IEA: Asian Superpowers to Boost Global Coal Demand More This Year

Coal remains at the center of the debate on the policy related to climate and energy. Coal’s shift to Asia over the last few years initiated the emergence of two worlds: one continuing coal power generation and the other discontinuing it. That is why building agreements on coal and emission reductions become difficult.

IEA publishes a series of six-year forecasts each year as the Coal 2018 report study the fossil fuel market out to 2023, segregated country and sector wise. According to this year’s report in 2017, global coal demand returned to growth after two years of decline and possibly in 2018, demand will continue to grow, but is still below “peak” levels seen in 2014, says Keisuke Sadamori, director of energy markets and security at the IEA.

Key Findings of IEA

The key findings in the IEA’s Coal 2018 report are that last two years saw the decline, but in 2017 there was a rise in global coal demand by 1% to 7585 Mt. It is due to increase in industrial output, and use of electricity as global economic growth becomes stronger.  The expectation is there that demand for coal will grow again in 2018 and strong coal power generation in India and China will contribute to it. To be specific, around 3% rise in global coal power generation means additional power generation of 40% worldwide and share of coal in power mix is 38%.

Global coal demand to remain stable in 2023

In next five years, global coal demand forecasts to be stable for the decline in demand of coal in the United States and Europe offset by an increase in coal demand in India and other Asian countries, e.g., China- the significant player in the global coal market. However, even in the case of China, coal demand will decrease gradually. The coal’s contribution in the total energy mix will decline from 27% to 25% because of the growth of renewables and natural gas.

Two Europes

The coal consumption declined by 1.1% to 627m tonnes in 2017 across EU. Western Europe adopted coal phase-out policies with action on climate change, e.g., France and Sweden. In Eastern Europe, coal demand remains the same as most countries have not taken coal phase-out policies, and new coal power plants are under construction in Poland, Balkans, and Greece.

In the EU, coal demand will decline by 2.5% per year, i.e., from 325metric tonnes of coal equivalent (mtce) in 2017 to 280mtce in 2023. However, across the whole of Europe, coal demand is expected to fall at a rate of 1.3% owing to demand remaining stable in Eastern Europe and potentially increasing in Turkey.

In the US coal demand got reduced by 2.6% to 641m tonnes in 2017. However, this decline is less rapid compared to last two years reflecting a slow-down in the closure of coal power stations. In 2018, coal retirements come down to near-record levels.

Blue Sky Policy: China

The clean-air measures in the environmental policies of China will constrain its coal demand. At present, China consumes one-fourth of the coal used globally to produce electricity and China power sector is the largest coal user in the whole world.

Coal demand in China increased by 10m tonnes to 3,664m tonnes in 2017 after three years of decline. As per IEA projection, it will decline to 2,673mtce by 2023. Despite the growth as seen in 2017, fall in coal demand expected due to the decline of consumption of coal by key industries, such as steel.

Another expected driver is the country’s “Blue Sky” policy – an action plan for reducing air pollution across large cities. The policy introduces bans on residents burning coal for heat in many cities, including Beijing. China is also committed to investing in renewable energy and energy efficiency. Similarly, global coal demand would decline with more annual growth in hydro output in China. The shutdown of small boilers in China in 2017 owing to clean air policies will also help.

Coal Demand in Asia

In Southeast Asia, the coal demand projected to increase from 186mtce in 2017 to 259mtce in 2023-the highest percentage increase in demand for coal power, i.e., 5.4%. The growth in coal demand expected to be highest in Indonesia, Malaysia, Vietnam, and the Philippines.

In India, coal demand projected to rise from 563mtce in 2017 to 708mtce in 2023. It is due to an increase in consumption of coal-fired power for ongoing infrastructure development, expansion of the country’s middle class, growth in key industries, such as cement and sponge iron production. India’s non-power coal consumption is also expected to rise by 33mtce to 163mtce by 2023.

The IEA expects coal demand will rise slowly in India compared to the previous decade because of investment in renewable sources of power, i.e., 25% of the total power mix by 2023. Indian government aims to install 100 GW of solar by 2022 and 50GW of wind, i.e., four times the solar capacity and double the wind capacity of 2017. This year, IEA cut its forecast once again for India’s growth in coal demand as it has fallen short of earlier projections.

Share on:

About Arindom Ghosh

A professional writer, editor, blogger, copywriter, and a member of the International Association of Professional Writers and Editors, New York. He has been part of many reputed domestic and global online magazines and publications. An avid reader and a nature lover by heart, when he is not working, he is probably exploring the secrets of life.