sehat jasmani rohani dan dompet Demand for coal will be driven by China and India (By Sylvia Pfeifer) Black power: a coal-fired plant near Datong, China – the country’s future coal consumption is hard to predict For most of the past decade, one of the most widely held assumptions in the energy world has been that demand for coal will keep on rising, fuelled by China’s soaring thirst for power as its population leaves the countryside for the cities in large numbers. International coal prices duly rose and stimulated mining activity across Australia, Indonesia and as far away as Colombia and South Africa. The International Energy Agency (IEA) last year predicted that coal would rival oil as the world’s top source of energy by 2017 if no changes were made to government policies; global coal consumption would be 4.32bn tonnes of oil equivalent by that year, compared with around 4.4bn tonnes of oil equivalent for oil, according to its projections. More On this story Editorial The wrong battle for the climate Keystone Pipeline stuck in lobbying war Editorial Time to end the US oil embargo Energy costs widen gap in competitiveness Politics prevents energy industry doing job IN Energy 2013 Case study: biomass fuels industrial rebirth Pressure on grid operators to keep lights on Gas: LNG projects from Africa to Australia seek buyers Nuclear energy: Revival threatened Yet more recently there have been signs that King Coal’s rise may not be as relentless as predicted. While there is a general consensus that demand for thermal coal, used in power generation, is slowing, there are a growing number of market watchers who suggest that demand may peak as early as the next decade. They point to several factors, from a slowdown in China’s economy to competition from shale gas and stringent environmental regulations that discourage investment in coal-fired power plants. Only real progress in carbon capture and storage technology will secure the long-term future for coal, they say. “The window for profitable investment in coal mining is closing,” said analysts from Goldman Sachs in July. Coal currently enjoys a position at the top of the global fuel mix with a 36 per cent share of electricity generation – ahead of gas with 23 per cent, hydro at 16 per cent and nuclear at 13 per cent – thanks partly to China becoming the world’s largest importer of the fuel. However, the analysts said that a sharp deceleration in seaborne demand had moved the market into oversupply and led to lower prices for thermal coal. As a result, “earning a return on incremental investment in thermal coal mining and infrastructure is becoming increasingly difficult”, they said. Analysts at Citi take a similarly bearish view, arguing that Chinese demand for thermal coal in power generation could peak even before 2020, because of slowing domestic economic growth, robust growth in the country’s renewables and nuclear capacity, along with efficiency improvements in coal power plants and energy demand in an effort to control air pollution. There is, however, an opposing camp that argues just as strongly that predictions of coal’s demise are exaggerated and that demand will not stop growing. “We think the idea of peak coal is a myth,” says Andy Roberts, principal analyst for thermal coal at Wood Mackenzie, the consultancy. One point everyone does agree on is that events in China, which accounts for half the world’s consumption of coal, will to a large extent determine what happens to demand. “The notion of peak demand for thermal coal having been reached is not a crazy idea,” concedes Laszlo Varro, head of the IEA’s gas, coal and power division. “We do see a significant slowdown in demand growth,” he adds. The agency’s baseline scenario shows Chinese coal demand and consumption continuing to grow, albeit at a slower pace than in the past decade. Yet Mr Varro identifies two risks: a slowdown in China’s economy; and/or a significant change in its energy consumption away from coal towards low-carbon sources. “China is throwing the kitchen sink at diversifying its energy sources. It is spending five times what the French did at the peak on a new nuclear programme; and eight times what the Germans spent at the peak on wind energy,” says Mr Varro. Another factor impacting coal demand is the shale gas revolution in the US, the second-largest user of coal today. Last year, US gas prices fell to a 10-year low, prompting many utilities to switch from burning coal to gas. This year, a rebound in gas prices has seen a modest revival in coal use, although electricity from new coal plants is still expected to be about 50 per cent dearer than from new gas plants. America’s Environmental Protection Agency in September promised new rules to limit carbon dioxide emissions from power plants. The IEA assumes “a slow decline in consumption” in the US, but “if you combine the threat of shale gas and the US finally adopting climate policies, then there could be an acceleration of the decline,” adds Mr Varro. As a result of a shrinking domestic market, coal companies have shifted much of their product to the export market over the past two years. More US coal has been going to Europe, where low carbon dioxide prices and high gas prices have increased the competitiveness of coal in power generation. “In the UK, the clean dark spread – the profit margin from burning coal and selling the resultant electricity – has more than doubled over the past two years from £10 per megawatt/hour to more than £20 per MW/hour in early 2013,” says Robert Coates, utilities analyst at Citi in London. Most experts believe this trend will not last over the long term, especially as many of Europe’s older coal plants are due to close by 2015 under the EU’s Large Combustion Plant Directive and in view of increasing renewable generation. Another big player is India, which desperately needs more coal to boost power generation and is predicted by some experts to overtake the US to become the world’s second biggest importer. Those bullish on coal argue that the recent fall in coal prices – with heavy investment in new production by the mining industry in recent years for export projects and China’s domestic industry investing in production – will reinforce the attractiveness of the fuel. “Coal is so cheap and abundant, you need a strong, dedicated climate policy with a high carbon price to defeat it,” says the IEA’s Mr Varro. But it is China, experts say, that most defines coal’s future. Some predict that the country, with its increasingly restrictive policies, may no longer be a net importer in the next few years. Others, yet again, argue that even if China experienced slower growth, it would still help underpin demand growth for coal. “The two big demand drivers are China and India. Change in coal consumption in the rest of the world is noise compared with how much consumption will grow in these two countries,” says Mr Roberts.
Posted on: Thu, 16 Jan 2014 19:27:55 +0000
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