Coal 2017 – analysis and forecast to 2022

EXECUTIVE SUMMARY
Coal’s decade of stagnation
Global coal demand dropped for a second year in a row in 2016, approaching the previous record for
two-year declines set in the early 1990s. Global demand for coal fell by 1.9% in 2016 to 5 357 Mtce, as
lower gas prices, a surge in renewables and energy efficiency improvements put a major dent on coal
consumption. Demand for coal has now dropped by 4.2% since 2014, almost matching the fall of 1990-
1992 which was the largest two-year decline recorded since the IEA started compiling statistics more
than 40 years ago. In 2016, rising coal use in India and other Asian countries was unable to offset large
declines in the United States, China (where demand dropped for the third consecutive year) and in the
United Kingdom (where demand dropped by more than 50%). In the United States, coal’s dominance in
the power sector has been eroded by low gas prices; in China, coal demand has fallen due to lower use in
the industrial and residential sectors linked to efforts to improve air quality; while in the United Kingdom
a recently introduced carbon price floor has rung the death knell for coal use in power generation.
Coal’s share in the global energy mix is forecast to decline from 27% in 2016 to 26% in 2022 on
sluggish demand growth relative to other fuels. Growth through 2022 is concentrated in India,
Southeast Asia and a few other countries in Asia. Coal demand declines in Europe, Canada, the
United States and China, the largest coal consumer by far, and where we forecast a structural but
slow decline with some fluctuations linked to short-term market requirements. As a result of these
contrasting trends, global coal demand reaches 5 530 Mtce in 2022, which is only marginally higher
than current levels, meaning that coal use all but stagnates for around a decade. Although coal-fired
power generation increases by 1.2% per year in the period 2016-22, its share of the power mix falls
to just below 36% by 2022, the lowest level since IEA statistics began.
While some demand centres are in decline, others are taking off
Prospects for coal are bleak throughout most of Europe. The future of coal in Europe is increasingly
tied to Poland and Germany, which account for more than half of the coal consumed in the European
Union. In Poland, demand is forecast to be stable through 2022. In Germany, coal demand declines
even as nuclear power is progressively phased out, with coal use remaining highly sensitive to the
relative prices of coal, natural gas and carbon dioxide (CO2). The decrease in coal demand forecast in
Germany could be accelerated by policy changes. For most countries in Europe, coal is increasingly
becoming a negligible part of the energy mix as a growing number of countries have closed or are
closing their coal-fired power plants. Hard coal production in Europe outside Poland drops to
marginal levels by 2022; lignite production remains meaningful in a few countries, but with a
declining profile that follows power generation trends.
Pakistan emerges in the coal landscape and others might follow. Endowed with vast reserves in the
Thar lignite field and facing a severe energy shortage, Pakistan is betting on domestic and imported
coal for electricity supply in the coming years. We forecast coal demand to more than quadruple
between 2016 and 2022, with Pakistan emerging as a significant international player, with imports
accounting for half of its consumption. Bangladesh is also planning an expanded role for coal although
developments through 2022 will be limited. Egypt has postponed its coal power plans, while in the
United Arab Emirates, Dubai is set to open the first large coal power plant in the Middle East. However,
these increases will be modest compared to today’s large consumers: Pakistan and Bangladesh
combined will represent around 5% of India’s coal consumption by 2022.

Fuente: IEA

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