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Vital Signs Volume 21
The Trends That Are Shaping Our Future
By Linda Starke
ISLAND PRESSCopyright © 2014 Worldwatch Institute
All rights reserved.
Fossil Fuels Dominate Primary Energy Consumption
Milena Gonzalez and Matt Lucky
Milena Gonzalez is the MAP Sustainable Energy Fellow at Worldwatch Institute. Matt Lucky was the sustainable energy lead researcher at the Institute.
Coal, natural gas, and oil accounted for 87 percent of global primary energy consumption in 2012 as the growth of worldwide energy use continued to slow due to the economic downturn. The relative weight of these energy sources keeps shifting, although the change was ever so slight. Natural gas increased its share of global primary energy consumption from 23.8 to 23.9 percent during 2012, coal rose from 29.7 to 29.9 percent, and oil fell from 33.4 to 33.1 percent. The International Energy Agency predicts that coal will replace oil as the dominant primary energy source worldwide by 2017.
The shale revolution in the United States is reshaping global oil and gas markets. The United States produced oil at record levels in 2012 and was expected to overtake Russia as the world's largest producer of oil and natural gas combined in 2013. Consequently, the country is importing decreasing amounts of these two fossil fuels, while using rising levels of its natural gas for power generation. This has led to price discrepancies between the American and European natural gas markets that in turn have prompted Europeans to increase their use of coal for power generation. Coal consumption, however, was dominated by China, which in 2012 for the first time accounted for more than half of the world's coal use.
Natural gas consumption grew by 2.2 percent to 2,987 million tons of oil equivalent (mtoe) in 2012—more than triple the level in 1970. (See Figure 1.) The largest increases in 2012 took place in the United States (an additional 27.6 mtoe), China (12.0 mtoe), and Japan (10.1 mtoe).
Global natural gas production grew by 1.9 percent in 2012; the United States (with 20.4 percent of the total) and Russia (17.6 percent) are the dominant producers. Other countries accounted for less than 5 percent each of global output.
Estimated natural gas reserves grew by 0.7 percent in 2012 to 173,400 mtoe, principally due to increases in Iran (485 mtoe) and China (434 mtoe). Reserves remain heavily concentrated in the Eurasia and Middle East regions; Iran, Russia, and Qatar alone account for 55 percent of the world's total. The global reserves-to-production ratio now stands at 63.6 years, the length of time that current supplies would last if production were to continue at the same rate as in 2011.
Natural gas prices continued to diverge globally in 2012. (See Figure 2.) Prices have been on significantly different trajectories across the world since the economic meltdown in 2008 due to the U.S. shale gas revolution and increases in shale gas exports to Asian countries. While U.S. prices declined by 31 percent to $2.76 per million Btu (in current dollars), the prices increased by 5 percent in Europe and 14 percent in Japan. Japan paid $16.75 per million Btu for liquefied natural gas (LNG) imports in 2012—a staggering six times more than the rate paid by U.S. consumers—as it continues to rely on natural gas to make up for decommissioned nuclear power plants.15 Japan is the dominant LNG importer, accounting for more than one-third of all LNG flows in 2012.
While global LNG trade increased significantly during the past decade—growing by 120 percent since 2002—it declined for the first time by about 1 percent in 2012. Australia, Indonesia, Malaysia, Nigeria, and Qatar dominate the market, accounting for about two-thirds of global LNG exports between them.
For the second consecutive year, natural gas consumption fell in the European Union (EU), down by 2.3 percent in 2012. This was the only region that experienced a decline. The causes include a struggling economy, increasingly large coal imports from Colombia and the United States, cheaper global coal prices, natural gas supply disruptions due to political unrest in parts of northern Africa, and natural gas producers' diversion of supplies to China and Japan.
Consumption trends in the United States, which accounts for 22 percent of global natural gas use, have reflected recent price shifts among fossil fuels. The country increased its use of natural gas by 4 percent during 2012. Much of this growth occurred in the power sector, attributable to the declining price of natural gas relative to coal due to the U.S. shale gas revolution. In fact, electricity generation from natural gas equaled that from coal for the first time ever in April 2012. But when the price of coal fell again, gas use in the power sector dropped by 14 percent during the first seven months of 2013 relative to the same period in 2012.
In 2012, coal remained the fastest-growing fossil fuel globally, even though at 2.5 percent the increase in consumption was weak relative to the 4.4 percent average of the last decade. (See Figure 3.) China increased its coal use by 6.1 percent. India also saw significant increases in its coal consumption—9.9 percent in 2012. Coal use by members of the Organisation for Economic Co-operation and Development (OECD) declined by 4.2 percent, as an 11.9-percent decline in U.S. consumption outweighed increases of 3.4 percent in the EU and 5.4 percent in Japan.
