Released November 09, 2022 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Global coal use rose sharply in 2021, and is on track to rise at a slower pace this year. But coal's long-term future will be determined by the world's ability to address climate change, specifically the ability of developing economies to replace coal with low- or no-carbon alternatives in electricity generation, the International Energy Agency (IEA) (Paris, France) said in its World Energy Outlook 2022 (WEO-22), released October 27.
As the world emerged from COVID-19 economic lockdowns in 2021, there was a surge in electricity demand, which pushed up the prices for fuels used to generate electricity. Gas prices doubled in 2021, which led to significant gas-to-coal switching in electricity generation. That trend continued this year, and was made even more pronounced after Russia invaded Ukraine. The IEA report expects coal use to increase in 2022.
"Both China and India have boosted investment in domestic coal production, but global production struggled to keep pace with demand increases, causing coal prices to surge," the IEA said in its report. "Russia--the world's third-largest coal exporter--and its invasion of Ukraine complicated coal-market dynamics and brought additional pressure on prices."
In last year's World Energy Outlook, the IEA constructed three scenarios to estimate demand, supply and price for energy, and carbon dioxide emissions, under three scenarios to the year 2050. This year's outlook continued that practice.
The scenarios are:
For steam and metallurgical coal, in the IEA's Stated Policies Scenario (STEPS), combined global coal demand declines by around 30% to 2050. Advanced economies cut coal use much faster than developing nations. In the Announced Pledges Scenario (APS), global coal demand falls by 20% to 2030 and by 70% to 2050. Demand in advanced economies declines by 65% to 2030 as coal use in the power and industry sectors falls rapidly. Coal demand peaks in China in the early 2020s and in India in the late 2020s.
And in the agency's NZE Scenario, global coal demand falls by 45% to 2030, with a 75% decline in advanced economies and a 40% decline in emerging market and developing economies. Unabated coal use drops by 99% between 2021 and 2050, and in 2050 just under 90% of remaining coal power generation comes from plants equipped with carbon capture, utilization and storage (CCUS).
Click on the image at right to see a graphic showing historical and projected demand under three scenarios and two time periods for all forms of coal on a worldwide basis.
China remains by far the most influential market for coal throughout the nearly three-decade outlook.
Worldwide demand for steam coal, which is used to generate electricity, falls faster than demand for metallurgical coal, which is used in steelmaking, chiefly because steam coal has several potential replacements (natural gas, renewable energy, nuclear power) while metallurgical coal has few, the report said.
Looking specifically at worldwide demand for thermal coal, coal use in electricity generation is projected to fall across all three scenarios over both timeframes--2030 and 2050. This decline results from a combination of governmental actions to restrict coal use as well as market forces that make it attractive for owners of power plants to switch from coal to other forms of fuel.
Click on the image at right to see a graphic showing historical and projected global demand for thermal coal under three scenarios and two time periods.
Developing economies around the world will determine whether coal use rises or falls, and how quickly, to 2050, the IEA report said. Developed economies like the U.S., Japan, and the European Union (EU) are projected to continue lowering their use of thermal coal to generate electricity to 2050. But developing economies, including China and India, have used three to four times the amount of coal to generate electricity than developed economies in recent years. It is not too much to say that the world's ability to combat climate change will be determined by how quickly the developing economies reduce their use of coal.
Click on the image at right to see a graphic showing historical and projected global demand for thermal and met coal in developed and developing economies under three scenarios and two time periods.
And that brings up some knotty questions:
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
As the world emerged from COVID-19 economic lockdowns in 2021, there was a surge in electricity demand, which pushed up the prices for fuels used to generate electricity. Gas prices doubled in 2021, which led to significant gas-to-coal switching in electricity generation. That trend continued this year, and was made even more pronounced after Russia invaded Ukraine. The IEA report expects coal use to increase in 2022.
"Both China and India have boosted investment in domestic coal production, but global production struggled to keep pace with demand increases, causing coal prices to surge," the IEA said in its report. "Russia--the world's third-largest coal exporter--and its invasion of Ukraine complicated coal-market dynamics and brought additional pressure on prices."
In last year's World Energy Outlook, the IEA constructed three scenarios to estimate demand, supply and price for energy, and carbon dioxide emissions, under three scenarios to the year 2050. This year's outlook continued that practice.
The scenarios are:
- Stated Policies Scenario (STEPS), which maps out a trajectory that reflects current policy settings, based on a detailed sector‐by‐sector assessment of what policies are actually in place or are under development by governments around the world. This amounts to a "business-as-usual" approach, which the world is not even coming close to meeting, according to a late-October report from the United Nations.
- Announced Pledges Scenario (APS), which assumes that all long‐term emissions and energy access targets, including net-zero commitments, will be met on time and in full, even where policies are not yet in place to deliver them.
- Net-Zero Emissions by 2050 Scenario (NZE), which sets out a pathway for the global energy sector to achieve net-zero CO2 emissions by 2050, updating the landmark IEA analysis first published in 2021. While the first two scenarios are exploratory, the NZE Scenario is normative, as it is designed to achieve the IEA's stated objective of fighting climate change and shows a pathway to that goal.
For steam and metallurgical coal, in the IEA's Stated Policies Scenario (STEPS), combined global coal demand declines by around 30% to 2050. Advanced economies cut coal use much faster than developing nations. In the Announced Pledges Scenario (APS), global coal demand falls by 20% to 2030 and by 70% to 2050. Demand in advanced economies declines by 65% to 2030 as coal use in the power and industry sectors falls rapidly. Coal demand peaks in China in the early 2020s and in India in the late 2020s.
And in the agency's NZE Scenario, global coal demand falls by 45% to 2030, with a 75% decline in advanced economies and a 40% decline in emerging market and developing economies. Unabated coal use drops by 99% between 2021 and 2050, and in 2050 just under 90% of remaining coal power generation comes from plants equipped with carbon capture, utilization and storage (CCUS).
China remains by far the most influential market for coal throughout the nearly three-decade outlook.
Worldwide demand for steam coal, which is used to generate electricity, falls faster than demand for metallurgical coal, which is used in steelmaking, chiefly because steam coal has several potential replacements (natural gas, renewable energy, nuclear power) while metallurgical coal has few, the report said.
Looking specifically at worldwide demand for thermal coal, coal use in electricity generation is projected to fall across all three scenarios over both timeframes--2030 and 2050. This decline results from a combination of governmental actions to restrict coal use as well as market forces that make it attractive for owners of power plants to switch from coal to other forms of fuel.
Developing economies around the world will determine whether coal use rises or falls, and how quickly, to 2050, the IEA report said. Developed economies like the U.S., Japan, and the European Union (EU) are projected to continue lowering their use of thermal coal to generate electricity to 2050. But developing economies, including China and India, have used three to four times the amount of coal to generate electricity than developed economies in recent years. It is not too much to say that the world's ability to combat climate change will be determined by how quickly the developing economies reduce their use of coal.
And that brings up some knotty questions:
- How can economies in the developing world, who often bear the brunt of climate-induced natural disasters and who often lack economic strength, be expected to spend trillions of dollars to convert their sources of electricity generation?
- What obligation, if any, do the advanced economies owe to the developing economies to accelerate their transition away from coal?
- Can private capital step up to augment public capital to build alternatives to thermal and met coal in developing economies?
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
