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Coal 2018 Analysis and Forecasts to 2023
Keisuke Sadamori – Director, Energy Markets and Security, IEA
IEEJ, Tokyo, 26th December 2018
IEA
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Coal market update• After two years of decline, global coal demand grew in 2017 and is estimated toincrease further again in 2018
• Coal demand grew strongly in India, Southeast Asian countries and Korea in2017, while decline continued in Europe and North America• With seaborne thermal coal trade growing and no large new mining capacity,prices remain high• High prices pushed up coal production in price sensitive exporters, particularly
the US (up 6.3%) and Indonesia (up 5.2%)• Climate and air quality regulations, divestment campaigns, phase out policies,
declining costs of renewables and more abundant gas are all putting additionalpressure on coal2© OECD/IEA 2018

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2017, when growths were bigger than declines again

60Mt

Mt

2017-2016 difference in coal consumption (left) and production (right)
1205010040803060

2040

102000‐10‐20‐20‐40Whereas growth is mostly in Asia and decline in Europe, United States is in a very particular position
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Prices remain highUSD/tThermal and coking coal price indices, 2015-18

350
300
250
200
150
100
500

Newcastle (6000 kcal)

Australian LV PCIAustralian prime hard coking

Sustained demand, Chinese supply side reforms and lack of investment in coal mining underpinnedhigh prices
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China is still the price setter in international markets
Coal prices (6000 kcal/kg) in China
800

RMB/t

700
600
500
400300Qinhuangdao FOB price

Bohai-Rim steam-coal price index

The comfort zone for the Chinese producers and consumers is the global reference for international
coal prices
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Much talk but not much change
Comparison between Coal 2017 and Coal 2018 global coal demand forecasts
6000
5500

Mtce

5000
4500
4000
3500
3000

Coal 2017 report

Coal 2018 report

IEA statistics (continuous line) and IEA forecast (dotted line)

Despite numerous policy changes and announcements,
the forecast of coal demand is almost unchanged compared with last year’s forecast
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One planet, two coal worlds
Coal demand in select countries/regions in 2000, 2017 and 2023 (forecast)
3000

2500

Mtce

2000

1500

1000

5000
US

EU‐28

Japan Korea
2000

2017

China

India

Southeast Asia

2023

India and southeast Asia will lead coal demand growth while it will continue to decline inEurope and United States
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Understanding China to understand coalPowerHeavy industry

Small industrial and residential

Coal conversion

Four largest coal consuming sectors in China follow different trends
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IEEJ：January 2019 © IEEJ2019Fight for blue skies
Coal (Mt) saved in industrial boilers, 2017-22
LNG spot prices

23

14.0
12.0
10.0

43

8.0

Beijing-Tianjin-Hebei

6.0

37

4.0
2.0

China

UK

FranceSpain

Nov‐18Oct‐18

Sep‐18Aug‐18Jul‐18Jun‐18May‐18Apr‐18Mar‐18Feb‐18Jan‐18Dec‐17

Nov‐17

Oct‐17

Sep‐17

Aug‐17

Jul‐170.0
Other regions

TTF

7
Pearl river delta(Guangdong)

Yangtze river delta andother Eastern China

Source: IEA Coal 2017

Phase out of coal boilers and stoves in China pushed up LNG prices all over the world.
In an interconnected world, Chinese coal is at the centre of the energy stage.
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China’s path to a less energy intensive economy
GDP, power demand and coal generation growth in China
16.0%
20.0%
14.0%
15.0%
12.0%
10.0%
10.0%
8.0%
5.0%
6.0%
4.0%
0.0%
2.0%

2000

2001

2002

2003

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

0.0%
‐5.0%
2004

2005 2006
GDP growthGDP growth (6 year average)

2007

2008 2009 2010 2011
Total generation growthPower growth (6 years average)

2012 2013 2014 2015 2016 2017
Coal generation growth
Coal generation growth (6 years average)

Whereas the structural transformation of the Chinese economy is unequivocal, and “blue skies” remains thepolicy priority, electricity demand is boosted by air quality policies, growing middle class and other factors
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Dominance of Chinese power sector in global coal market

Global coal demand increase

Relationship between global coal demand and hydro generation/power demand in China
4.0%
3.0%
2.0%

China hydrooutput growth

1.0%
0.0%

China power
demand growth

-1.0%
-2.0%
0%

1%

2%
3%
4%
5%
6%
7%
8%
Hydro output or power demand growth

9%

10%

Changes in Chinese power demand and hydro output have a significant impact on global coal demand.
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Coal power generation in India is set to continue to grow
TWhForecast

1800

90%

1600

80%

1400

70%

1200

60%

1000

50%

800

40%

600

30%

400

20%

200

10%

01973

1978

1983

1988

1993

Coal-fired generation (TWh)

1998

2003

Share coal (%)

2008

2013

2018

0%2023

Share renewables (%)

Coal has been a cornerstone of India’s power system.
Renewables and more efficient coal plants reduce the forecast rate of growth.
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Coal for power will be the driver of demand growth in southeast Asia

TWhElectricity generation by source in southeast Asia
600

Forecast
500
400300200
100
02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Renewables

CoalOthers

Increasing use of coal for electricity will push up consumption in some of the countries in southeast Asia
(Indonesia, Vietnam, Philippines and Malaysia)
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IEEJ：January 2019 © IEEJ2019(Western) EU on its way out of coal
Coal’s share in Power Generation

Coal phase out in EU-28
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

No coal power

Phase out announced

Phase out underdiscussion

No phase out

Cyprus, Belgium, Estonia, Latvia, Lithuania, Luxembourg and Malta do not have coal power plants in operation

Phase-out policies are broadly announced and implemented in EU countries.
The challenge imposed by the end of coal-based electricity is country-specific14© OECD/IEA 2018

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Low investment due to uncertain demand
The evolution of exports from six major thermal coal exporters between 2011 and 2023

450

Forecast

Mt

400
350

Indonesia

300

Australia
Russia

250
200
150

Colombia
South Africa
United States

100
5002011 2012 2013 2014 2015 2016 2017 2018* 2019* 2020* 2021* 2022* 2023**ForecastRussia’s infrastructure expansion will support export growth.
United States and Indonesia will continue to be the most price sensitive exporters
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International CCUS Summit, Edinburgh

UK and IEA hosted 50 senior delegates from across government, industry and the finance sector tosupport new momentum for CCUS
16

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Key messages• Global coal demand through 2023 set to be stable, as growth in India andother Asian countries will offset decline in Europe and US• China remains the key player in coal market. The rise of power demand inChina, the main driver of a recent global coal rebound, will likely slow down in thecoming years; but uncertainties remain• Despite high prices, investment in new mines remains low. Uncertain demandfor imported coal, risks associated with climate policy and local opposition havecooled investors’ appetites• One planet, two coal worlds. In one world, closing coal power plants is a key
climate policy. In the other, coal will play a continuing role thanks to its
affordability and local availability. Carbon capture, utilization and storage is thebridge between the two worlds
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