Where is coal demand heading?

Population and economic growth are the two main drivers for increasing energy demand. Most population growth is in developing countries. Coal remains a major fuel for power generation worldwide. In 2014, coal provided >30% of global primary energy requirements, ~40% of the world’s electricity generation and ~68% of steel production.

Asia consumes 63% of the total coal used, followed by North America with a 14% share. Coal imports are also dominated by Asia; the top five importers in 2013-14 were China, India, Japan, South Korea and Chinese Taipei, followed by Germany and the UK. The main exporters were Indonesia, Australia, Russia, USA, Colombia, South Africa and Canada.

More stringent legislation for coal combustion means that in some parts of the world, notably the EU, coal-fired power providers must either construct state-of-the-art, advanced power plants, invest in retrofitting pollution control technologies for existing facilities, or shut down plants altogether.

Pollution control technologies ensure the continued, reliable supply of coal-fired electricity with a reduced environmental impact. Relevant legislation and consequent investment has resulted in reduced emissions of air pollutants (SO2, NOx and particulate matter) in many regions over the last few decades.

However, coal combustion has relatively high GHG emissions compared to gas, and the carbon capture and storage technologies to deal with these emissions currently remain at demonstration level.

In her latest report for the IEA Clean Coal Centre, New regulatory trends: effects on coal-fired power plants and coal demand, Herminé Nalbandian-Sugden discusses many international, bilateral, multilateral, regional and national regulations and agreements, that have been introduced and adopted for the control of air pollutant emissions, as well as GHGs, from coal combustion.

For example, the control and reduction of CO2 emissions are addressed by the annual international conferences of the UNFCCC parties as well as by the Intergovernmental Panel on Climate Change, World Energy Council and the European Union. To date, the measures discussed and adopted, have proven insufficient and the anthropogenic emissions of GHGs, particularly CO2, continue to increase. Some reduction in CO2 emissions growth rate occurred in the OECD countries, but the growth rate has accelerated in non-OECD countries, particularly in China and India.

The latest development in the process to reduce global GHG emissions was, of course, the 21st Conference of the Parties (COP21). At the end of the meeting, on 12 December 2015, the Paris Agreement on Climate Change was adopted, in which 195 Nations agreed to set a path (based on their historic, current and future responsibilities) to keep the global temperature rise well below 2°C.

Coal retained about 30% share of global primary energy supply in 2014. This trend is forecast to continue for the medium term mainly due to the continuing growth in coal-fired power generation in China and India and, to a lesser extent, the ASEAN countries.

By 2040, forecasts indicate that the share of coal in global primary energy will decline to 24%. But projections show that global coal demand will increase 15% by 2040, as total energy demand grows. Coal use will differ dramatically by region. Coal demand is forecast to decline in all OECD regions, particularly in the USA where a reduction of about one-third in coal-fired power generation is expected to occur in the next decade. This is due to increased regulation and competition from other fuels, especially unconventional (shale) gas and renewables. Conversely, coal demand in developing countries is forecast to increase by about one-third by 2040, with significant growth in Southeast Asia, India, Africa, and Brazil. Coal demand in China is expected to peak in 2030.

The long-term future of coal as a major energy source is often seen as being in jeopardy due to regulations, market forces and environmental pressures. However, there are currently no viable, immediate, substitutes to match the relatively low-cost, availability, reliability and scale of electricity production provided by coal-fired power plants, globally.

Short-term forecasts to 2020, mid-term to 2035 and 2040, and long-term ones indicate that coal consumption will increase but the share of coal-based power generation will gradually decline in the global generation mix. The consensus seems to be that coal will remain an essential fuel, especially when addressing the current lack of access to electricity in many regions.

New regulatory trends: effects on coal-fired power plants and coal demand CCC/262 by Herminé Nalbandian-Sugden, 116 pp, December 2015 is available 2015 is available for download from the IEA Clean Coal Centre Bookshop Residents of member countries and employees of sponsoring organisations can download the report at no charge after a one-off registration.