Global coal production grew by 2 percent in 2012. A decline in U.S. output of 7.5 percent was more than offset by an expansion of 3.5 percent in China's production. China now accounts for a dominant 47.5 percent of global coal production, followed by the United States (13.4 percent) and India (6 percent). But the United States still holds the largest share of proven reserves, with 27.6 percent, followed by Russia with 18.2 percent, China with 13.3 percent, Australia with 8.9 percent, and India with 7 percent.
Coal prices fell across all markets in 2012. (See Figure 4.) After a relatively steady increase from early 2009 through mid-2011, European prices decreased from a peak $121.52 to $92.50 per ton. Prices fell less drastically in other markets: from $87.38 to $72.06 in the United States and from $136.21 to $133.61 in the Pacific Basin.
Oil remains the most widely consumed fuel worldwide, but at a growth rate of 0.9 percent, it is being outpaced by gas and coal for the third consecutive year. The OECD's share declined to 50.2 percent of global consumption—the smallest share on record and the sixth decrease in seven years. This reflects declines of 2.3 percent in U.S. consumption and of 4.6 percent in EU consumption. By contrast, usage in China and Japan rose by 5.0 and 6.3 percent, respectively.
Conversely, global oil production grew by more than twice as much as consumption—2.2 percent or 100.1 million tons in 2012. (See Figure 5.) This was mainly due to a rise in U.S. output of 13.9 percent—the highest rate ever. In comparison, Canada, China, and the former Soviet Union saw relatively small increases of 6.8, 2.0, and 0.4 percent, respectively.
Conflicts in the Middle East and Africa disrupted oil supplies. Iran's oil production decreased by 16.2 percent or 33.3 million tons due to international sanctions. Sudan's oil production declined by 81.9 percent, while Syria's was cut in half, dropping by 49.9 percent. South Sudan, where most of the oil in the former Sudan is produced, gained independence from Sudan in mid-2011, but the new country still depends on Sudan for access to export pipelines and processing facilities. A dispute over oil transit fees led South Sudan to shut down oil production in early 2012. In April 2013, the country restarted production, yet several issues remain unresolved between the two nations. And in Syria, civil war and sanctions have had a dramatic impact on the oil industry. Damage to its energy infrastructure and uncertainty over the outcome of the continued violence threaten Syria's energy sector and regional energy markets.
These various disruptions were offset, however, by expanding output in many countries that belong to the Organization of the Petroleum Exporting Countries (OPEC). Libya's civil war had led to a collapse in production of 71 percent in 2011. But in 2012, Libya saw an astonishing rebound of 215.1 percent, returning output to close to 2010 levels. In addition, Saudi Arabia, the United Arab Emirates, and Qatar produced at record levels, with increases of 3.7, 1.6, and 6.3 percent, respectively. Together, these three countries accounted for 19 percent of world output. Iraq and Kuwait also saw significant increases in production, raising their combined share of global production to 7.4 percent.
In 2012, crude oil prices peaked in March due to the reduction in Iranian oil exports, but they eased later in the year due to rising output in the United States, Libya, and other OPEC countries. They also fell in the second quarter of 2012 due to concerns of global economic slowdown.
Global oil trade grew by 1.3 percent in 2012 to 2.7 billion tons, equivalent to 62 percent of worldwide output. Declining exports from several regions were offset by larger shipments from Canada and North Africa. U.S. net oil imports fell by 37.4 million tons—to 22 percent below their peak in 2007. China's net oil imports, on the other hand, grew by 30.4 million tons, accounting for 86 percent of the global increase. According to projections by the U.S. Energy Information Administration, China will surpass the United States as the world's largest oil importer by 2014.
Consumption of all fossil fuels will likely grow in the future. With increasing shale gas fracking and many countries' interest in displacing coal generation with natural gas due to the lower greenhouse gas emissions, natural gas use seems well poised to grow. Although some countries are trying to move away from coal use, the incredible coal consumption growth rates in China and India will likely make this the main energy resource in the next few years. Last, even if oil is eventually not the world's dominant energy resource, its use is expected to grow unless there is a fundamental change in the way the world fuels the transportation sector.
Nuclear Power Recovers Slightly, But Global Future Uncertain
Alexander Ochs and Michelle Ray
Alexander Ochs is director of the Climate and Energy Program at Worldwatch Institute. Michelle Ray was an intern at the Institute.
