Treading water or full steam will be ahead for coal



International Energy Agency : Economist, engineer
Maintaining current policies would see coal use rise by a further 65% by 2035, overtaking oil as the largest fuel in the global energy mix. In the New Policies Scenario, global coal use rises for the next ten years, but then levels off to finish 25% above the levels of 2009. Realisation of the 450 Scenario requires coal consumption to peak well before 2020 and then decline. The range of projections for coal demand in 2035 across the three scenarios is nearly as large as total world coal demand in 2009.
Coal has met almost half of the increase in global energy demand over the last decade. Whether this trend alters and how quickly is among the most important questions for the future of the global energy economy. Maintaining current policies would see coal use rise by a further 65% by 2035, overtaking oil as the largest fuel in the global energy mix. In the New Policies Scenario, global coal use rises for the next ten years, but then levels off to finish 25% above the levels of 2009. Realisation of the 450 Scenario requires coal consumption to peak well before 2020 and then decline. The range of projections for coal demand in 2035 across the three scenarios is nearly as large as total world coal demand in 2009. The implications of policy and technology choices for the global climate are huge. China’s consumption of coal is almost half of global demand and its Five-Year Plan for 2011 to 2015, which aims to reduce the energy and carbon intensity of the economy, will be a determining factor for world coal markets. China’s emergence as a net coal importer in 2009 led to rising prices and new investment in exporting countries, including Australia, Indonesia, Russia and Mongolia. In the New Policies Scenario, the main market for traded coal continues to shift from the Atlantic to the Pacific, but the scale and direction of international trade flows are highly uncertain, particularly after 2020. It would take only a relatively small shift in domestic demand or supply for China to become a net-exporter again, competing for markets against the countries that are now investing to supply its needs. India’s coal use doubles in the New Policies Scenario, so that India displaces the United States as the world’s second-largest coal consumer and becomes the largest coal importer in the 2020s. Widespread deployment of more efficient coal-fired power plants and carbon capture and storage (CCS) technology could boost the long-term prospects for coal, but there are still considerable hurdles. If the average efficiency of all coal-fired power plants were to be five percentage points higher than in the New Policies Scenario in 2035, such an accelerated move away from the least efficient combustion technologies would lower CO2 emissions from the power sector by 8% and reduce local air pollution. Opting for more efficient technology for new coal power plants would require relatively small additional investments, but improving efficiency levels at existing plants would come at a much higher cost. In the New Policies Scenario, CCS plays a role only towards the end of the projection period. Nonetheless, CCS is a key abatement option in the 450 Scenario, accounting for almost one-fifth of the additional reductions in emissions that are required. If CCS is not widely deployed in the 2020s, an extraordinary burden would rest on other low-carbon technologies to deliver lower emissions in line with global climate objectives.


WEO 2011