Released December 22, 2021 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The reports of coal's death, to modify a Mark Twain quip, have been greatly exaggerated. That's according to a new report from the International Energy Agency (IEA) (Paris, France), which said global coal use to generate electricity is on track to grow 9% this year over 2020, to a new all-time high of 10,350 terawatt-hours.
Coal power generation will rise about 20% this year in the U.S. and U.K., predicted the new IEA report, Coal 2021, released December 17. But the real drivers for demand growth this year were China and India, where coal use to generate electricity will rise about 9% and 12%, respectively, pushing both countries into record territory.
"Taking into account the rebound in global industrial output, overall coal demand worldwide is expected to grow by 6% in 2021, bringing it close to the record levels it reached in 2013 and 2014," the report said.
Part of the reason for this year's worldwide jump in demand for thermal and metallurgical coal is the dramatic recovery of national economies after the widespread availability of vaccines to fight COVID-19. Another critical factor has been the sharp increase in natural gas prices. Economic growth zoomed higher and faster than could be met with renewable energy, the report noted. Natural gas also could not economically meet demand. Natural gas prices got so high this summer that some power stations switched from gas to fuel oil.
"Coal is the single largest source of global carbon emissions, and this year's historically high level of coal power generation is a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero," IEA Executive Director Fatih Birol said in a statement. "Without strong and immediate actions by governments to tackle coal emissions -- in a way that is fair, affordable and secure for those affected -- we will have little chance, if any at all, of limiting global warming to 1.5 degrees Celsius."
The report noted: "China's influence on coal markets is difficult to overstate. China's power generation, including district heating, accounts for one-third of global coal consumption. China's overall coal use is more than half of the global total. Coal demand in China is underpinned by fast growing electricity demand and the resilience of heavy industry."
"This (increased demand for coal) is despite a decade of strong and sustained efforts to diversify the country's power mix -- during which China has expanded hydro, wind, solar and nuclear power capacity by more than any other country in the world -- and intensive switching from coal to natural gas in the residential heating and light industrial sectors. China is also the world's largest coal producer and importer, with domestic price swings from supply-demand imbalances immediately impacting international markets."
As the IEA sees it, 2021 could be a harbinger of new record demand in 2022-2024, where demand trends will revert to pre-COVID patterns: declining use in the U.S. and European Union more than offset by strong demand growth in some emerging and developing countries.
In the U.S. over the 2022-2024 period, demand for coal in the Power sector will decline, the result of slow electric demand growth and the rapid expansion of renewable generation. In addition, as gas prices come down, gas will recapture some market share from coal.
Developing nations such as Vietnam, the Philippines and Bangladesh are expected to only marginally increase their coal to generate electricity over the 2022-2024 period, a reversal from earlier expectations that future coal use there would surge. Instead, those countries will shift to less-carbon-intensive fuels for their future electricity.
But global coal trends over the 2022-2024 period will be shaped largely by China and India, which account for about 67% of global coal use, the report said.
"Despite their efforts to increase renewables and other low-carbon energy sources, China's coal demand growth is expected to average less than 1% per year between 2022 and 2024. In India, stronger economic growth and increasing electrification are forecast to drive coal demand growth of 4% per year," the report said. Though the percentage gains are small, the sheer size of those two national markets is expected to more than offset any reduction in thermal coal use in the U.S. and EU over the next three years, the report said.
Click on the image at right to see IEA's estimate of aggregate coal demand, by country, from 2000 through 2024.
Global coal use in the Power sector was about 7,800 million tonnes in 2019, but COVID-19 cut that back to about 7,456 million tons in 2020. Sharp economic growth pushed coal use in electricity generation to about 7,906 million tons this year. While demand in the U.S. and EU is expected to drop by a total of about 179 million tons over the 2022-2024 period, demand in China is projected to jump 135 million tons over that time, with Indian demand rising about 129 million tons, the report projected. By the end of 2024, global coal use to generate electricity is expected to be approximately 8,031 million tons.
Click on the image at right to see project changes in coal use for electric generation over the 2021-2024 period.
Coal 2021 notes that coal prices have been on a "rollercoaster ride" over the past two years: "After falling to $50 per tonne in the second quarter of 2020, they started to climb towards the end of the year, with supply cutbacks balancing the market before rebounds in economic activity and coal demand in China started pushing prices up. In 2021, prices were lifted further by demand outstripping supply in China -- the global coal price setter -- as well as by supply disruptions and higher natural gas prices globally. Coal prices reached all-time highs in early October 2021, with imported thermal coal in Europe, for example, hitting $298 per tonne. Quick policy intervention by the Chinese government to balance the market had a rapid effect on prices. As of mid-December, European prices were back below $150 per tonne."
The report predicts that global coal production will hit a record in 2022. Coal production "failed to keep pace with rebounding coal demand in 2021, especially during the first half of the year, cutting into stock levels and pushing up prices. In China and India, where coal shortages led to power outages and idled factories, domestic policies to ramp up production and reduce coal shortages were soon implemented, facilitated by the large presence of state-owned companies in production. The main coal exporting countries were prevented from fully taking advantage of high prices by supply-chain disruptions, such as flooding in Indonesian mines. Years of lower investment due to financing and bureaucratic restrictions also played a role."
