- Use of coal in the US has dropped by half.
- Natural gas is now 38% of the US energy mix.
- Clean energy solutions are favoured by Biden.
- Global leaders hope to influence emerging economies.
The G7’s recent commitment to move away from coal as an energy source mirrors an existing trend in the US energy market.
Between 2005-2019, the use of coal for electricity generation in the US more than halved, dropping from 50% to 23%, according to new figures from the US Energy Information Administration (EIA).
Over the same period, the country doubled its usage of renewable energy, including wind and solar.
But the biggest shift has been towards natural gas, which over 15 years, has jumped from 19% of the energy mix to 38%.
Its use is particularly prevalent in five key states, with Texas accounting for nearly 15% of natural gas consumption in 2020.
Natural gas: the ‘bridge fuel’
Natural gas is a fossil fuel, but its carbon emissions are 50-60% less than coal when combusted in a power plant, so it’s considered a ‘bridge fuel’ in the energy transition to a carbon-neutral future.
Since 2010, switching from coal to natural gas has saved around 500 million tonnes of CO2, according to the IEA.
But, research has found it really depends on how much methane leaks during the production process - because methane molecules trap more heat than carbon dioxide.
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It’s hoped that innovations in the energy sector, such as the conversion of power plants from gas to hydrogen, will help the transition away from gas in the long-term.
At sites like the Rio Grande LNG (liquid natural gas) project in Brownsville, Texas, operators are planning the use of carbon capture and storage (CCS) technology that will trap up to five million tonnes of CO2 a year.
Accelerating the clean energy transition
The G7 leaders announced an end to new government support for coal power by the end of 2021 and pledged to invest in technologies such as carbon capture to help accelerate the clean energy transition.
US President Joe Biden has called for the country to reach 100% carbon-polluting free electricity by 2035; with some of the strategies to achieve that goal including power plants retrofitted with carbon capture, expanding the use of heat pumps and investing in new sources of hydrogen — produced from renewable energy, nuclear energy, or waste — to power industrial facilities.
What's the World Economic Forum doing about the transition to clean energy?
Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated.
Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010.
Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.
Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.
To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.
Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission.
Is your organisation interested in working with the World Economic Forum? Find out more here.
In April 2021, Biden promised $2 trillion in infrastructure investment in a plan that incorporates tax incentives for clean energy, electric transmission and CCS technology and which would also fund research and development to tackle climate change.
It includes $100 billion for upgrading the nation's electric transmission system.
Investment in renewable energy in the US reached $48.5 billion in 2018, the highest level since 2011, driven by an increase in wind power financing, according to the Renewables 2019 Global Status Report.
Globally, investment reached $288.9 billion that year - and the spend on new capacity was far greater than the backing for new fossil fuel power.
Even in US, coal still has a shelf-life
In spite of this, the global demand for coal hasn’t gone away. The International Energy Agency (IEA) anticipates a 4.5% increase in 2021.
The IEA forecasts a record-high demand for coal in China, as government stimulus measures support carbon-intensive industries such as steel and cement production. India’s economic recovery also led to a 6% increase in coal consumption in the fourth quarter of 2020.
Both countries are committed to boosting renewable energy capacity, with China alone responsible for 80% of global annual installations between 2019 and 2020.
Even in the US, higher gas prices have seen an uptick in coal demand, although the EIA predicts this will be a short-term trend, with both coal and gas set to lose a portion of their market share to renewables by 2022.
Financing a greener future
Multilateral investment could help other countries follow the broader US trajectory. At the G7 summit, leaders committed up to $2 billion to support developing economies in the transition away from unabated coal usage.
A new report from the IEA, the World Bank and the World Economic Forum outlines just how vital it is to mobilize green investment in those countries.
According to the report, Financing Clean Energy Transitions in Emerging and Developing Economies, clean energy investment needs to increase by more than seven times – from less than $150 billion last year to over $1 trillion by 2030 to put the world on track to reach net-zero emissions by 2050.