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Which Countries Are Most Reliant on Coal?

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Which Countries Are Most Reliant on Coal?

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Global energy policies and discussions in recent years have been focused on the importance of decarbonizing the energy system in the transition to net zero.

However, despite efforts to reduce carbon emissions, fossil fuels still account for more than 80% of primary energy use globally—and coal, the world’s most affordable energy fuel, is also the largest source of energy-related CO2 emissions.

The graphic above uses data from the Statistical Review of World Energy to show how much select countries rely on fossil fuels, particularly coal.

Coal’s Importance in Emerging Economies

Coal is the largest source of electricity generation and the primary fuel for iron, steel, and cement production, making it central to climate and energy discussions.

The fossil fuel continues to be an affordable and abundant source of energy, particularly in emerging economies where demand is expanding rapidly.

South Africa is the world’s most coal-dependent nation featured in the statistical review, with coal accounting for 69% of its primary energy consumption in 2022.

Primary energy use, by fuel type (2022)
CountryCoal %Oil %Gas %Other %
🇿🇦 South Africa69%22%3%6%
🇨🇳 China55%18%8%18%
🇮🇳 India55%27%6%11%
🇮🇩 Indonesia45%31%14%10%
🇻🇳 Vietnam45%22%6%27%
🇵🇱 Poland 42%34%15%9%
🇵🇭 Philippines40%42%5%13%
🇯🇵 Japan27%37%20%15%
🇦🇺 Australia26%35%25%14%
🇹🇷 Türkiye25%30%26%19%
🇰🇷 South Korea23%43%17%17%
🇺🇦 Ukraine22%17%30%31%
🇲🇾 Malaysia19%36%37%8%
🇩🇪 Germany19%35%23%23%
🇹🇭 Thailand14%47%32%7%
🇷🇺 Russia 11%24%51%14%
🇺🇸 U.S.10%38%33%19%
🇮🇹 Italy5%40%38%16%
🇬🇧 United Kingdom3%36%35%25%
🇫🇷 France2%35%16%46%

Percentages may not add to 100 due to rounding. Select countries shown above.

In 2022, global consumption of coal surpassed 8 billion tonnes in a single year for the first time, with China and India being the two biggest consumers in absolute terms.

China’s power sector alone accounts for one-third of global coal consumption. Meanwhile, with a growth rate of 6% annually, India has doubled its coal consumption since 2007—and is expected to lead the growth in coal consumption for years to come.

Coal Demand in Developed Countries

U.S. consumption of coal has dropped almost 50% compared to the early 2010s.

With initiatives like the Inflation Reduction Act (IRA), which includes nearly $370 billion to accelerate the U.S.’s energy transition, coal consumption is expected to remain on a downward trajectory in the United States.

Source: BP Energy Outlook 2023. The forecast is based on BP’s scenario for global net-zero emissions by 2050.

The same movement is seen in the European Union.

France, for example, only has 2.5% of its primary energy consumption coming from coal, a share that is just half of what it was in the early 2000s.

In Germany, Europe’s biggest economy, coal still accounts for 18.9% of total energy consumption (a small increase over 2021, due to the energy crisis). However, a decade ago in 2012, that number stood even higher at 24.9% of primary energy use.

With coal consumption falling in developed nations but remaining steady in emerging economies, the International Energy Agency projects that coal demand will plateau at 2022 levels until 2025 when it will begin to fall.

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Visualized: An Investor’s Carbon Footprint, by Sector

Which sectors are the largest contributors to emissions? From energy to tech, this graphic shows carbon emissions by sector in 2023.

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Visualized: An Investor’s Carbon Footprint, by Sector

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The following content is sponsored by MSCI
Visualized: An Investor’s Carbon Footprint, by Sector

Visualized: An Investor’s Carbon Footprint, by Sector

In the quest for a sustainable future, investors can play a crucial role in shaping our planet’s destiny.

Understanding the carbon emissions in different sectors is a key way to make environmentally and financially conscious decisions and help make a positive impact on the planet.

This infographic, sponsored by MSCI, looks at carbon emissions by sector.

Types of Carbon Emissions

Unsurprisingly, industries heavily reliant on fossil fuels and energy-intensive processes, like energy, materials, and industrials, have significant carbon footprints. In contrast, service-based and technology industries are traditionally less carbon-intensive.

To get an accurate picture of a sector/industry’s carbon footprint, it’s important to look up and down their value chain. Here is how policymakers categorize carbon emissions:

  1. Scope 1: Generated directly by the organization and within its control e.g., on-site fuel combustion and internal industrial processes.
  2. Scope 2: Indirect emissions from energy use, such as purchased electricity, heat, or cooling.
  3. Scope 3: Indirect emissions, but different from Scope 2 emissions. These are emissions that the company does not directly control such as the emissions produced from a supplier or emissions generated from the use of its sold product.

Only looking at all three scopes of emissions can we arrive at a complete picture of a sector’s carbon footprint.

Volume of Carbon Emissions, by Sector

The following table breaks down the greenhouse gas emissions for each sector by scope. A sector’s carbon footprint is expressed in metric tons of CO2 equivalent for every $1 million in financing.

In other words, here’s how much of a climate impact a one million dollar investment has in each of the following sectors.

The total figure represents the weighted average carbon emissions of each sector’s constituents as of August 10, 2023:

SectorScope 1
Scope 2
Scope 3
Total
Energy263.327.22827.53118.0
Materials298.482.81349.21730.4
Utilities461.416.0405.5883.0
Industrials32.68.3425.1466.0
Consumer
discretionary
5.09.0372.2386.2
Consumer staples16.512.4276.4305.3
Information
technology
2.05.879.387.1
Health care1.82.470.975.1
Financials4.01.158.363.4
Real estate1.45.946.854.0
Communication
services
0.64.740.545.8

Represented by tCO₂e/USD million EVIC. EVIC is the enterprise value including cash.

Understanding carbon footprint profiles can help investors evaluate the risks faced by carbon-intensive industries, such as future regulations and reputational challenges.

MSCI’s climate metrics empower investors to make responsible investments and drive meaningful change.

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Download MSCI’s Climate Metrics Report.

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