Issued shortly after the U.N. summit on global climate change, held in Glasgow, Scotland, the report noted that "momentum behind net-zero greenhouse gas emissions has grown, but the era of declining emissions is moving further away." An increasing number of countries have taken the net-zero pledge, which should curtail future demand for coal, "but these (pledges) are not yet visible in our near-term forecast, reflecting the major gap between ambitions and action," Coal 2021 said. "The coal power generation rebound in the United States and Europe in 2021 is a blip, and coal demand will resume its decline in both regions. However, Asia dominates the global coal market, with China accounting for more than half of global demand, or two-thirds if India is added. These two economies -- dependent on coal and with a combined population of almost 3 billion people -- hold the key to future coal demand."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
Coal power generation will rise about 20% this year in the U.S. and U.K., predicted the new IEA report, Coal 2021, released December 17. But the real drivers for demand growth this year were China and India, where coal use to generate electricity will rise about 9% and 12%, respectively, pushing both countries into record territory.
"Taking into account the rebound in global industrial output, overall coal demand worldwide is expected to grow by 6% in 2021, bringing it close to the record levels it reached in 2013 and 2014," the report said.
Part of the reason for this year's worldwide jump in demand for thermal and metallurgical coal is the dramatic recovery of national economies after the widespread availability of vaccines to fight COVID-19. Another critical factor has been the sharp increase in natural gas prices. Economic growth zoomed higher and faster than could be met with renewable energy, the report noted. Natural gas also could not economically meet demand. Natural gas prices got so high this summer that some power stations switched from gas to fuel oil.
"Coal is the single largest source of global carbon emissions, and this year's historically high level of coal power generation is a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero," IEA Executive Director Fatih Birol said in a statement. "Without strong and immediate actions by governments to tackle coal emissions -- in a way that is fair, affordable and secure for those affected -- we will have little chance, if any at all, of limiting global warming to 1.5 degrees Celsius."
The report noted: "China's influence on coal markets is difficult to overstate. China's power generation, including district heating, accounts for one-third of global coal consumption. China's overall coal use is more than half of the global total. Coal demand in China is underpinned by fast growing electricity demand and the resilience of heavy industry."
"This (increased demand for coal) is despite a decade of strong and sustained efforts to diversify the country's power mix -- during which China has expanded hydro, wind, solar and nuclear power capacity by more than any other country in the world -- and intensive switching from coal to natural gas in the residential heating and light industrial sectors. China is also the world's largest coal producer and importer, with domestic price swings from supply-demand imbalances immediately impacting international markets."
As the IEA sees it, 2021 could be a harbinger of new record demand in 2022-2024, where demand trends will revert to pre-COVID patterns: declining use in the U.S. and European Union more than offset by strong demand growth in some emerging and developing countries.
In the U.S. over the 2022-2024 period, demand for coal in the Power sector will decline, the result of slow electric demand growth and the rapid expansion of renewable generation. In addition, as gas prices come down, gas will recapture some market share from coal.
Developing nations such as Vietnam, the Philippines and Bangladesh are expected to only marginally increase their coal to generate electricity over the 2022-2024 period, a reversal from earlier expectations that future coal use there would surge. Instead, those countries will shift to less-carbon-intensive fuels for their future electricity.
But global coal trends over the 2022-2024 period will be shaped largely by China and India, which account for about 67% of global coal use, the report said.
"Despite their efforts to increase renewables and other low-carbon energy sources, China's coal demand growth is expected to average less than 1% per year between 2022 and 2024. In India, stronger economic growth and increasing electrification are forecast to drive coal demand growth of 4% per year," the report said. Though the percentage gains are small, the sheer size of those two national markets is expected to more than offset any reduction in thermal coal use in the U.S. and EU over the next three years, the report said.
Global coal use in the Power sector was about 7,800 million tonnes in 2019, but COVID-19 cut that back to about 7,456 million tons in 2020. Sharp economic growth pushed coal use in electricity generation to about 7,906 million tons this year. While demand in the U.S. and EU is expected to drop by a total of about 179 million tons over the 2022-2024 period, demand in China is projected to jump 135 million tons over that time, with Indian demand rising about 129 million tons, the report projected. By the end of 2024, global coal use to generate electricity is expected to be approximately 8,031 million tons.
Coal 2021 notes that coal prices have been on a "rollercoaster ride" over the past two years: "After falling to $50 per tonne in the second quarter of 2020, they started to climb towards the end of the year, with supply cutbacks balancing the market before rebounds in economic activity and coal demand in China started pushing prices up. In 2021, prices were lifted further by demand outstripping supply in China -- the global coal price setter -- as well as by supply disruptions and higher natural gas prices globally. Coal prices reached all-time highs in early October 2021, with imported thermal coal in Europe, for example, hitting $298 per tonne. Quick policy intervention by the Chinese government to balance the market had a rapid effect on prices. As of mid-December, European prices were back below $150 per tonne."
The report predicts that global coal production will hit a record in 2022. Coal production "failed to keep pace with rebounding coal demand in 2021, especially during the first half of the year, cutting into stock levels and pushing up prices. In China and India, where coal shortages led to power outages and idled factories, domestic policies to ramp up production and reduce coal shortages were soon implemented, facilitated by the large presence of state-owned companies in production. The main coal exporting countries were prevented from fully taking advantage of high prices by supply-chain disruptions, such as flooding in Indonesian mines. Years of lower investment due to financing and bureaucratic restrictions also played a role."
Issued shortly after the U.N. summit on global climate change, held in Glasgow, Scotland, the report noted that "momentum behind net-zero greenhouse gas emissions has grown, but the era of declining emissions is moving further away." An increasing number of countries have taken the net-zero pledge, which should curtail future demand for coal, "but these (pledges) are not yet visible in our near-term forecast, reflecting the major gap between ambitions and action," Coal 2021 said. "The coal power generation rebound in the United States and Europe in 2021 is a blip, and coal demand will resume its decline in both regions. However, Asia dominates the global coal market, with China accounting for more than half of global demand, or two-thirds if India is added. These two economies -- dependent on coal and with a combined population of almost 3 billion people -- hold the key to future coal demand."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
