coal supply and coal markets in east asia summit(eas) region
DESCRIPTION
Roundtable GTRANSCRIPT
Coal supply and coal markets
in East Asia Summit （EAS) Region
Motohilko Kato
Senior Executive Director
Japan Coal Energy Center
(JCOAL)
Contents
Importance of Coal in EAS Region
• History and ｆorecast of coal and electricity demand
• Origin of fuel import in EAS; Self sufficiency of energy resources
• Comparison of fuel price
• Coal reserves and trend of Low rank coal (LRC) utilization
• Promotion of CCT
Impact of Shale gas
• Impacts on the coal market by shale gas production expansion
• Impact of shale gas on the Asian coal market
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Importance of Coal in EAS Region – Coal and electricity demand
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■ Coal will remain the dominant power source in the EAS Region
Coal will continue to supply more than half of electricity in the EAS region by 2035.
Capacity addition of coal-fired power stations are significant notably in China, India and ASEAN countries.
Share of coal-fired power stations in the EAS region Coal-fired power generation by country
Source) Compiled from IEA statistics
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Importance of Coal in EAS Region – Coal demand
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■ Coal Demand Increase is Expected to Continue
The increase in coal demand in Asia is expected to continue for the foreseeable future.
According to JICAs forecast, an estimated amount of 6,500 MT of coal is consumed in 2035.
Coal demand history and forecast [MT] Coal demand breakdown of “Others” [MT]
Source) History is taken from IEA statistics. The forecast was made by JICA
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Importance of Coal in EAS Region – Steam coal flow
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■ Coal is Mainly Traded Within the EAS Region
The majority of EAS coal supply is imported from Indonesia and Australia.
Note) Only trade flows larger than 3MT are depicted.
Source) Compiled from IEA “Coal Information 2013”
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Importance of Coal in EAS Region – Origin of fuel import
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■ Coal is least dependent on the Middle East
Unlike oil and natural gas, coal is not transported through the Hormuz Straight, an area with rising tension.
Raising the coal consumption ratio within nation’s energy consumption mix is an effective way to enhance
energy security in the EAS region.
Source) Compiled from IEA Natural gas information, Coal information, GTA data, Japan’s trade statistics and original estimation
Origin of Coal imports of EAS 2011 Origin of LNG imports of EAS 2011 Origin of Oil imports of EAS 2011
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Importance of Coal in EAS Region – Comparison of fuel price
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■ Cost competitive and self-sufficient energy source in the EAS Region
The seaborne coal demand in the EAS region is expected to be met mostly by Australia and Indonesia.
The price of natural gas has higher volatility compared with that of coal. Thermal coal has historically been
traded with a stable price.
The price of coal per heating value bases is always more competitive than natural gas, providing high
economic rationale.
Source) Compiled from IEA Natural gas information, Coal information, Japan’s trade statistics and original estimation
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Crude Oil Steam Coal ＬＮＧ
(Yen/1,000 kcal)
94%
6%
9%
91%
0%
100%
South Africa (30.2Bt)
46%
41%
13%
U.S. (237.3Bt)
89%
11%
Other African countries (1.5Bt)
Canada (6.6Bt)
Colombia (6.7Bt)
Other SA countries (5.8Bt)
93%
7%
54%30%
16%
China (114.5Bt)
India (60.6Bt)
Indonesia (5.5Bt)
53%
2%
45%
Other Asian countries (47.6Bt)
31%
62%
7%
Russia (157.0Bt)
19
%
17
%64
%
Europe (10.8Bt)
48%
3%
49%
Australia (76.4Bt)
27%
53%
20%
53%
13%
34%
bituminous+anthracite
(47.0%)
lignite (22.7%)
subbituminous (30.3%)
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Importance of Coal in EAS Region – Coal reserves
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■ Effective use of Low Rank Coal (LRC) provides more energy security
About half of Asia’s coal reserves consist of LRC such as lignite and subbituminous coals.
