Coal Demand in South-East Asia Set To Triple In The Next 25 Years
South-east Asian coal demand is set to triple in the next 25 years, bucking a global trend and giving Australia’s coal exporters a sorely needed boost, a new International Energy Agency report predicts.
The forecast surge in demand for energy coal – also known as thermal coal and Australia’s third-biggest export – in south-east Asia comes as China’s demand is thought by some analysts to have peaked and India focuses on renewables and domestic coal production.
The report is a rare piece of good news for Australia’s struggling coal producers because the growth in domestic energy demand in south-east Asia will exceed the capacity of domestic suppliers, especially Indonesia, to expand to meet it.
As a result, the International Energy Agency predicts that Australia will surpass Indonesia as the world’s largest thermal coal exporter again by 2020, regaining a position it gave up in 2006.
The growth of coal power generation in south-east Asia comes as Australian financial institutions face global pressure to walk away from coal. Many expect a United Nations climate conference in December to bring a global agreement to reduce planet-warming carbon dioxide emissions – of which coal is the biggest source.
Chinese group Shenhua’s Watermark coal mine in north-western NSW and Indian group Adani’s Carmichael mine in Queensland are awaiting federal government approval, in the face of persistent protests by farmers and green groups.
South-east Asia’s embrace of coal comes with a geopolitical twist.
As Western financial institutions such as the World Bank and European and American development banks walk away from funding coal, the IEA predicts that Chinese-led institutions such as the recently formed Asian Infrastructure Investment Bank will step into the breach to help south-east Asia meet the higher cost of low-emission coal technology.
Paul Flynn, chief executive of Whitehaven Coal, operator of the Maules Creek mine in north-western NSW, said the IEA projections were consistent with the demand the company was seeing from countries such as Vietnam, Malaysia and the Philippines.
Mr Flynn said analysts predicting the decline of Australian coal exports ignored the higher energy content of Australian coal, which made it more suitable for new high-efficiency coal plants, which emit up to a third less carbon dioxide than conventional power plants.
He said 70 gigawatts of new coal-fired power stations would be opened across Asia in the next five years, requiring another 150 million to 180 million tonnes of coal a year. Even if only half of that came from Australia, it didn’t have the capacity.