Coal globally

10 largest coal consumers

The world's insatiable need for energy ... and why coal remains the preferred option in developing countries

Global demand for energy continues to grow. According to the International Energy Agency (IEA), World Energy Outlook 2016 1, global energy use will grow by 30.5% by 2040, driven primarily by Asia, under the IEA's "New Policies" scenario. This takes into account the Paris Agreement targets. Renewables grow by 78% out to 2040, natural gas, 49%, nuclear 78% (mainly in China), and coal, by 5%.

On this topic, the IEA's Executive Director Dr Fatih Birol has said: "We see clear winners for the next 25 years - natural gas but especially wind and solar - replacing the champion of the previous 25 years, coal".

This is heartening, noting that global demand for coal - for both electricity generation and steel and cement-making - continues to increase, particularly in Asia, more than offsetting declining demand in OECD countries. Coal demand in India is projected to increase by two-and-a-half times out to 2040, and that of Southeast Asia triples. In 2040, 80% of global coal consumption will take place in Asia.

These projections are broadly supported by BP’s Energy Outlook for 2017 2.

In this report, global coal demand is forecast to peak in the 2020s, with China consuming almost half the world’s consumption by 2035 as its economy continues to grow.

Over the past 30 years, at least 650 million people have been lifted out of energy poverty, mostly in China where most are now connected to a largely coal-generated grid. The WCA considers that today (January 2017) China has achieved “universal energy access” for its people 3.  

In the words of World Bank Vice President Rachel Kyte: "Access to energy is absolutely fundamental in the struggle against poverty. It is energy that lights the lamp that lets you do your homework, that keeps the heat on in a hospital, that lights the small businesses where most people work. Without energy, there is no economic growth, there is no dynamism."

 

 

An estimated two billion people worldwide live without modern energy - evidenced by the World Bank's data site 4 showing percentages of population with access to electricity. To name just some: Burundi 6.5 per cent, Cambodia 31.2, Chad 6.4, Liberia 9.8, Papua New Guinea 18.1, South Sudan 5.1, Uganda 18.2.

The IEA projects that in 2040 there will still be 1.8 billion people relying on traditional biofuels (wood, animal dung), down on 2.7bn today.

So, energy is vital to alleviating poverty - the question is what energy sources to use?
For generations coal has played a major role in energy generation due to its reliability, affordability and accessibly - and evidence suggests demand will continue to rise in developing countries.

Since the late 1980s coal has consistently met 37-40 per cent of world fuel requirements for electricity generation. Despite significant shifts to other generation fuels, coal continues to be the most widely used fuel for electricity generation, although this is likely to change. Under the IEA's "New Policies" scenario (2015), the share of coal-fired electricity in global generation is projected to drop from 41% today to 28% in 2040. Even so, coal use for electricity generation increases in absolute terms by 11% because the world's economy continues to grow.

In summary, between now and 2040, more coal will be mined and consumed every year, year on year. This is the real issue confronting the world, as far as coal's contribution to GHG emission growth is concerned.

The World Coal Association estimates current annual global production of coal at 6.9 billion tonnes 5, not including lignite and peat. 

For example, China added 39 gigawatts of coal-fired capacity in 2014 and until recently was expected to add the equivalent of a new 600-megawatt plant every 10 days for the next 10 years.

The picture has changed recently with China adding five nuclear reactors to the national grid in 2016, increasing its component of nuclear power by 25%. The IEA suggests that in the last year China’s coal consumption, for electricity generation at least, may have peaked 6.

As well, China's coal-fired power stations have increased in efficiency over the last 10 years by 6%, suggesting that as new plants are built, some older ones are decommissioned. On the other hand, India is preparing for a huge surge in 7 energy use.

Home to one-sixth of the world's population and the world's third-largest economy, it is estimated 240 million people do not have electricity. (Source: Australian Government's Coal in India 2015) 8. With policies in place o accelerate modernisation, India plans to double domestic coal production by 2019 but this is not expected to come close to meeting demand. 

Demand for coal in power generation and industry is expected to increase India's share of coal to almost half of the country's energy mix and making India the largest source of growth in global coal use.
This highlights a significant challenge: demand is soaring in developing countries, with cost a key factor - 40 per cent of the world's population (approx. 2.9 billion people) has a purchasing power parity (PPP) of less than one fifth that of New Zealand. Their governments are looking to cheaper sources of energy - and that's driving their use of coal over other options.

Alongside this strategic use of coal to connect populations to the grid, many developing countries are investing in renewable energy sources. In 2015, for the first time, total investment 9 in renewable power and fuels in developing countries exceeded that in developed economies. This trend looks set to continue in the view of the IEA.

However, barriers 10, such as lack of infrastructure and economies of scale need to be overcome.

The reduction in coal use in some OECD countries has been offset by higher consumption in highly-populated emerging economies looking for reliable and affordable energy sources to produce electricity.

For example, Japan is building state-of-the-art coal plants domestically and internationally. The US Energy Information Administration reported in February 2017 11 that there are 45 coal-fired power projects under construction or planned to be built to replace the loss of nuclear power capacity shuttered due to the 2011 accident at the Fukushima nuclear plant.

Coal’s share of Japan’s electricity sector before Fukishima was 23%; it rose to 31% in 2015.  

Japan is selling its highly efficient technology to other countries as a means of ensuring secure power, based on coal supplies coming from stable countries rather than being dependent on natural gas from the Russian Federation or from the Middle East. Developing countries that need to electrify their population - many without any power - are happy to receive backing from Japan to build coal-fired power plants.

IER reports: 12 “Japan is financing $1 billion in loans for coal-fired plants in Indonesia and $630 million in loans for coal-fired plants in India and Bangladesh". Japan is using climate finance funds for the projects since these new coal-fired plants are less polluting than older coal-fired plants and therefore qualify as clean energy. Japan believes that the promotion of high-efficiency coal-fired power plants is one of the “realistic, pragmatic and effective approaches to deal with climate change.”

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