The world gets back to burning

By O.M.

NOT since 1973 has world energy use increased by as much, in percentage terms, as it did in 2010. According to BP's annual Statistical Review of World Energy, published today, 2010's energy consumption was up by 5.6% on the year before. In part this is thanks to recovery from the economic crisis; in part it is down to the longer-term shift in economic activity towards emerging economies, which are less efficient in their energy use.

Robust growth was seen in all regions and in almost all types of energy use: the world consumed more of every main fuel bar one than it had in any previous year. Consumption of oil, which accounts for 34% of the world's primary energy by BP's calculations, rose by 3.1%. Coal, at 30% the number two fuel, was up by 7.6%, growing faster than at any time since 2003. Consumption of gas, which contributes 24%, was up by 7.4%, the biggest annual growth since 1984.

The growth in fossil fuels was so strong that although non-fossil-fuel energy also had a record year, its share of the world total primary energy decreased a little. Hydro (6.5%) saw its biggest annual increase on record, in part due to more dams and in part due to a lot of rain; Christof Rühl, BP's chief economist, notes there was more precipitation in 2010 than in any year in the past century. Other renewables grew impressively too, thanks to countries all round the world continuing to pile on new wind capacity. That said, non-hydro renewables still check in at only 1.3% of global energy consumption—1.8% if you include biofuels.

Of all the fuels, only nuclear had seen better years; 2% growth over 2009 still left it a little below its levels in 2005 and 2006. Ten years ago nuclear and hydro were pretty evenly pegged as energy providers; last year hydro provided 20% more electricity. After the disaster at Fukushima, with its attendant closure of a lot of Japanese and German nuclear capacity, nuclear will undoubtedly fall further behind still.

There are other shifts to note. Oil's share of primary energy has declined every year over the past decade, while coal's share of the total has increased by four percentage points since 2000. The main reason for this is China. In 2000, China consumed 11% of the world's energy; in 2010 it consumed 20.3% of a significantly bigger pie, making it the biggest energy consumer on the planet for the first time in BP's books (other analyses have made China number one in earlier years; BP doesn't look at biomass burned in stoves and treats Hong Kong separately, which accounts for the discrepancy).

A burning desire for coal
Most of China's growth came from burning more coal: in 2000 China accounted for just under a third of world coal use; in 2010 a staggering 48.2%. Repeat that sort of expansion on a smaller scale for a number of other countries and you see why coal is going up in the global mix. You also see why the world's energy-related carbon-dioxide emissions have grown even faster than its energy use—by 5.8% last year, on BP's figures. That is the fastest growth since 1969.

The shift in production from developed to emerging economies doesn't just decrease global energy efficiency; it also increases emissions for any given amount of energy use. The less energy-efficient economies also tend to be the heaviest coal users. Mr Rühl points to the intractability this adds to the problem of emissions; even if emerging economies are reducing their carbon intensity (the amount of carbon emitted per unit of output), global carbon intensity can continue to rise if production shifts to those emerging economies fast enough. Hence record growth in emissions despite modest but real commitments to emissions control in both emerging and developed economies.

This is why there is so much interest at the moment in gas, about which the BP statistics paint an encouraging picture. The copious amounts of shale gas now being produced in America—23% of the country's total gas production, up from 4% in 2005—have led to power utilities switching from coal to gas, which emits considerably less carbon dioxide per unit of output. This has kept emissions lower than they would have been. Indeed the unprecedentedly high spread between the costs of energy in the form of oil and in the form of gas is leading to serious discussion of gas as a transport fuel.

At the same time, in part because now-self-sufficient America doesn't need it, liquefied natural gas (LNG) is becoming ever more available in the rest of the world. Global supply expanded by 22.6% last year, and has grown 58% over the past five years. That liberalised energy markets allow utilities to buy LNG on the spot market has allowed for competition in the liberalised European market, even through the past two severe winters.

A golden age of gas
And there is no reason to think that the gas boom will come to a stop any time soon. In the week's other big dollop of energy-geekery, the International Energy Agency released a portion of this year's World Energy Outlook (the whole thing comes out in November) which lays out a new “golden age of gas” scenario for future energy production and consumption. This sees global gas demand rising by more than 50% over the next 25 years, as gas outstrips coal to come close to equalling oil in the energy mix. Meeting that demand would require an increase in production equivalent to three times the amount of gas produced by Russia today, which the agency imagines being handily met by a mixture of conventional gas and shale gas, as well as some other unconventional forms of the fuel such as coal-bed methane. China becomes both a principal producer (its shale-gas resources are reckoned the largest in the world) and perhaps the largest importer.

But all this does not do anything like as much as you might expect in terms of reducing carbon emissions. This is because cheap gas does not just displace dirty coal, as it has been doing in America; it also displaces expensive renewables and nuclear. In its current scenario, which assumes that countries actually pursue the emission-cutting policies they are now espousing, the IEA sees renewables and nuclear growing substantially until 2035; in the new gas scenario they grow a bit less. And because gas is cheap, overall energy use grows a bit faster. The result is that the all-told reduction in emissions in 2035 is remarkably small: 160m tonnes of carbon dioxide, rather less than the Netherlands emits today.

That more energy is being used than ever before is a welcome sign of economic growth after a sharp downturn. That it is being used less efficiently than before, and producing record levels of carbon dioxide, is harder to welcome. A small mercy, though, is that there are numbers like BP's available with which to perceive such unwelcome truths. Since the Anglo Iranian Oil Company, which would become BP a few years later, first put together its annual review 60 years ago—six typewritten pages, one graph, for internal use only—they have grown into a widely valued tool for economists and energy strategists in a field where reliable compendia of facts are rare, and growing rarer. In April the United States government announced that it would stop gathering the data on which various domestic energy indicators are based, reduce efforts to assure data quality in some others and cease publication of its International Energy Statistics. It is hard to see how, if such numbers have any value at all, that doesn't represent a false economy.