Global coal demand to reach 9bn tonnes by 2019

Global demand for coal over the
next five years will continue
marching higher, breaking the 9-
billion-tonne level by 2019, the
International Energy Agency (IEA)
said in its annual Medium-Term
Coal Market Report just released.

This is just as Nigeria, with
abundant coal reserves spread
across Enugu, Kogi, Nasarawa and
Gombe states, is yet to fully utilize
its deposits. The Minister of Power,
Professor Chinedu Nebo recently
said that the federal government is
working out a sustainable
framework to ensure profitability
on future investments in the coal-
to-power aspect of Nigeria’s
electricity mix.
“We do not have infinite coal
deposit, so we have to plan well
for utilisation of the deposit that
we have, that is why we have to
initiate processes to develop a
bankable framework for coal-to-
power initiative. We want to ensure
that we do not start projects that
we cannot finish in the coal-to-
power aspect of our energy mix,”
Nebo said, while addressing a
gathering of energy economists at
the 7th Annual Nigerian
Association for Energy Economists
(NAEE)/International Association
for Energy Economists (IAEE)
conference in Abuja.
The IEA report notes that despite
China’s efforts to moderate its
coal consumption, it will still
account for three-fifths of demand
growth during the outlook period.
Moreover, China will be joined by
India, ASEAN countries and other
countries in Asia as the main
engines of growth in coal
consumption, offsetting declines in
Europe and the United States.
“We have heard many pledges and
policies aimed at mitigating
climate change, but over the next
five years they will mostly fail to
arrest the growth in coal demand,”
IEA Executive Director Maria van
der Hoeven said.
“Although the contribution that
coal makes to energy security and
access to energy is undeniable, I
must emphasise once again that
coal use in its current form is
simply unsustainable. For this to
change, we need to radically
accelerate deployment of carbon
capture and sequestration.”
The Executive Director also called
for more investment in high-
efficiency coal-fired power plants,
especially in emerging economies.
“New plants are being built, in an
arc running from South Africa to
Southeast Asia, but too many of
these are based on decades-old
technology,” she said.
“Regrettably, they will be burning
coal inefficiently for many years to
come.”
The report noted that global coal
demand growth has been slowing
in recent years, and sees that trend
continuing. It explained that coal
demand will grow at an average
rate of 2.1 percent per year
through 2019. This compares to
the 2013 report’s forecast of 2.3
percent for the five years through
2018 and the actual growth rate of
3.3 percent per year between 2010
and 2013.
As has been the case for more
than a decade, the fate of the
global coal market will be
determined by China. The world’s
biggest coal user, producer and
importer has embarked on a
campaign to diversify its energy
supply and reduce its energy
intensity, and the resulting
increase in gas, nuclear and
renewables will be staggering.
However, the IEA report shows that
despite these efforts, and under
normal macroeconomic
circumstances, Chinese coal
consumption will not peak during
the five-year outlook period.
The report’s forecasts come with
considerable uncertainties,
especially regarding the prospect
of new policies affecting coal.
Authorities in China as well as in
key markets like Indonesia, Korea,
Germany and India, have
announced policy changes that
could sharply affect coal market
fundamentals. The possibility of
these policy changes becoming
reality is compounding uncertainty
resulting from the current
economic climate.
The issue of low prices remains a
hot topic among coal market
participants. Last year’s report
emphasised that many coal
producers were running at losses,
largely driven by take-or-pay
infrastructure contracts or financial
liabilities. Coal prices have
declined even more since last year,
but several factors have helped
producers withstand further
economic pain.