Power-Hungry Asia Drives New Coal Boom

  • Date: 16/11/18
  • Jude Clemente, Forbes

Even with the Paris climate accords signed in late-2015, global coal demand in 2017 rose for the first time in two years, as reported by the Paris-based International Energy Agency during its annual World Energy Outlook release week.

Global coal use increased in 2017, despite claims it is “dying.” — DATA SOURCE: BP; JTC

 

We energy-saturated Westerners, of course, have a hard time understanding this. We should know, however, that any anti-coal policy that we impose is not that significant. The coal action is “over there.” Per BP, China consumes over 50% of the world’s coal, with India using about 12%. In contrast, the U.S. consumes 9% of the world’s coal with Europe at 8%.

In fact, coal is the cornerstone of urbanization, increasingly important since the world’s cities are expanding by 75 million humans per year

Again, already accomplished here, mass migration to cities is a phenomenon that is mostly happening “over there,” so a lot of us fail to understand.

Yes, the coal-based Asian giants are looking to utilize more natural gas, but that does not necessarily mean a material drop in coal demand. Many of these countries are so energy deprived that all sources are needed.

Moreover, as more gas gets utilized, coal will become cheaper, thereby encouraging use. This practical problem of “using less fossil fuels will simply make them cheaper and more attractive to use” is hardly ever addressed by the anti-fossil fuel business.

Governments in still developing countries see lower cost energy like coal as especially crucial since citizens have a much smaller capacity to absorb higher prices.

Although a little known secret, even the great switch to renewables will mean more coal. Coal is an integral component for 70% of global steel production, and via steel, “There’s about 150 tonnes of metallurgical coal via steel in an onshore windmill – and 250 tonnes of coal in an offshore one.

Geology surely will not stop coal. In terms of proven coal reserves alone, Asia and the world have an 80 and 135 year supply, respectively – with the resource much larger.

My point? Undeniably not in a booming market, coal is also undeniably hardly in free fall.

Supplying 40% of all power generated, coal is still the backbone of the world’s electric power system Although slowing, new generation capacity builds are outpacing retirements.

Asia Pacific has about 1,500 gigawatts of coal-fired power capacity. While the coal fleets in Europe and the U.S. average 42 years of age, which is close to the end of their life,  “Asia’s coal plants are just 11-years-old on average and most still have decades left to operate.”

Looking forward to new builds, Carbon Brief tracks 200 gigawatts of coal capacity currently under construction and another 450 gigawatts being planned. That’s around a 30% increase in the global coal fleet.

Everybody knows about China, “according to the China Electricity Council, China added 39 gigawatts of coal-fired power capacity in 2017 alone.” But, coal-based India is likely the bigger incremental demand market for coal, especially since the average Indian consumes just 6% of the electricity that we Americans do.

While renewables and gas are expanding, BMI research says that coal will still supply nearly 70% of India’s electricity in 2026.

And outside of China and India, the little brother but rapidly growing ASEAN countries will see coal generation capacity boom 40% because it is “attractive” and “affordable.”

Moroever, as these emerging economies build out their transportation fleets, the goal for more electric vehicles will make coal power even more vital. Globally, IEA projects that there could be over 900 million electric cars in the world by 2040, helping all sources of electricity.

It is actually a very simple concept: IEA sees a 60% surge in global power demand by 2040, so obviously coal, the main source of electricity, should be expected to grow. 

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