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The Decline of Coal in Three Charts

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The Decline of Coal in Three Charts

The Decline of Coal in Three Charts

How coal went from hero to zero in just five short years.

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

There was a time in the not so distant past that coal was the unquestioned all-star of the energy mix.

Just over a decade ago, coal-fired power generated more than 50% of U.S. electricity. Coal is cheap and found almost everywhere, but it’s also extremely easy to scale with. If you need more power, just burn more coal.

However, the decline of coal has been swift and unprecedented. That’s why it is expected that by 2020, only 22% of electricity will be generated from the fossil fuel.

What’s Behind the Decline of Coal?

While there is obvious environmental pressure on miners and utilities in the coal business, the number one coal killer is an unlikely source: hydraulic fracturing and horizontal drilling.

These two technologies have led to a natural gas supply boom, making the United States the top natural gas producer in the world. From 2005 to 2010, natural gas mostly traded in a range between $5-10 per mcf. Today, excess supply has brought it to a range between $2-3 per mcf, making it extremely desirable for utilities.

This year, for the first time ever, natural gas has surpassed coal in use for power generation in the United States. The EIA expects natural gas and coal to make up 33% and 32% respectively in the energy mix for 2016.

How the Mighty Have Fallen

Not surprisingly, shrinking demand has led to a collapse in coal prices.

The decrease in revenues have slashed margins, and now equity in some of the biggest coal miners in the world is almost worthless. Similar to some oil and gas companies, many coal miners accumulated major debt loads when prices were high and demand seemed sustainable.

Now major US coal miners such as Peabody Energy and ArchCoal have been obliterated:

 201120142016
Peabody$19.7 billion$7 billion$0.030 billion
Arch Coal$6.0 billion$1 billion$0.006 billion
Alpha Natural$10.7 billion$1.6 billion$0.003 billion
Walter Energy$8.2 billion$1 billion$0.006 billion
Total$44.6 billion$10.6 billion$0.045 billion

The top four miners have lost over $44 billion in market capitalization from their recent peaks in 2011.

That’s an astonishing 99.9% decrease in value, and possibly exemplifies the decline of coal better than anything else.

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Energy

Visualizing China’s Energy Transition in 5 Charts

This infographic takes a look at what China’s energy transition plans are to make its energy mix carbon neutral by 2060.

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China Energy Mix

Visualizing China’s Energy Transition in 5 Charts

In September 2020, China’s President Xi Jinping announced the steps his nation would take to reach carbon neutrality by 2060 via videolink before the United Nations Assembly in New York.

This infographic takes a look at what this ambitious plan for China’s energy would look like and what efforts are underway towards this goal.

China’s Ambitious Plan

A carbon-neutral China requires changing the entire economy over the next 40 years, a change the IEA compares to the ambition of the reforms that industrialized the country’s economy in the first place.

China is the world’s largest consumer of electricity, well ahead of the second place consumer, the United States. Currently, 80% of China’s energy comes from fossil fuels, but this plan envisions only 14% coming from coal, oil, and natural gas in 2060.

Energy Source20252060% Change
Coal52%3%-94%
Oil18%8%-56%
Natural Gas10%3%-70%
Wind4%24%+500%
Nuclear3%19%+533%
Biomass2%5%+150%
Solar3%23%+667%
Hydro8%15%+88%

Source: Tsinghua University Institute of Energy, Environment and Economy; U.S. EIA

According to the Carbon Brief, China’s 14th five-year plan appears to enshrine Xi’s goal. This plan outlines a general and non specific list of projects for a new energy system. It includes the construction of eight large-scale clean energy centers, coastal nuclear power, electricity transmission routes, power system flexibility, oil-and-gas transportation, and storage capacity.

Progress Towards Renewables?

While the goal seems far off in the future, China is on a trajectory towards reducing the carbon emissions of its electricity grid with declining coal usage, increased nuclear, and increased solar power capacity.

According to ChinaPower, coal fueled the rise of China with the country using 144 million tonnes of oil equivalent “Mtoe” in 1965, peaking at 1,969 Mtoe in 2013. However, its share as part of the country’s total energy mix has been declining since the 1990s from ~77% to just under ~60%.

Another trend in China’s energy transition will be the greater consumption of energy as electricity. As China urbanized, its cities expanded creating greater demand for electricity in homes, businesses, and everyday life. This trend is set to continue and approach 40% of total energy consumed by 2030 up from ~5% in 1990.

Under the new plan, by 2060, China is set to have 42% of its energy coming from solar and nuclear while in 2025 it is only expected to be 6%. China has been adding nuclear and solar capacity and expects to add the equivalent of 20 new reactors by 2025 and enough solar power for 33 million homes (110GW).

Changing the energy mix away from fossil fuels, while ushering in a new economic model is no small task.

Up to the Task?

