Photo by: Bloomberg
JOHANNESBURG (miningweekly.com) – As appetite for other energy sources gains momentum, with the fast growth of renewables and a strong focus on energy efficiency, growth in global coal demand is expected to stall over the next five years, the International Energy Agency’s (IEA’s) latest ‘Medium-term Coal Market’ report shows.
However, while the forecast shows coal’s share of the global power generation mix contracting from 41% in 2014 to 36% by 2021, driven, in part, by lower demand from China and the US, the world remains highly dependent on coal. Coal will remain the world’s number-one fuel for generating electricity, producing steel and making cement.
Coal demand dropped for the first time in 2015, and is not expected to reach 2014 levels again until 2021; however, this outlook depends on the trajectory of demand from China, which accounts for 50% of global coal demand and almost half of coal production.
Coal-fired power generation in China dropped in 2015 owing to sluggish power demand and a diversification policy that led to the development of new renewable and nuclear power generation capacity.
Coal currently provides almost 30% of the world’s primary energy, which will decline to 27% by 2021.
It is also responsible for 45% of all energy-related carbon emissions and is a significant contributor to other types of pollution.
“This is the contradiction of coal — while it can provide essential new power generation, it can also lock in large amounts of carbon emissions for decades to come. It is too early to say that this is the end for coal,” said IEA energy markets and security directorate director Keisuke Sadamori.
The IEA forecast for Chinese coal demand shows a very slow decline, with chemicals being the only sector in which coal demand will grow.
Another significant decline in coal consumption is expected in the US for 2016 following a 15% contraction in 2015 – the largest decline yet – precipitated by competition from cheap natural gas, cheaper renewable energy, notably wind, and regulations to reduce air pollutants that led to coal plant retirements.
“Looking ahead, the IEA forecasts a 1.6% a year decline, much slower than the 6.2% decline over the past five years, as higher gas prices result in less coal-to-gas switching,” Sadamori noted.
Further, coal demand is shifting to Asia, where emerging economies with growing populations are seeking affordable and secure energy sources to power their economies.
In 2000, about half of coal demand was in Europe and North America, while Asia accounted for less than half.
“By 2015, Asia accounted for almost three-quarters of coal demand, while coal consumption in Europe and North America had declined sharply to below one-quarter,” the IEA noted.
This shift will accelerate in the next few years.