, said for the world to limit global warming to within a 2 degrees Celsius limit, it can only consume around two thirds of existing fossil fuel reserves. “What happens in China will not only affect the Chinese but to certain degrees, all of us,” Birol said. 

Helm said that, for Europe, part of the problem is the design of the Kyoto Protocol, which was based on targets to reduce carbon production rather than consumption. This means that technically, while a country’s carbon production could fall, it would not necessarily make any difference to global carbon emissions.

At the Doha climate talks in December 2012 a decision was reached to extend the existing Kyoto Protocol into a second commitment period covering 2013-2020 but this was not considered especially ambitious.

Only a small number of the world’s major polluting countries signed up to the original Kyoto agreement in 2005, which established the principle of carbon trading globally and expired at the end of 2012. Only part of that group signed up for Kyoto 2, including the EU, Australia, Norway and Switzerland,  and Kyoto 2 countries account for only around 15% of global carbon emissions.

Statoil's Rune Bjornson, senior vice president natural gas, said Europe “risks paying a very high price for achieving very little in CO2 reduction” and that the continent must focus on developing a single CO2 reduction target.  

And development of renewable energy, Helm said, is unlikely to help much. “Wind in particular is a de-centralised, low-density, intermittent source of power. It can't solve the problem,” Helm said. “We have to stop the dash for coal. We cannot afford for the world to have all the coal which is projected, to come forward.”

For Helm, the answer to tackling climate change is set a high carbon price to de-incentivise coal use, and make gas prices more competitive. Developing new technology, such as carbon capture and storage, is also crucial. Helm added that next year’s election of a new European Commission would be an opportunity for the new commission to realise its competitiveness is seriously compromised by coal.

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