China is the world’s factory and has relatively young industrial infrastructure with fleets of coal plants, steel mills, and cement factories with plenty of life left.

However, China also is the biggest investor in low-carbon energy sources, has access to massive technological talent, and holds a strong central government to guide the transition.

The direction China takes will have the greatest impact on the health of the planet and provide guidance for other countries looking to change their energy mixes, for better or for worse.

The world is watching…even if it’s by videolink.

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Energy

Visualizing the Flow of U.S. Energy Consumption

From renewables to fossil fuels, we’ve visualized the diverse mix of energy sources that powered U.S. energy consumption in 2020.

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Breaking Down America’s Energy Consumption in 2020

The United States relies on a complex mix of energy sources to fuel the country’s various end-sectors’ energy consumption.

While this energy mix is still dominated by fossil fuels, there are signs of a steady shift to renewable energy over the past decade.

This radial Sankey diagram using data from the EIA (Energy Information Administration) breaks down U.S. energy consumption in 2020, showing us how much each sector relies on various energy sources.

The Balance of Energy Production and Consumption

In 2019 and now in 2020, America’s domestic energy production has actually been greater than its consumption—a development that hasn’t taken place since 1957.

Last year’s numbers were severely impacted by the COVID-19 pandemic, seeing a 5% drop in energy production and a 7% drop in consumption compared to 2019. Total energy production and consumption for 2020 came in at 95.75 and 92.94 quads respectively.

The energy amounts are equalized and measured in quadrillion BTUs (British thermal units), also known as quads. A quad is a huge amount of energy, equivalent to 183 million barrels of petroleum or 36 million tonnes of coal.

So how is America’s overall energy production and consumption split between energy sources?

U.S. Energy Production and Consumption Share by Source

Energy SourcePercentage of U.S. Energy ProductionPercentage of U.S. Energy Consumption
Petroleum32%35%
Natural Gas36%34%
Renewable Energy12%12%
Coal11%10%
Nuclear9%9%

Source: IEA

America’s new margin of energy production over consumption has resulted in the country being a net total energy exporter again, providing some flexibility as the country continues its transition towards more sustainable and renewable energy sources.

Fossil Fuels Still Dominate U.S. Energy Consumption

While America’s mix of energy consumption is fairly diverse, 79% of domestic energy consumption still originates from fossil fuels. Petroleum powers over 90% of the transportation sector’s consumption, and natural gas and petroleum make up 74% of the industrial sector’s direct energy consumption.

There are signs of change as consumption of the dirtiest fossil fuel, coal, has declined more than 58% since its peak in 2005. Coinciding with this declining coal dependence, consumption from renewable energy has increased for six years straight, setting record highs again in 2020.

However, fossil fuels still make up 79% of U.S. energy consumption, with renewables and nuclear accounting for the remaining 21%. The table below looks at the share of specific renewable energy sources in 2020.

Distribution of Renewable Energy Sources

Renewable Energy Source2020 Energy Consumption in QuadsShare of 2020 Renewable Energy Consumption
Biomass4.5239%
Wind3.0126%
Hydroelectric2.5522%
Solar1.2711%
Geothermal0.232%

Source: IEA

The Nuclear Necessity for a Zero-Emission Energy Transition

It’s not all up to renewable energy sources to clean up America’s energy mix, as nuclear power will play a vital role in reducing carbon emissions. Technically not a renewable energy source due to uranium’s finite nature, nuclear energy is still a zero-emission energy that has provided around 20% of total annual U.S. electricity since 1990.

Support for nuclear power has been growing slowly, and last year was the first which saw nuclear electricity generation overtake coal. However, this might not last as three nuclear plants including New York’s Indian Point nuclear plant are set to be decommissioned in 2021, with a fourth plant scheduled for retirement in 2022.

It’s worth noting that while other countries might have a higher share of nuclear energy in their total electricity generation, the U.S. still has the largest nuclear generation capacity worldwide and has generated more nuclear electricity than any other country in the world.

Converting Energy to Electricity

The energy produced by nuclear power plants doesn’t go directly to its end-use sector, rather, 100% of nuclear energy in the U.S. is converted to electricity which is sold to consumers. Along with nuclear, most energy sources aside from petroleum are primarily converted to electricity.

Unfortunately, electricity conversion is a fairly inefficient process, with around 65% of the energy lost in the conversion, transmission, and distribution of electricity.

This necessary but wasteful step allows for the storage of energy in electrical form, ensuring that it can be distributed properly. Working towards more efficient methods of energy to electricity conversion is an often forgotten aspect of reducing wasted energy.

Despite the dip in 2020, both energy production and consumption in the U.S. are forecasted to continue rising. As Biden aims to reduce greenhouse gas emissions by 50% by 2030 (from 2005 emission levels), U.S. energy consumption will inevitably continue to shift away from fossil fuels and towards renewable and nuclear energy.

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