19-12-2017

Coal’s Fading Crown to Get Indian Polish as Demand Stagnates

Coal may have fallen out of favor in China, North America and Europe but India and other Asian nations will ensure the dirtiest fossil fuel continues to supply more than a quarter of the world’s energy.

Rapid economic development in parts of Asia will rely on coal-fired plants, the International Energy Agency said in its Coal 2017 market report. After a government anti-pollution drive that resulted in one of the largest ever yearly declines in China, demand there will change little to 2022 to cement its position as the largest market by far.

“As coal use continues to decline in many parts of the world these declines are offset by continued growth in India, Southeast Asia as well as several other countries where today coal’s role is small but is on the rise,” the IEA said. “Virtually all coal consumption growth will be in power generation.”

Global consumption will rise 0.5 percent a year to 2022, the IEA said, similar to last year’s projection that demand for the fuel would “stall and plateau”. The price volatility that has seen Europe’s benchmark rise about 40 percent this year “is here to stay” as China’s national policies continue to drive the global market.

The five countries with the highest growth rate will be Pakistan, Indonesia, Vietnam, Malaysia and the Philippines, which already have many coal-fired plants under construction, according to the report. In absolute terms, India will lead the pack with an increase of 135 million metric tons over the five-year period, or about 2.5 percent of global demand last year.

In Europe, coal’s prospects are “bleak,” the agency said. Poland and Germany remain the European Union’s largest consumers of the fuel, accounting for more than half of the bloc’s demand. But while that demand will remain stable in Poland through 2022, it is projected to decline in Germany, even as the country phases out its nuclear power stations. Hard coal production in Europe outside Poland will drop to “negligible” levels by 2022.

Demand for coal will probably continue to decline in the U.S. as well. While President Donald Trump’s pro-mining policies helped the demand to recover this year, it will start declining again at a rate of about 0.9 percent a year from 2018 to 2022. The agency expects coal’s overall share in the global energy mix to decline from 27% in 2016 to 26% in 2022.

Source: Bloomberg

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