LRC are largely undeveloped, but have high potential to increase coal supply in EAS.
Source) BP Statistics 2010, WEC “Survey of Energy Resources 2010
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Importance of Coal in EAS Region – Utilization of LRC
■ Increasing trend of LRC Consumption
Korea started to increase low-rank coal
consumption to reduce coal procurement costs.
The graph shows coal consumption by heating
value for PLN, PLN subsidiaries, and IPPs.
In 2010, low rank coal consumption accounted for
about 20% of total consumption. By 2012, about
36% of coal consumed was low rank coal.
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Boiler Type
Ultra Super Critical (USC) Super Critical (SC) Sub-critical
Capacity 1,000 MW
Coal CV / Price 4,000 Kcal/kg (GAR) / 50 USD/ton
Thermal Efficiency (LHV) 42.1% 41.1% 38.2%
Initial Cost (million USD) 1,931 1,897 1,787
Fuel Consumption (tons/year) 3,578,283 3,665,326 3,943,583
CO2 Emission (tons/year) 5,102,914 5,227,073 5,623,893
Generation Cost (USD cent/kWh)
IRR=9.5% 6.77 6.79 6.85
IRR=15.0% 8.27 8.26 8.24
EAS countries shall consider to use more LRC through high efficiency CCT LRC-fired power plant is lower thermal efficiency due to the low coal quality, however CCT achieves high thermal
efficiency and reduced CO2 emission compared with conventional power plant.
USC is cost-competitive, but USC is loses cost- competitiveness when IRR is increased. Therefore, financial
support such as low interest loans should be provided to promote USC.
Source) ERIA study for Strategic Usage of coal
Importance of Coal in EAS Region – Promotion of CCT
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Shale Gas Impact on Coal Market
US coal enters the
European market
1
Competition on the European
coal market increases
2
As the coal market in Europe saturates, South African
and Colombian coal is aimed at the Asian market
3
PRB coal and Illinois coal enters
the Asian market directly
4
Increased competition
Source) Analysis from
various resources
Shale Gas Production Expansion has Four Impacts on the Coal Market 1. US coal enters the European coal market.
2. Competition intensifies between US and Colombian coal in the European market
3. Saturation of the European market leads to coal flows to the Asian market
4. PRB and Illinois coal enters the Asian market directly
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0
200
400
600
800
1,000
1,200
1,400
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Export
s,
import
dem
and [
MT
]Australia China Indonesia South Africa Mozambique
Mongolia India Russia US Colombia
Others Imports (low) Imports (medium) Imports (high)
Australia
Indonesia
South Africa
Russia
US
Colombia49 MT
104 MT
99 MT
158 MTIndonesia 248 MT
South Africa 72 MT
US 7 MT
Colombia 3 MT
Australia 144 MT
460 MT
Demand (2011) 557 MT
Demand
(medium scenario)
839 MT
Shale Gas Impact on Coal Market
Impact of Shale Gas on the Asian Coal Market If supply from Indonesia does not increase, coal supply-demand in Asia is expected to become tight.
If South African, Colombian and US coal flows into the Asian market, the supply-demand balance could be eased
sufficiently.
Source) Analysis from various resources
Conclusion
Coal is an important energy sources and will continue to supply more
than half of electricity in the EAS region.
Coal is least dependent on imports from outside the EAS region. EAS
coal supply is mainly imported form Indonesia and Australia.
Coal has always been more affordable than natural gas and oil on
heating value basis. Furthermore, coal prices are less volatile than
natural gas or oil prices.
Half of regional coal reserves is low rank coal and undeveloped, but
have high potential to increase coal supply in region. Therefore, use of
low rank coal by CCT and financial support for CCT promotion shall be
considered.
Australia and Indonesia are expected to remain the main suppliers in
EAS region. However, other region coal such as South Africa, US and
Colombian coal can also potentially contribute to coal supply in Asian
markets by shale gas development expansion, which further enhances
supply security of existing coal sources from Australia and Indonesia.
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