The global energy shock stemming from the conflict in the Middle East is rewriting the ways governments think about their power needs. Big Oil has predictably emerged as an early winner, benefiting from soaring oil and gas prices, but the long-term upshot could be faster dispersal of an altogether different energy source.<\/p>\n
Despite negotiation attempts during the current ceasefire, officials from the Trump administration and Iran remain at an impasse over the Strait of Hormuz, meaning most of the Middle East\u2019s oil and gas is still locked up<\/a> in the Persian Gulf seven weeks since the start of the war.<\/p>\n That hole in global energy supply has sent countries scrambling for alternatives for their fuel and electricity needs, including for coal, potentially marking a resurgence for the dirtiest fossil fuel that was quickly being phased out<\/a> around the world. Asian countries, formerly the Middle East\u2019s biggest energy customers, have indeed delayed plans<\/a> to close down coal-fired power plants and ramped up output<\/a> from existing ones.\u00a0<\/p>\n But while coal demand has risen since the Strait of Hormuz locked down, the data tells an altogether different story about what direction the global energy mix is headed. Global fossil fuel power generation fell in the first month of the war, according to an analysis<\/a> published Tuesday by think tank the Centre for Research on Energy and Clean Air (CREA). That was mostly because of the hole in global natural gas supply, as gas-powered generation fell 4% in March year on year.\u00a0<\/p>\n But in most cases, countries are shunning coal and filling the gap by turning to renewable energy sources instead. Coal usage remained more or less flat compared with March of last year, and by excluding China\u2014which alone accounts for more than half<\/a> of global coal consumption\u2014coal-fired power generation actually declined 3.5%. Renewables data for China was not included in CREA\u2019s dataset, but in the rest of the world, solar power usage rose 14% in March, with wind power generation up 8%.<\/p>\n \u201cThe government statements used to create a \u2018back to coal\u2019 narrative range from meaningless to inconsequential,\u201d wrote Lauri Myllyvirta, CREA\u2019s cofounder and lead analyst. \u201cThere has been no increase in coal capacity so far.\u201d<\/p>\n Coal remains a hard sell<\/p>\n To be sure, coal demand has risen over the past month and a half. The fuel often becomes a \u201ccritical fallback\u201d during energy supply shocks, Sushmita Vazirani, an analyst at energy consultancy Wood Mackenzie, wrote in a report<\/a> published this week. India, as well as several countries in East Asia and Europe, have ramped up their coal-fired power generation plans in the near term, she wrote, to compensate for soaring liquefied natural gas prices.<\/p>\n But an uptick in interest for coal doesn\u2019t mean it will figure permanently into countries\u2019 energy plans, CREA\u2019s report argued. Around the world, most coal plants were already running at or near full capacity, meaning commitments to ramp up production will lead to relatively small increases in aggregate. Another reason is that the longer the energy crunch goes on, the more expensive coal will get. Wood Mackenzie estimated that for every $10 per barrel rise in crude oil prices, coal per tonne gets $1 to $3 pricier, too. That is because soaring diesel prices raise the cost of mining and transport that is needed to get coal to buyers.<\/p>\n But the biggest indicator that the global coal scramble might prove short-lived is how comparatively cheap clean energy alternatives like wind and solar have become. A report by the International Renewable Energy Agency (IRENA) published last year found that 91% of new renewable energy projects are more cost-effective<\/a> than fossil fuel options.<\/p>\n Even countries that have increased coal production since the war started have hedged their bets. In South Korea, for instance, where a coal plant had been slated to shutter in June, the closure has been postponed by only nine months (and two more were under review). Meanwhile, President Lee Jae Myung urged the country to \u201cmove very quickly toward renewable energy\u201d during a speech<\/a> last month, adding: \u201cOur future will be at serious risk if we continue to rely on fossil fuels.\u201d<\/p>\n There\u2019s another market signal suggesting countries have looked to insulate themselves from fossil fuel shocks since the war began. Across Southeast Asia in particular, but also in East Asia and Australia, demand for electric vehicles has surged<\/a> over the past month as fuel concerns start to bite at consumers.<\/p>\n","protected":false},"excerpt":{"rendered":"The global energy shock stemming from the conflict in the Middle East is rewriting the ways governments think…\n","protected":false},"author":2,"featured_media":383412,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[4888,1686,273,149,111,139,69,27199,42959,147,4166,10000],"class_list":{"0":"post-383411","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-environment","8":"tag-coal","9":"tag-electricity","10":"tag-environment","11":"tag-fossil-fuels","12":"tag-new-zealand","13":"tag-newzealand","14":"tag-nz","15":"tag-oil-and-gas","16":"tag-renewables","17":"tag-science","18":"tag-solar","19":"tag-wind"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/383411","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=383411"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/383411\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/383412"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=383411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=383411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=383411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}