The Asian perspective: thermal coal and renewables ESPO: PORTS IN A CHANGING CLIMATE, A CHANGING WORLD! June 01, 2017
Historical development
Global energy use: historical Global energy use by source (1990-2015) % split by source (1990-2015) 14,000 CAGR (2000-2005) 4% (1990-1995) 1% (2005-2010) 3% (1995-2000) 2% (2010-2015) 2% 100% M. Tonne oil equivalent 10,500 7,000 75% 50% 3,500 25% 0 1990 1995 2000 2005 2010 2015 0% 1990 1995 2000 2005 2010 2015!3 Oil Natural Gas Coal Nuclear Hydroelectricity Biofuels Renewables Source:- BP Statistical Review of World Energy 2016 Renewables Biofuels Hydroelectricity Nuclear Coal Natural Gas Oil
Global coal production and trade Thermal coal production (million tonne oil equivalent) 2015 Seaborne total coal trade increased at a CAGR of 7% from 2005-2010 and 3% from 2011-2016 100% In 2016, thermal coal production in Asia Pacific region constitutes about 70% of the total global production Seaborne total coal trade development (million tonnes) 781.1279 956.3855 1110.7118 2008 2011 2016 Source: Drewry Maritime Research, BP Statistical Review of World Energy 2016!4
Global coal trade: total Seaborne coal trade totalled 1,081 million tonnes in 2016 with trade of 770 million tonnes of thermal coal, 271 million tonnes of metallurgical coal and 40 million tonnes of anthracite coal Intra Eur 13 FSU-Eur 39 NAm - Eur 27 Rus - FE Asia 53 S&C Am - Eur 49 SE Asia-Eur 6 Aus FE Asia 284 Intra S&C Am 15 S&C Am - ME 5 SE Asia-S Asia 100 SE Asia-FE Asia 144 S&E Af-Eur 10 S&E Af-S Asia 45 Aus S Asia 48 Aus Eur 23 Aus SE Asia 18 More than one-fourth of the total seaborne trade is confined to Australia-Far East Asia, with China being one of the largest importer of coal. With expectation of rising steel production in China, the demand for metallurgical coal is expected to rise. Source: Drewry Maritime Research!5
Global coal trade: thermal Global seaborne thermal coal trade in 2016 totalled 770 million tonnes. Total seaborne thermal coal trade constitutes more than 70% of the total coal trade Intra Eur 8 FSU-Eur 36 NAm - Eur 8 Rus - FE Asia 41 S&C Am - Eur 48 SEAsia-Eur 6 Aus FE Asia 173 Intra S&C Am 14 S&C Am - ME 5 SE Asia-S Asia 100 SE Asia-FE Asia 143 S&C Am-NAm 9 S& E Af-Eur 10 S& E Af-S Asia 45 Aus SE Asia 14 Aus N.Am 3 The major trade lanes include Australia-Far East Asia (mainly China) route, South East Asia-Far East and South East Asia to South Asia route Strict environmental regulations in China and rising share of clean energy sources will cap thermal coal imports over the coming years Source: Drewry Maritime Research!6
Key trends and issues
Steel and energy intensity: dropping Moderating steel and energy intensity Decline in steel consumption per unit of GDP Falling energy intensity in GDP: World 24.0 160 23.5 145 23.0 130 22.5 115 22.0 2011 2012 2013 2014 2015 (est) 2016 (est) Global Steel intensity 100 Energy use (kg of oil equivalent) per $1,000 GDP (constant 2011 PPP) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: berc.berkeley.edu; World Bank, IMF, World Steel Association!8
Inequalities: power consumption per capita Variations in per capita consumption are vast Electric power consumption 2014 (kwh per capita) 14000 10500 7000 3500 0 USA Germany UK Spain China India!9 Source: World Bank
Outlook
Global energy by source: outlook Energy consumption growth continues to moderate and renewables share grows steadily Global energy use by source, 2015-2035 100% % split by source 24,000 CAGR (2015-2020) 2% CAGR (2020-2025) 2% CAGR (2025-2030) 2% CAGR (2030-2035) 1% 75% 18,000 50% 12,000 25% 6,000 0% 2015 2020 2025 2030 2035!11 0 Oil Natural Gas Coal Nuclear Hydroelectricity Biofuels Renewables 2015 2020 2025 2030 2035 Source:- BP Statistical Review of World Energy 2016 Renewables Biofuels Hydroelectricity Nuclear Coal Natural Gas Oil
Coal in power generation: regional outlook Use of thermal coal will continue to rise in Asia, Africa and Latin America -0.0113 North America 0.0162-0.0404-0.0436 2005-10 2010-15 2015-20 2020-25 South & Central America 0.0562 0.0329 0.0172 0.039 2005-10 2010-15 2015-20 2020-25 45% 44% 43% 43% -0.0022 Europe & Eurasia -0.0113-0.0107-0.0165 2005-10 2010-15 2015-20 2020-25 Middle East 0.0141-0.0823 2005-10 2010-15 2015-20 2020-25 0.0093 Africa 0.0212 0.0028-0.0125 0.011 2005-10 2010-15 2015-20 2020-25 -0.0125 0.0768 Asia Pacific 0.0289 0.024 0.0158 2005-10 2010-15 2015-20 2020-25 In the period 2010-2015, thermal coal power generation declined at a CAGR of 1% while power generation using renewables increased by 17%. IEA expects the global thermal coal demand will continue to increase, but the share of coal in power generation will decline gradually in the medium to long term Energy production using thermal coal is expected to fall in European countries with rising share of renewables and natural gas. Source:- BP Statistical Review of World Energy 2016, IEA!12
China: historical Energy consumption growth slowing; coal growth stopped; steady growth in renewables 5,000.0 100% 3,750.0 75% 2,500.0 50% 1,250.0 25% 00 2014 2015 2016 2017 2018 2019 0% 2014 2015 2016 2017 2018 2019!13 Coal Oil Natural Gas Hydro Nuclear Other Growth Coal Natural Gas Nuclear Oil Hydro Other
China: outlook Consumption growth moderating and renewables share increasing; China plans to increase the share of renewables from 12% in 2015 to 15% in 2020 Power generation plan 6,000 100% 4,500 75% 3,000 50% 1,500 25% CAGR 2015-2 Hydro 22% Wind 23% Solar 40% Biomass 15% 00 2010 2015 2020 0% 2010 2015 2020!14 Growth Renewables Natural gas Oil Coal Renewables Natural gas Oil Coal
India electricity demand India s demand for electricity is set to grow at a frantic pace: by 17% annually from 2012-2022 and 12% annually from 2022-2030 5,000 India's electricity demand by sector 3,750 TWh 2,500 1,250 0 2012 2022 2030 2047 Source: Niti Aayog Industry Residential Commercial Agriculture Others Growth!15
India power generation Renewables share grows to 23%, but rising demand means that thermal coal consumption will quadruple from 2012 levels 6,000 India's energy production by source 100% % split by source 4,500 75% TWh Generations 3,000 50% 1,500 25% 0 2012 2022 2030 2047 0% 2012 2022 2030 2047 Source: Niti Aayog Coal Nuclear Renewables Gas Hydro Imports Coal Nuclear Renewables Gas Hydro!16
Summary
Summary Growth in share of renewable energy will slow down growth in demand for thermal coal, but thermal coal use will still grow. Energy production using renewables is expected to grow at a CAGR of 13% between 2015-2020. Energy production using coal is expected to rise at a CAGR of 1.8% between 2015-2020. Coal demand will contract in Europe and North America. In Asia Pacific countries, thermal coal demand will continue to grow. India will be a large contributor!18