© OECD/IEA 2018
Coal 2018 Analysis and Forecasts to 2023
Keisuke Sadamori – Director, Energy Markets and Security
Jakarta, 18th December 2018
IEA
© OECD/IEA 2018
Coal market update
• After two years of decline, global coal demand grew in 2017 and is estimated to increase further again in 2018
• Coal demand grew strongly in India, Southeast Asian countries and Korea in 2017, while decline continued in Europe and North America
• With seaborne thermal coal trade growing and no large new mining capacity, prices remain high
• High prices pushed up coal production in price sensitive exporters, particularly the US (up 6.3%) and Indonesia (up 5.2%)
• Climate and air quality regulations, divestment campaigns, phase out policies, declining costs of renewables and more abundant gas are all putting additional pressure on coal
© OECD/IEA 2018
2017, when growths were bigger than declines again
Whereas growth is mostly in Asia and decline in Europe, United States is in a very particular position
-40
-20
0
20
40
60
80
100
120
Mt
2017-2016 difference in coal consumption (left) and production (right)
-20
-10
0
10
20
30
40
50
60
Mt
© OECD/IEA 2018
Prices remain high
Sustained demand, Chinese supply side reforms and lack of investment in coal mining underpinned
high prices
0
50
100
150
200
250
300
350
USD/t
Newcastle (6000 kcal) Australian LV PCI Australian prime hard coking
Thermal and coking coal price indices, 2015-18
© OECD/IEA 2018
China is still the price setter in international markets
The comfort zone for the Chinese producers and consumers is the global reference for international
coal prices
300
400
500
600
700
800RMB/t
Qinhuangdao FOB price Bohai-Rim steam-coal price index
Coal prices (6000 kcal/kg) in China
© OECD/IEA 2018
Despite numerous policy changes and announcements,
the forecast of coal demand is almost unchanged compared with last year’s forecast
Comparison between Coal 2017 and Coal 2018 global coal demand forecasts
Much talk but not much change
IEA statistics (continuous line) and IEA forecast (dotted line)
3000
3500
4000
4500
5000
5500
6000
Mtc
e
Coal 2017 report Coal 2018 report
© OECD/IEA 2018
One planet, two coal worlds
India and southeast Asia will lead coal demand growth while it will continue to decline in
Europe and United States
0
500
1000
1500
2000
2500
3000
US EU-28 Japan Korea China India Southeast Asia
Mtc
e
2000 2017 2023
Coal demand in select countries/regions in 2000, 2017 and 2023 (forecast)
© OECD/IEA 2018
Understanding China to understand coal
Power
Small industrial and residential
Heavy industry
Coal conversion
Four largest coal consuming sectors in China follow different trends
© OECD/IEA 2018
Fight for blue skies
Phase out of coal boilers and stoves in China pushed up LNG prices all over the world.
In an interconnected world, Chinese coal is at the centre of the energy stage.
Beijing-Tianjin-Hebei
23
Pearl riv er delta
(Guangdong)
7
37
Yangtze riv er delta and
other Eastern China
Other regions
43
Coal (Mt) saved in industrial boilers, 2017-22
LNG spot prices
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
Jul-
17
Au
g-17
Sep
-17
Oct
-17
Nov
-17
Dec
-17
Jan
-18
Feb
-18
Mar
-18
Ap
r-1
8
Ma
y-1
8
Jun
-18
Jul-
18
Aug
-18
Sep
-18
Oct
-18
Nov
-18
China UK France Spain TTF
Source: IEA Coal 2017
© OECD/IEA 2018
Whereas the structural transformation of the Chinese economy is unequivocal, and “blue skies” remains the
policy priority, electricity demand is boosted by air quality policies, growing middle class and other factors
GDP, power demand and coal generation growth in China
China’s path to a less energy intensive economy
-5,0%
0,0%
5,0%
10,0%
15,0%
20,0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP growth Total generation growth Coal generation growth
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP growth (6 year average) Power growth (6 years average) Coal generation growth (6 years average)
© OECD/IEA 2018
Dominance of Chinese power sector in global coal market
Changes in Chinese power demand and hydro output have a significant impact on global coal demand.
Relationship between global coal demand and hydro generation/power demand in China
-2,0%
-1,0%
0,0%
1,0%
2,0%
3,0%
4,0%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
Glo
ba
l c
oa
l d
em
an
d in
cre
ase
Hydro output or power demand growth
China hydro
output growth
China power
demand growth
© OECD/IEA 2018
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0
200
400
600
800
1000
1200
1400
1600
1800
1973 1978 1983 1988 1993 1998 2003 2008 2013 2018 2023
TWh
Coal-fired generation (TWh) Share coal (%) Share renewables (%)
Coal power generation in India is set to continue to grow
Coal has been a cornerstone of India’s power system.
Renewables and more efficient coal plants reduce the forecast rate of growth.
Forecast
© OECD/IEA 2018
Coal for power will be the driver of demand growth in southeast Asia
Increasing use of coal for electricity will push up consumption in some of the countries in southeast Asia
(Indonesia, Vietnam, Philippines and Malaysia)
Forecast
Electricity generation by source in southeast Asia
0
100
200
300
400
500
600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
TWh
Renewables Coal Others
© OECD/IEA 2018
(Western) EU on its way out of coal
Phase-out policies are broadly announced and implemented in EU countries.
The challenge imposed by the end of coal-based electricity is country-specific
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Coal’s share in Power GenerationCoal phase out in EU-28
Cyprus, Belgium, Estonia, Latvia, Lithuania, Luxembourg and Malta do not have coal power plants in operationNo coal power Phase out announced
Phase out under discussion
No phase out
© OECD/IEA 2018
0
50
100
150
200
250
300
350
400
450
2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2020* 2021* 2022* 2023*
Mt
Indonesia
Australia
Russia
Colombia
South AfricaUnited States
Low investment due to uncertain demand
Russia’s infrastructure expansion will support export growth.
United States and Indonesia will continue to be the most price sensitive exporters
The evolut ion of exports from six major thermal coal exporters between 2011 and 2023
*Forecast
Forecast
© OECD/IEA 2018
International CCUS Summit, Edinburgh
UK and IEA hosted 50 senior delegates from across government, industry and the finance sector to
support new momentum for CCUS
© OECD/IEA 2018
Key messages
• Global coal demand through 2023 set to be stable, as growth in India and other Asian countries will offset decline in Europe and US
• China remains the key player in coal market. The rise of power demand in China, the main driver of a recent global coal rebound, will likely slow down in the coming years; but uncertainties remain
• Despite high prices, investment in new mines remains low. Uncertain demand for imported coal, risks associated with climate policy and local opposition have cooled investors’ appetites
• One planet, two coal worlds. In one world, closing coal power plants is a key climate policy. In the other, coal will play a continuing role thanks to its affordability and local availability. Carbon capture, utilization and storage is the bridge between the two worlds
© OECD/IEA 2018
www.iea.orgIEA