Global nuclear generation capacity increased by 4.2 gigawatts (GW), or 1.1 percent, to 373.1 GW in 2012. (See Figure 1.) The number of operational reactors also increased in 2012 by two units, or 0.46 percent, to a total of 437 nuclear reactors worldwide. The increases are net figures: three reactors with a total capacity of 1.3 GW were shut down in Canada and the United Kingdom, while three new plants in China and South Korea with a total capacity of just under 3 GW came online. In addition, two Canadian reactors (with 772 megawatts (MW) each) returned to service after 15 years offline.
Since 1987, expansion of the world's nuclear power generating capacity has slowed considerably. Just 75 GW were added over the last 25 years, compared with 296 GW during the preceding 25 years. Indeed, nuclear power is the only mainstream energy technology that does not show rapid growth. Its share of the world's primary energy supply fell from 6.4 percent in 2001 and 2002 to just 4.5 percent in 2012, about the same share as in 1985. (See Figure 2.)
Although nuclear power is dispersed widely across the globe, it is most heavily used in industrial countries. Of the 10 currently leading nuclear nations, 8 are established industrial countries, while China and South Korea are emerging industrial nations. (See Figure 3.)
With 102.1 GW capacity and 104 reactors (including those under construction and in long-term shutdown), the United States remains the world's leading nuclear power. Measured by its contribution to electricity generation, however, France is the leader. Its 58 reactors contribute 75 percent of that country's electricity supply, compared with 19 percent in the United States. (See Figure 4.)
Europe is the most reactor-saturated continent, with 170 plants—some 39 percent of the global total. Following France's 58 reactors, Russia is second in Europe with 33 nuclear reactors in operation, 10 new ones under construction, and 26 in the planning phase.
In Asia, China anticipates continued growth in its nuclear sector; it has 17 plants in operation, 29 under construction, and 38 in the planning phase. South Korea's recent completion of 2 new reactors brings the total number of operational reactors there to 23, which generate 30.4 percent of total electricity production. With 5 reactors currently under construction, the country aims to add a total of 11 new reactors and to increase its nuclear capacity to 43 GW by 2030. In Japan, the share of electricity generation from nuclear power is unusually low for that country at the moment because many reactors were taken offline after the Fukushima disaster.
Worldwide, construction began on seven new reactors during 2012, with total planned capacity of 6.9 GW, well short of the 15.8 GW of capacity that was started in 2010, when startups surged. (See Figure 5.) China has led the world in capacity additions in recent years, and its 3.1 GW of new capacity accounted for 45 percent of global starts in 2012. (See Figure 6.) Worldwide, some 67 nuclear reactors with a total capacity of 64.3 GW are being built. However, 7 of these have now been under construction for more than 20 years, suggesting that their completion is doubtful.
At the same time, decommissioning of aging nuclear power plants is at an all-time high, reflecting the aging of the global stock of nuclear power plants. The capacity of decommissioned plants reached 50 GW in 2011 and again in 2012, up from about 38 GW in both 2009 and 2010. (See Figure 7.)
A number of European countries intend to reduce their nuclear power operations. Germany, with nine reactors, continues on its path to a full nuclear phaseout by 2022. The Belgian government announced in July 2012 that all seven of the country's reactors will be shut down between 2015 and 2025. French president François Hollande recently declared his intention to reduce reliance on nuclear power from 75 percent of electricity generation to 50 percent by 2025. And the Swiss government released a national energy roadmap for public consideration that includes abandonment of its five nuclear power plants.
Meanwhile, in the United States, the Nuclear Regulatory Commission suspended all reactor licensing decisions in 2012 "pending completion of a new waste confidence environmental impact statement and rule," with the Kewaunee plant (566 MW) and San Onofre-2 and 3 (1,070 MW and 1,080 MW, respectively) phased into permanent shutdowns in 2013.
Several factors account for stagnancy in the nuclear sector. First is the high cost of nuclear power. Even at high levels of plant utilization, the levelized capital cost of nuclear energy (the cost of building and operating a plant over its operational life, divided by the energy generated) is 6–81 percent higher than the capital cost of other sources of energy for plants due to enter service in 2018. (See Table 1.) In addition, the cost of nuclear power has increased dramatically over recent decades. In France, for example, the Fessenheim reactors were commissioned in 1978 at 1,070 euros per kilowatt electrical (kWe); Chooz 1 and 2 went online in 2000 at 2,060 euros per kWe; the delayed Flamanville 3 reactor is projected to produce energy at 3,700 euros per kWe when it is finalized.
Excerpted from Vital Signs Volume 21 by Linda Starke. Copyright © 2014 Worldwatch Institute. Excerpted by permission of ISLAND PRESS.
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