World Coal and the Imperative for CCS

World Coal and the Imperative for CCS www.coalimp.org.uk Nigel Yaxley Royal Society of Chemistry 24 th March 21 World Coal and the Imperative for CCS World coal demand and supply growth Reserves and resources Coking demand and steel production World traded market IEA world energy outlook Policy developments Europe and UK Conclusions 2 1

Coal the world s fastest growing energy source Source: BP Statistical Review 3 Coal production growth even continued in 29 7 6 Million Tonnes 5 4 3 2 Coking Coal Steam Coal 1 Source: IEA Coal Information 29 4 2

China dwarfs other producers 3 Million Tonnes 25 2 15 1 28 Total 5.85 billion tonnes hard coal 5 Source: IEA Coal Information 29 27 28 5 and drives hard coal production growth Million Tonnes 7 6 5 4 3 2 1 Others Ukraine Colombia Poland Kazakhstan South Africa Indonesia Russia Australia India 23 24 25 26 27 28 Source: IEA Coal Information 29 United States PR of China 6 3

but second tier producers also show interesting trends Million Tonnes 6 5 4 3 2 1 India Australia Russia Indonesia South Africa Kazakhstan Poland Colombia 23 24 25 26 27 28 Source: IEA Coal Information 29 Ukraine 7 EU remains world s 3rd largest coal consumer Million Tonnes Coal Equivalent 25. 2. 15. 1. 5. World Coal Consumption 28 (including lignite). PR of China United States EU27 India Russia Japan South Africa Others Source: IEA Coal Information 29 8 4

Almost 6% of EU s coal supply is indigenous Imported Hard Coal, 181.4, 42% EU Indigenous Hard Coal, 122.6, 28% 28 Mtce Based on Estimated Calorific Values Source: EURACOAL EU Indigenous Lignite, 133.2, 3% 9 Reserves and Resources Reserves proven and can be recovered at current prices with current technology Different sources and methodologies WEC/BP/BGR Assessment of economically recoverable is difficult 728 billion tonnes hard coal (+269 Bn t lignite) Resources demonstrated quantities that might be recoverable in the future plus geologically possible but not demonstrated Over 15 trillion tonnes hard coal (+4 Tn t lignite) Resources are particularly relevant for underground coal gasification 1 5

Reserves of coal are evenly distributed around the globe N. America 12/1/8 Global Energy Reserves 28 FSU 17/17/51 Asia Pacific 138/6/14 Europe 18/2/5 Middle East /12/68 S. & Cent. America 7/18/7 Africa 22/17/13 Source: BP StatisticalReview of WorldEnergy 29 coal / oil / gas (billion tonnes oil equivalent) The top five countries have 8% of proven reserves 25 2 Billion Tonnes 15 1 5 Source: BGR - Bundesanstalt für Geowissenschaften und Rohstoffe 12 6

and USA, China and Russia have 9% of resources 7 6 Billion Tonnes 5 4 3 2 1 Source: BGR Reserves Resources 13 Changing the axis highlights large resources in the UK 5 45 Billion Tonnes 4 35 3 25 2 15 1 5 Source: BGR Reserves Resources 14 7

Coking Demand and Steel Production Remember coal is not just for electricity production! Coking coal demand in 29 was around 8 million tonnes Essential component in steel-making Use is concentrated in rapidly growing economies Must not be forgotten in climate change mitigation Measures in old economies may simply drive production elsewhere carbon leakage 15 Coal in China powers more than just electricity 3% 8% 24% 8% 57% Electricity Coking Industry Residential Others Source: IEA Coal Information 29 16 8

with China also dominant in world steel production Brazil 27 Ukraine 3 Germany 33 Turkey 25 Others 227 Million Tonnes China 568 South Korea 49 India 57 United States 58 Russia 6 Japan 88 Source: World Steel Association 17 Chinese steel production withstood the recession Million Tonnes 1,6 1,4 1,2 1, 8 6 4 2 Others Turkey Brazil Ukraine Germany South Korea India United States Russia Japan 2 21 22 23 24 25 26 27 28 29 Source: World Steel Association China 18 9

