Coal consumption falling

GLOBAL coal consumption fell 1.9% to 5.4 billion tonnes of coal equivalent last year, the second year of decline, because of lower gas prices, a surge in renewables and improvements in energy efficiency, according to the International Energy Agency Coal 2017 report.
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Lau Caruana

Coal demand is down 4.2% over the past two years, nearly matching the two-year decline in the early 1990s, which remains the biggest recorded drop since the IEA started compiling statistics more than 40 years ago.

Looking ahead, global demand for coal should remain nearly flat between 2017 and 2022, resulting in a decade of stagnation for coal consumption.

By 2022, global coal demand is expected to reach 5.5Btce, the same as the average of the past five-year period.

The share of coal in the global energy mix is forecast to decline to 26% in 2022, from 27% in 2016 because of sluggish demand compared with other fuels. 

Although coal-fired power generation increases by 1.2% per year through 2016-22, its share of the power mix falls to just below 36% by 2022, which would be the lowest level since IEA statistics began,  according to International Energy Agency energy markets and security director Keisuke Sadamori.

"The energy system is evolving at a rapid pace all around us, with a more diversifying fuel mix, and the cost of technologies going down," he said.

"But while everything else is changing, global coal demand remains the same."

Coal demand dropped in China, the US and the European Union in 2016, but increased in India and across many parts of South East Asia, and shows no signs of slowing down. 

For instance, despite the rapid growth in renewables, Indian coal-fired power generation is expected to grow almost 4% a year through 2022.

While India will be increasingly important to global coal markets, China will remain the key driver. 

The potential for coal demand growth in China is limited, but the country’s supply-side reforms will be critical factors for coal prices in the coming years. Meanwhile, the European Union, accounting today for just 6% of global demand, is set to become an increasingly marginal player.

The IEA says urgent action is needed to support carbon capture, utilisation and storage technologies, which made important strides last year but still lags far behind other low-carbon technologies. 

"This serves as a critical reminder why technologies like CCUS are so important, and why governments and companies need to step up their policy support and investments in that sector in order to meet global climate goals," Sadamori said. 

"Indeed, without CCUS, coal use will be seriously constrained in the future."