Happy July! The year is now more than halfway over, so I want to take a look at how a few big sources of carbon pollution are shaping up in 2022.
To understand what’s going on, it’s first worth reflecting on last year. In 2021, the world pumped 36.3 metric gigatons of carbon pollution from fossil fuels into the atmosphere, a record high. This pollution was largely driven by a surge in energy production in China, which produced about a third of the world’s total energy-related carbon pollution. Last year, China’s electricity demand jumped by 10 percent, a leap equivalent to adding Africa’s total power consumption, according to the International Energy Association. But the United States was responsible for roughly another 13 percent, and emissions from the U.S., the European Union, and Japan combined for about a quarter of the global total.
That was last year. So far, we don’t have the numbers to figure out what this year’s top-line emissions look like, but 2022 has been defined by two events: First, Russia ramping up its invasion of Ukraine. When Russian tanks rolled across the border in February, the global energy market changed, undergoing a series of convulsions that have sent Europe into a massive energy crisis and handed the U.S. some of its highest gasoline prices ever. On top of that debacle, the Chinese economy has slowed, bogged down by President Xi Jinping’s zero-COVID policy.
Both of these events will shift emissions in significant ways, but it’s too early to unpack all of the effects they might have. The war in Ukraine, for instance, could spur emissions in every sector to rise—except, that is, in transportation, where surging oil prices are reducing demand. In the perverse logic of climate change, China’s sputtering economy would normally be good for the planet, because GDP remains correlated with carbon emissions. But because of the construction-and-infrastructure-focused approach that Chinese officials use to stimulate their country’s economy, a slowdown in Chinese growth could produce an emissions bonanza as the government pours investment into the carbon-intensive steel, cement, and power industries.
That’s the overview, at least. I’ll leave the conclusive analysis of this year’s climate impact to the energy experts. But I want to highlight two significant changes in the energy system.
The first is that coal is in the middle of a comeback that’s probably temporary, but who really knows. Before the pandemic, the common wisdom was that coal was on its way out as a major electricity source, especially in North America and Europe. It simply could not compete with cheap renewables and natural gas, and because it’s so much worse for the climate than either, power generators had little reason to allow it.
With natural-gas prices spiking, and with countries recalculating what kind of energy they can get hold of in a geopolitical crisis, coal has become more important. Germany, which was in the middle of phasing out its coal plants before the war in Ukraine, has ordered coal plants to produce more electricity in the short term. Even in the United States, where natural gas hasn’t spiked as much, coal demand has been up since late last year—although coal plants are still closing. In the West, the coal industry is not acting as if this boom will be permanent. You don’t see coal miners expanding their operations or opening new mines. Like oil companies, they’re mostly returning the cash to their investors.
China remains a larger concern. As the world has prepared for larger forms of economic warfare, China has doubled down on coal production, which is among its most militarily secure energy sources. The country’s premier says that only a boost to coal production can stave off blackouts this summer (amid a climate-change-intensified heat wave).
The second change we’ve seen this year is that the energy consumption of bitcoin has fallen. Cryptocurrencies are extremely environmentally taxing, because creating new coins requires constantly performing costly computing. But this year, the cryptocurrency industry has collapsed: Since its peak last fall, more than $2 trillion in value has been annihilated, and bitcoin in particular has plunged 70 percent. In turn, bitcoin’s global energy consumption has fallen by about 70 terawatt-hours a year, effectively eliminating an Austria’s worth of power consumption.
Essentially, the more that a bitcoin costs, the more valuable it is for miners to expend energy to produce it. There’s essentially a similar relationship in the oil market: Oil companies try to drill for the world’s most expensive barrels, such as those secured beneath the Arctic Ocean, only when oil is expensive, because the marginal cost of finding an additional barrel has to exceed the cost of pulling it out of the ground in that specific spot. To be clear, bitcoin still uses significantly more energy than it did before the pandemic. Its carbon pollution is now on par with Greece’s. But it hasn’t experienced the hockey-stick growth that some climate experts feared.
That hasn’t been the only positive development. Over the past year, wind turbines and solar panels have gotten costlier, but not to the same degree that fossil fuels have. According to a new study from Bloomberg New Energy Finance, renewables remain the cheapest form of power generation for two-thirds of the world’s population. These trends, it’s worth noting, may not hold for the rest of 2022. If some parts of the world enter a recession, as now seems possible, if not likely, then their emissions could fall. Regardless, the return to a more bellicose world, a less energy-secure world, means that more countries will turn to the energy sources—the fossil fuels—in their backyard. That means coal, the fossil fuel by far the most damaging to the climate and to human health, may burn for years to come.