OREANDA-NEWS. January 15, 2015. The International Energy Agency (IEA) in its annual Medium Term Coal Market Report released recently said that global demand for coal over the next 5 years will contin¬ue marching higher, break¬ing the nine billion-tonne lev¬el by 2019.

The report noted that despite China’s efforts to moderate its coal consumption, it will still account for three-fifths of demand growth during the outlook period.

Moreover, China will be joined by India, ASEAN countries and other countries in Asia as the main engines of growth in coal con¬sumption, offsetting declines in Europe and the United States.

Ms Maria van der Hoeven executive director, of IEA “We have heard many pledges and policies aimed at mitigating climate change but over the next five years they will mostly fail to arrest the growth in coal demand.”

Ms der Hoeven said that “Although the contribution that coal makes to energy se¬curity and access to energy is undeniable, I must emphasise once again that coal use in its current form is simply unsus¬tainable. For this to change, we need to radically accelerate deployment of carbon capture and sequestration.”

She said also called for more investment in high-efficiency coal-fired power plants, especially in emerging economies. She said that “New plants are being built, in an arc running from South Africa to Southeast Asia, but too many of these are based on decades-old technology. Re¬grettably, they will be burning coal inefficiently for many years to come.”

The report said that global coal demand growth has been slowing in recent years, and the report sees that trend continuing. Coal demand will grow at an average rate of 2.1% per year through 2019. This compares to the 2013 report’s forecast of 2.3% for the 5 years through 2018 and the actual growth rate of 3.3% per year between 2010 and 2013.

As has been the case for more than a decade, the fate of the global coal market will be determined by China. The world’s biggest coal user, producer and importer has embarked on a campaign to diversify its energy supply and reduce its energy intensity, and the resulting increase in gas, nuclear and renewables will be staggering.

However, the IEA report shows that despite these efforts, and under normal mac¬roeconomic circumstances, Chinese coal consumption will not peak during the five-year outlook period.
The report’s forecasts come with considerable uncertain¬ties, especially regarding the prospect of new policies affect¬ing coal. Authorities in China as well as in key markets like Indonesia, Korea, Germany and India, have announced policy changes that could sharply affect coal market fun¬damentals. The possibility of these policy changes becom¬ing reality is compounding uncertainty resulting from the current economic climate.