Global coal demand has stalled after more than a decade of aggressive growth, the International Energy Agency announced today.
In its annual coal market report, the IEA has slashed its global coal demand growth forecast, based on two key factors: economic restructuring in China, which represents half of the world’s coal consumption, and greater policy support for renewables and energy efficiency.
The IEA has cut its five-year estimate of global coal demand growth by more than 500 million tonnes of coal equivalent (Mtce) in recognition of what it calls “the tremendous pressures facing coal markets”.
The report found that Chinese coal demand dropped in 2014 and is set to continue at a faster pace this year, m arking the first two-years-in-a-row decline in China since 1982.
IEA Executive Director Fatih Birol said: “The coal industry is facing huge pressures, and the main reason is China – but it is not the only reason.
“The economic transformation in China and environmental policies worldwide – including the recent climate agreement in Paris – will likely continue to constrain global coal demand.”
The IEA found that coal demand in China is “sputtering” as the Chinese economy gradually shifts to one based more on services and less on energy-intensive industries.
Chinese growth in hydropower, nuclear, wind and solar are also “significantly curtailing coal power generation, driven not only by energy security and climate concerns but also by efforts to reduce local pollution”.
India’s push for universal energy access and an expansion of manufacturing will drive electricity growth and despite the country’s ambitious renewable targets, coal will provide a large share of the additional power requirements – as much as 60 per cent through 2020 according to the IEA.
The report finds that Southeast Asia will have the highest growth rate in coal use in the next five years, as Indonesia, Vietnam, Malaysia and the Philippines bid to underpin their power generation with new coal plants.
The IEA also notes that “unfortunately, around half of the new coal-fired generation capacity under development in the region still uses inefficient subcritical technologies”.
And Birol today also stressed that carbon capture and storage technology will be vital on the back of the recent COP21 agreement in Paris calling for the global increase in temperatures to be limited to “well below” 2 degrees Celsius.
“Governments and industry must increase their focus on this technology if they are serious about long-term climate goals,” he said. “CCS is not just a coal technology. It is not a technology just for power generation. It is an emissions reduction technology that will need to be widely deployed to achieve our low-carbon future.”