Growth in demand for coal will slow over the next five years as the United States and Europe reduce consumption and China implements air pollution policies, according to the International Energy Agency.
The Paris-based group said China will still account for three-fifths of global coal growth, which is set to increase 2.1 percent annually through 2019. Coal demand rose 3.3 percent annually between 2010 and 2013.
“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,” IEA Executive Director Maria van der Hoeven said. “Although the contribution that coal makes to energy security and access to energy is undeniable, I must emphasize once again that coal use in its current form is simply unsustainable.”
A global slowdown is significant for U.S. producers that have increasingly turned toward international markets as environmental policies and competition from cheap natural gas edged out the use of coal in the electric power sector. Coal exports, which hit a record in 2012, fell by 16 percent in the first half of this year compared with 2013, according to the U.S. Energy Information Administration.
The global challenges to the industry presented by China’s moves to reduce coal use are compounded by a projected 1.7 percent annual decrease in U.S. consumption and a downturn in Europe, which had unexpectedly become a destination for U.S. coal.
“[C]oal use increase in Europe in recent years was a temporary spike largely due to low coal and carbon dioxide (CO2) prices, high gas prices, and the partial shutdown of German nuclear plants,” the IEA said in its “Medium-Term Coal Market Report.”
China will still account for a bulk of the international coal trade — IEA noted of the nearly 9 billion tons of coal consumed annually, 1 billion tons head to China’s coast each year. But the world’s top emitter has designs on ratcheting down coal use in response to domestic concerns about air quality, and its economy is also slowing down.
“After many years of unbelievable economic and coal demand growth, China has entered a more moderate path. Lower economic growth and also a lower energy intensive economy and higher diversification will curtail coal growth in China in the coming years,” the IEA said.
India, however, will likely begin consuming more coal.
The IEA projected a growth rate of 5 percent annually for India, which it said would pass the U.S. as the world’s second-biggest coal consumer and edge closer to China to become the world’s second-largest coal importer. That accounts for an increase of 250 million tons of coal through 2019, though the IEA noted that’s less than what China added in a single year last decade.
