LAHORE: While global coal demand looks set to rise for the second year in a row in 2018, it is forecast to remain stable over the next five years as declines in Europe and North America are offset by strong growth in India and Southeast Asia, the International Energy Agency (IEA) said on Tuesday.
Air quality and climate policies, coal divestment campaigns, phase-out announcements, declining costs of renewables and abundant supplies of natural gas are all putting pressure on coal.
As a result, coal’s contribution to the global energy mix is forecast to decline slightly from 27 per cent in 2017 to 25 per cent by 2023, IEA’s market report ‘Coal 2018’ said.
But coal demand grows across much of Asia due to its affordability and availability.
India sees the largest increase of any country, although the rate of growth, at 3.9 per cent per year, is slowing, dampened by a large-scale expansion of renewables and the use of supercritical technology in new coal power plants.
Significant increases in coal use are also expected in Indonesia, Vietnam, Philippines, Malaysia and Pakistan.
Coal in China accounts for 14 per cent of global primary energy, the largest in the world. Developments in the Chinese coal sector have the potential to affect coal, gas and electricity prices across the world, for instance through inter-fuel substitution or regional arbitrage.
This puts China’s coal sector at the centre of the global energy stage. While China accounts for nearly half of the world’s coal consumption, its clean-air measures are set to constrain Chinese coal demand going forward.
The IEA forecasts Chinese coal demand to fall by around three per cent over the period.
Meanwhile, in a growing number of countries, the phase out of coal-fired generation is a key policy goal.
But market trends are proving resistant to change.
“The story of coal is a tale of two worlds with climate action policies and economic forces leading to closing coal power plants in some countries, while coal continues to play a part in securing access to affordable energy in others,” said Keisuke Sadamori, Director of Energy Markets and Security at the IEA.
“For many countries, particularly in South and Southeast Asia, it is looked upon to provide energy security and underpin economic development.”
This is why the IEA sees technologies like carbon capture, utilisation and storage as essential tools to bridge current and future energy needs with global and national climate ambitions.