World Traded Market Most coal demand in the world is met from indigenous supply Around 15% is traded Different players have dominated the international coal market But this is changing World markets in 29 saw a net increase of 1 million tonnes in Chinese demand 19 World seaborne hard coal trade stalled in 29 9 8 Million Tonnes 7 6 5 4 3 2 191 445 18 492 197 532 24 575 226 243 231 67 66 615 Coking Coal Steam Coal 1 23 24 25 26 27 28 29 Est Source: IEA Coal Information 29 2 1

but Asia/Pacific trade continued to grow Source: Verein der KohlenImporteure 21 UK has become a major coal importer 1 9 8 Million Tonnes 7 6 5 4 3 2 1 Source DECC Steam Coal Demand UK Production 22 11

but was overtaken by India and China in 28 Major World Coal Importers Japan 185.6 Others 294.3 Korea 99.6 Italy 25.1 Russia 25.8 USA 3.9 UK 43.7 China 45.6 Germany 46.1 Taiwan 66.1 India 59.8 Million Tonnes Source: IEA Coal Information 29 23 Australia and Indonesia account for 48.5% of exports China 47.4 Canada 31.5 Others 93.4 28 - Million Tonnes Australia 252.2 South Africa 61.8 Russia 11.3 Indonesia 22.6 USA 73.7 Colombia 73.9 Source: IEA Coal Information 29 Slide 24 12

Asian demand is distorting world price differentials 1 9 $/tonne 8 7 6 5 4 Europe - ARA cif South Africa - Richards Bay fob Australia - Newcastle fob Source: MCIS 25 IEA World Energy Outlook World Energy Outlook deals in scenarios not forecasts Reference scenario is based on business as usual and only reflects climate change measures currently in place Over 5% growth in coal demand 27 to 23 Highlights the potential for massive growth in coal use to fuel growth in China/India etc Demonstrates the imperative for CCS 26 13

IEA Reference Scenario shows continued growth 3,424. Million Tonnes Coal Equiv alent 3,5 2,633. 1,883. 3, 2,386. 1,998. 1,847. 2,5 2, 1,5 346 1, Others 837 436 China 472 5 41 India 334 EU 27 215 Source: IEA World Energy Outlook 29 23 27 Policy Developments 14

IEA CCS roadmap sets the challenge Without CCS overall costs to reduce emissions to 25 levels by 25increase by 7% Roadmap envisions 1 projects globally by 22 and over 3 projects by 25 29 EU attempts to kick-start CCS funding EU Council has agreed 12 CCS demonstrations by 215 Economic Recovery package 1 billion for 6 projects (including Hatfield) Funding from EUETS 3 Million EUAs from New Entrant Reserve Further funding needed from members states 3 15

UK policy emerges Financial support for up to four commercial-scale CCS demonstrations No new coal without CCS on a defined part of its capacity Requirement to retrofit CCS to full capacity within five years of CCS being judged technically and economically proven - planned on the basis that CCS will be proven by 22 Annual Luncheon Meeting 16th March 21 31 but progress is slow Five months on And little new emerges CCS incentive able to support full retrofit by 225 Funding for up to four projects subsequently confirmed Energy bill passes through parliament But the competition runs on Annual Luncheon Meeting 16th March 21 32 16

CCS Industrial Strategy was launched last week CCS a massive industrial growth opportunity for the UK Coal is the most abundant worldwide energy resource but it is also the most polluting, so there is no solution to climate change without CCS Yorkshire and Humber is well placed to see the benefits from the jobs that investment in CCS can bring, other regions will too For the UK economy as a whole these benefits could be worth up to 6.5 billion a year, sustaining jobs for up to 1, people, by 23 33 and the Conservatives launched their policy A Conservative Government will put UK CCS back on track: Bring the current CCS competition to a rapid conclusion Expand the demonstration programme to at least four facilities We will ensure that CCS pipelines are planned and located where the greatest capacity for growth can be provided Preference to fund the CCS demonstrations from EU Emissions Trading System receipts, but would adopt the CCS levy in the current Energy Bill to avoid further delays 34 17

Conclusions Coal is the world s fastest growing energy source Reserves are widespread and resources are massive long term potential for UCG Coal is also required for steel production key for rapidly developing economies IEA business as usual scenario shows 5% growth in coal by 23 Highlights the imperative for CCS EU/UK policy is enthusiastic about CCS -but progress is slow Global leadership from Europe and USA is surely needed before China and India will come on board 35 www.coalimp.org.uk Thank You nigelyaxley@coalimp.org.uk 18