The Importance of Electricity to the Developing World

 Global coal use soaring, expected to set new record in 2022 
Robert Bryce, The Hill, 23 July 2021

Call it an inconvenient truth, but the global economy is fueled by electricity, much of it produced from coal, and that will not change anytime soon. 

Electricity use and economic growth go hand in hand. And as global electricity demand continues to rebound in the wake of the COVID-19 lockdowns, so, too, will the use of coal in developing countries. Indeed, global coal demand is expected to set a record in 2022, which likely will hamper efforts to reduce greenhouse gas emissions. 

Those are the key takeaways from the latest edition of the BP Statistical Review of World Energy, which was released on July 8, and the International Energy Agency’s (IEA) July 15 report on global electricity demand

According to BP, even as the global economy collapsed last year during the pandemic, electricity demand barely wavered. While global gross domestic product (GDP) fell by about 3.5 percent in 2020, electricity use fell by less than 1 percent — 0.9 percent, to be exact. By contrast, global gasoline use fell by about 13 percent, overall oil use plummeted last year by 9 percent, (the biggest decline in history), coal use dropped by about 4 percent, and natural gas use fell by about 2 percent. As noted by BP chief economist Spencer Dale, the decline in electricity use was “the smallest fall across the main components of final energy demand.” 

That slight decline shows, once again, that electricity is the world’s most important form of energy. And a look at the countries where electricity demand  is growing the fastest — and the fuels those countries are using to generate the power they need — shows why making drastic cuts in global greenhouse gas emissions will be a difficult, or perhaps impossible, task over the timelines that are commonly being used by climate activists and policymakers. 

Last year’s decline in global electricity production was only the second time since 1985 that annual electricity generation fell; the other decline occurred in 2009. Since 1985, global electricity generation has been growing by about 500 terawatt-hours per year, which is roughly equal to the amount of electricity generated every year by France. 

Electricity demand is soaring in developing countries. Between 2009 and 2019, electricity use jumped by 12 percent in Iraq, by nearly 11 percent in Vietnam, and by about 9 percent in Bangladesh. Over that same period, China’s electricity production grew by an average of 7 percent per year. At that rate, the country’s production will double in the next 10 years or so. In 2020 alone, China’s electricity production grew by 3.4 percent — the biggest percentage increase in Asia. That production was a key reason why China was one of only two countries to see an increase in carbon dioxide emissions last year. (The other was Iran.) 

China and other Asian countries are relying heavily on coal for power generation. While coal-fired generation in the U.S. dropped by 20 percent last year, China’s coal-fired output increased by 1 percent. By itself, China accounts for more than half of global coal use.  Coal-fired electricity also jumped by nearly 19 percent in Malaysia, nearly 7 percent in Vietnam, and about 3 percent in Indonesia. 

The BP report also noted the jump in electricity generated by solar and wind in China and other countries. In 2020, Chinaproduced about 727 terawatt-hours of energy from those two sources. But China also generated nearly seven times as much electricity — about 4,918 terawatt-hours last year — by burning coal.

Those numbers reflect broader global trends. Renewables are growing and they are politically popular, but their growth is not keeping pace with the surging demand for power in a world where electricity poverty is rampant. More than 3 billion people are living in places where electricity use is less than what’s consumed by an average American refrigerator, which is about 1,000 kilowatt-hours per year. 

The BP report acknowledges this gap, saying that the Energy for Growth Hub, a nonprofit group, “proposes a Modern Energy Minimum of 1,000 kwh per person, per year, which they argue is consistent with countries reaching a lower-middle income status. This is around four times greater than the U.N. definition.” It goes on: “Close to half the world’s population are living below the Modern Energy Minimum. Half the world’s population — it makes you think.” 

The IEA, meanwhile, expects global electricity demand “to grow by close to 5 percent in 2021 and by 4 percent in 2022. The majority of these increases will take place in the Asia Pacific region.” It expects more than half of that growth will happen in China and about 9 percent will be related to growth in India. The agency predicts that renewables will continue to “grow strongly” but notes that they “cannot keep up with increasing demand.”

The IEA expects that “fossil fuel-based electricity is set to cover 45 percent of additional demand in 2021 and 40 percent in 2022.” It says coal-fired electricity production likely will “ increase by almost 5 percent in 2021 and a further 3 percent in 2022,” and that “coal-fired electricity generation is set to exceed pre-pandemic levels in 2021 and reach an all-time high in 2022.” 

To be sure, these facts will not please those who insist that coal-fired generation must cease to avoid catastrophic climate change. But the data from BP and projections from the IEA show that countries around the world are doing what they need to do to generate the electricity their people demand at prices they can afford.

Call it an inconvenient truth, but the global economy is fueled by electricity, much of it produced from coal, and that will not change anytime soon. 

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