IEA Says World Coal Demand Will Rise, Despite Slashing Forecast Growth in India
The International Energy Agency (IEA) has once again forecast that world coal demand will rise, despite halving its outlook for growth in India.
The IEA’s Coal 2017 report, published Monday, sees a small increase in global coal demand from 2016 to 2022, with growth in India and southeast Asian countries outweighing declines in rich nations and China.
Since 2011, the IEA has consistently forecast rising coal demand, even as it has repeatedly adjusted its figures downwards in light of lower-than-expected growth. Some analysts believe the agency remains behind the curve in its outlook for coal (see below).
Carbon Brief runs through the IEA’s changing coal forecasts for India and other key world regions.
Decade of Stagnation
Each year, the IEA publishes a series of six-year forecasts for key energy markets. For example, Coal 2017 looks at the market for the fuel out to 2022, broken down by country and sector.
The report’s top line notes how global coal demand fell in 2015 and 2016, with the combined fall being the largest it has ever recorded in more than 40 years of data. It goes on to say that coal demand will increase by 177 million tonnes of coal equivalent (Mtce, 3 percent) in the years to 2022.
After two years of declines, this low growth will round off a “decade of stagnation” for coal, the IEA said. In a foreword to the report, IEA Executive Director Fatih Birol wrote:
“Looking ahead, this stagnation masks important regional variations. As coal use continues to decline in many parts of the world these declines are offset by continued growth in India [+135Mtce], Southeast Asia [+70Mtce] as well as several other countries where today coal’s role is small but is on the rise, such as Pakistan and Bangladesh [+35Mtce].”
You can see this regional variation in the map, below.
Change in coal demand from 2016 to 2022, by country and region, in millions of tonnes of coal equivalent. The bubble sizes indicate the magnitude of change, with green for increases and red for decreases.
The IEA said global coal demand will reach 5,534Mtce in 2022, up from 5,357Mtce in 2016. Note that this would leave demand in 2022 at 1 percent below the level seen in 2013, a decade earlier. Note also that pathways to 1.5 or 2C require rapid and immediate reductions in global coal use.
Growth Forecasts
This picture of rising coal demand, even after adjustments for slower-than-expected growth, fits into a pattern of IEA forecasts over recent years (see chart, below). For example, its 2011 forecast overestimated global coal use in 2016 by 827Mtce (15 percent), which is equivalent to today’s demand in the U.S. and EU combined.
Forecasts for global coal demand, made by the IEA in 2011 through 2017 (blue lines), compared to data on actual use (red), in millions of tonnes of coal equivalent. Note the y-axis is truncated.
Last year, the most significant shift saw the IEA align with others in saying that Chinese coal demand had peaked in 2013. The IEA cuts its forecast for China again in this year’s report, pushing the outlook for demand in 2022 even lower (see chart, below).
This shift for China reflects a drive to cut air pollution by replacing small coal boilers with gas, as well as expanding low-carbon supplies and building huge high-voltage power cables to replace coastal coal plants with a mixture of coal and renewable power from the country’s interior.
The chart shows expected demand in 2022, for the thermal coal used in power plants, as forecast by the IEA in 2015 (dark blue columns), 2016 (yellow) and 2017 (light blue).
Outlooks for thermal coal demand in 2022, by country and economic grouping, as forecast by the IEA in 2015, 2016 and 2017. OECD is the Organization for Economic Cooperation and Development, made up by the world’s wealthiest nations. ASEAN is the Association of Southeast Asian Nations, comprising Thailand, Vietnam, Indonesia, Malaysia, the Philippines and others. *The 2015 and 2016 forecasts were extrapolated in a straight line to 2022, based on the last three data points.
This year, however, perhaps the more notable shift in outlook is for India. Last year, the IEA forecast saw Indian thermal coal demand rising by 215Mtce between 2014 and 2022. This year, the figure is 115Mtce, effectively halving the rate of growth for power sector coal demand.
The chart below shows the change in thermal coal demand between 2014 and 2022, as forecast by the IEA in (dark blue columns), 2016 (yellow) and 2017 (light blue).
Outlooks for the change in thermal coal demand between 2014 and 2022, by country and economic grouping, as forecast by the IEA in 2015, 2016 and 2017. OECD is the Organization for Economic Cooperation and Development, made up by the world’s wealthiest nations. ASEAN is the Association of Southeast Asian Nations, comprising Thailand, Vietnam, Indonesia, Malaysia, the Philippines and others….
