Coal plays an important and growing role in global energy supply and power generation

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1 OECD/IEA - 21

2 Coal plays an important and growing role in global energy supply and power generation OECD/IEA, 21 Global Primary Energy Supply, 27 Global Electricity Generation, 27 TPES coal s share World Mtoe 26.5% OECD Mtoe 2.9% USA 2 34 Mtoe 23.7% China Mtoe 65.7% India 595 Mtoe 4.8% elec. gen. coal s share World TWh 41.5% OECD TWh 37.1% USA TWh 49.% China TWh 81.% India 83 TWh 68.4% sources: IEA Key World Energy Statistics 29 and IEA databases 2

3 China s coal production and use could rise enormously million tonnes OECD/IEA, IEA World Energy Outlook 29 Reference Scenario for China US UK Germany* note: * shows only German hard coal production sources: Cleaner Coal in China, OECD/IEA 29 and IEA World Energy Outlook 29 3

4 The importance of coal in meeting recent growth in energy demand Mtoe OECD/IEA, 21 Increase in primary demand, % % = average annual rate of growth % 2.6% %.8% Coal Oil Gas Renewables Nuclear Demand for coal has been growing faster than any other energy source and is projected to account for more than a third of incremental global energy demand to 23. 4

5 OECD/IEA, 21 World coal production (to 28) and CO 2 emissions from fossil fuel use (to 27) 7, million tonnes GtCO2 3 global CO2 6, 25 5, 2 4, 3, 15 brown coal ROW hard coal China hard coal 2, 1 1, sources: IEA Coal Information 29 and IEA CO 2 Emission from Fossil Fuel Combustion

6 OECD/IEA, 21 Coal production accounts for ~2% of energy production and ~1% of TPES in EU-27 Brown Coal, 28 Czech Republic Spain Hard Coal, 28 other Bulgaria Hungary Slovenia other Estonia United Kingdom Germany Poland Romania Czech Republic Germany 135 Mt 113 Mtce note: TPES: total primary energy supply source: IEA databases Poland Greece 452 Mt 139 Mtce 6

7 OECD/IEA, 21 million tonnes Hard coal imports into EU-27, other+non spec. Poland Indonesia United States Colombia Australia South Africa Russia EU-27 imported 43% of its coal needs in 28, compared with 19% in 199 (on an energy basis). source: IEA databases 7

8 OECD/IEA, 21 coal imports and (exports), million tonnes China became a net importer for the first time in Chinese coal imports & exports to IMPORTS coking coal imports steam coal imports coking coal exports steam coal exports net hard coal trade WEO EXPORTS -1 Net imports of c.1 Mt by 215, forecast in IEA World Energy Outlook 27, have been reached 6 years earlier. sources: IEA Coal Information 29; IEA World Energy Outlook 27; and IEA databases 8

9 OECD/IEA, 21 USD/tonne (6, kcal/kg net) International steam coal prices have fallen from the peaks of mid McCloskey Asian CIF McCloskey NWE CIF Central Appalachia Powder River Basin OECD / WEO21 API #2 29-Apr-21 NYMEX QL:CAPP 7-May Asian spot prices underpinned by demand from China. Lower spot prices elsewhere reflect drop in demand with strong competition from natural gas for power generation. sources: IEA Energy Prices & Taxes; US Energy Information Administration; and MCIS Ltd. 9

10 Global financial crisis has not changed basic outlook for energy OECD/IEA, 21 1% Shares of incremental energy demand Reference Scenario, % 6% Other fuels 4% 2% % Non-OECD Coal OECD source: IEA World Energy Outlook 1

11 OECD/IEA, 21 Gt Long term, there is no such thing as business-as-usual 42 Reference Scenario Share of abatement % Efficiency End-use Gt Power plants Gt Renewables Biofuels 1 3 Nuclear Scenario CCS source: IEA World Energy Outlook 29 - climate change excerpt Efficiency measures account for two-thirds of the 3.8 Gt of abatement in 22, with renewables contributing close to one-fifth and CCS about 3%. 11

12 OECD/IEA, 21 Mtce World primary coal demand by scenario Reference Scenario 45 Scenario In the 45 Scenario global coal demand plateaus by 215 and declines progressively, returning to 23 levels by 23 - a level almost 5% lower than in the Reference Scenario. 12

13 The rationale for CCS OECD/IEA, 21 Without new policies, global emissions increase by 13% by 25, leading to a 4-7 o C temperature rise. CCS provides one-fifth of the needed CO 2 reductions in 25: 9 GtCO 2 captured from over 3 plants each year. Without CCS, cost of stabilization rises by 7%. CCS is the only low-carbon solution for gas/coal, cement, and iron & steel sectors. 7 plants operating today; over 7 integrated projects planned. 13

14 Near-term actions for governments OECD/IEA, 21 Clarify CO 2 transport, storage property rights/access rights. Establish regional storage exploration programmes, and policies to encourage commercial exploration. Develop national CO 2 storage capacity estimates. Expand human capacity in CO 2 storage site assessment. Fund RD&D programmes on CCS technologies. Ensure provision of regular, transparent data from early projects. Establish CCS education/outreach programmes for the general public. 14

15 Near-term actions for industry stakeholders OECD/IEA, 21 Take more risk in funding near-term demonstration projects. Develop international sector-specific CCS working groups to address CO 2 capture and CCS generally. Share demonstration data more widely; transparent data will improve public confidence. Ensure adequate public engagement in all CCS projects. 15

16 OECD/IEA, 21 Conclusions Global coal trade patterns are shifting east after enormous demand growth since 2, driven by non-oecd countries, it is the growing import demands from China and India that are now shaping the market. The reduction of industrial production in Europe, Japan and the US weakened demand for electricity and steam coal in 29. Low natural gas prices and renewables growth will keep demand weak for imported coal in Europe and the US. With economic recovery, coal supply chains will become more stressed, as in Coal prices are likely to become higher and more volatile. CCS is a budding technology, but crucial for coal market prospects. The next vital step is full-sized demonstrations. 16