Although coal use is expected to be displaced by natural gas in some parts of the world,only a slight drop in its share of total energy consumption is projected by 2020.
Coal continues to dominate many national fuel markets in developing Asia.
Historically, trends in coal consumption have varied considerably by region. Despite declines in some regions, world coal consumption has increased from 84 quadrillion British thermal units (Btu) in 1985 to 93 quadrillion Btu in 1997.
Regions that have seen increases in coal consumption include the United States, Japan, and developing Asia.
Declines have occurred in Western Europe, Eastern Europe, and the countries of the former Soviet Union (FSU). In Western Europe, coal consumption declined by 33 percent between 1985 and 1997, displaced in considerable measure by growing use of natural gas and, in France, by nuclear power.
The countries of Eastern Europe and the former Soviet Union (EE/FSU) saw an even sharper decline in coal use during the period (a 38-percent decline), primarily the result of reduced economic activity.
Although coal has lost market share to petroleum products, natural gas, and nuclear power, it continues to be a key source of energy, especially for electric power generation.
In 1997, coal accounted for 24 percent of the world’s primary energy consumption (down from 27 percent in 1985) and 36 percent of the energy consumed worldwide for electricity generation.
In the International Energy Outlook 2000 (IEO2000) forecast, coal’s share of total energy consumption falls only slightly, from 24 percent in 1997 to 22 percent in 2020.
Its historical share is nearly maintained, because large increases in energy use are projected for the developing countries of Asia, where coal continues to dominate many national fuel markets.
Together, two of the key countries in the region, China and India, are projected to account for 33 percent of the world’s total increase in energy consumption over the forecast period and 97 percent of the world’s total increase in coal use (on a Btu basis).
Coal for electricity generation accounts for virtually all the projected growth in coal consumption worldwide. In other sectors where coal is used, such as industrial and residential/commercial, other energy sources—primarily natural gas—are expected to gain market share.
One exception is China, where coal continues to be the primary fuel in a rapidly growing industrial sector, in view of the nation’s abundant coal reserves and limited access to alternative sources of energy.
Consumption of coking coal is projected to decline slightly in most regions of the world as a result of technological advances in steelmaking, increasing output from electric arc furnaces, and continuing substitution of other materials for steel in end-use applications.
Because the Kyoto Protocol is not currently a legally binding agreement, the IEO2000 projections do not reflect the commitments made by the signatory countries to reduce or moderate their emissions of greenhouse gases.
If their commitments do become legally binding, however, it is likely that the coal outlook for the industrialized countries will differ substantially from the IEO2000 projections.
In IEO2000, coal consumption in the industrialized countries is projected to increase by 11 percent over the forecast period, rising from 36.6 quadrillion Btu in 1997 to 40.5 quadrillion Btu in 2020.
In a study completed in October 1998, the Energy Information Administration (EIA) projected that for the United States to meet its Kyoto emissions target, annual U.S. coal consumption would need to be reduced by as little as 18 percent or by as much as 77 percent (on a Btu basis) by 2010, relative to a reference case forecast without the Kyoto carbon emissions constraints.
The largest reduction in coal consumption was projected in a case which assumed that the United States would be required to reduce its carbon emissions to 7 percent below the 1990 level through fuel switching, increased penetration of energy-efficient technologies, and reductions in overall energy use.
Other cases modeled in the study assumed that the United States would meet its Kyoto emissions target through a combination of actions such as fuel switching, emissions trading, joint implementation, reforestation, and reductions in emissions of other greenhouse gases.
The most significant difference between the IEO99 and IEO2000 coal projections, particularly in the short term, is a significant change in international coal trade patterns.
Most of the major coal-exporting countries, including Australia, South Africa, Canada, Indonesia, and Russia, reduced the prices of their export coal considerably in 1999.
Both Australia and Indonesia showed a considerable increase in their coal exports for the year, primarily at the expense of U.S. coal exports.
Lower prices benefitted coal importers and improved coal’s ability to compete with other fuels worldwide. For coal producers in countries such as the United Kingdom and Germany, however, lower prices for coal imports are expected to lead to some reductions in output at domestic mines and an accelerated schedule for mine closures, as domestic consumers switch from indigenous coal to increasingly less expensive imports.
Highlights of the IEO2000 projections for coal are as follows:
World coal consumption is projected to increase by 2.3 billion tons, from 5.3 billion tons in 1997 to 7.6 billion tons in 2020 (Figure 60). World coal consumption in 2020 could be as high as 9.1 billion tons or as low as 5.6 billion tons, based on alternative assumptions about economic growth rates.
Coal use in developing Asia alone is projected to increase by 2.4 billion tons. China and India, taken together, are projected to account for 33 percent of the total increase in energy consumption worldwide between 1997 and 2020 and 97 percent of the world’s total projected increase in coal use, on a Btu basis.
China is projected to add an estimated 180 gigawatts of new coal-fired generating capacity (600 plants of 300 megawatts each) by 2020 and India approximately 50 gigawatts (167 plants of 300 megawatts each).
Coal’s share of the world’s total primary energy consumption is expected to decline from 24 percent in 1997 to 22 percent in 2020. The coal share of energy consumed worldwide for electricity generation also declines, from 36 percent in 1997 to 34 percent in 2020.
World coal trade is projected to increase from 546 million tons in 1998 to 708 million tons in 2020, accounting for approximately 9 to 10 percent of total world coal consumption over the period.
Steam coal (including coal for pulverized coal injection at blast furnaces) accounts for most of the projected increase in world coal trade.
Environmental Issues:
In future years, coal will face tough challenges, particularly in the environmental area. Increased concern about the harmful environmental impacts associated with coal use has taken a toll on coal demand throughout industrialized areas.
Coal combustion produces several air pollutants that adversely affect ground-level air quality.
One of the most significant pollutants from coal is sulfur dioxide, which has been linked to acid rain. Many of the industrialized countries have implemented policies or regulations to limit sulfur dioxide emissions.
Such policies typically require electricity producers to switch to lower sulfur fuels or invest in technologies—primarily, flue gas desulfurization (FGD) equipment—that reduce the amounts of sulfur dioxide emitted.
In the developing countries of Asia, only minor amounts of existing coal-fired capacity currently are equipped with FGD equipment.
For example, in China, the world’s largest emitter of sulfur dioxide, data for 1995 indicated that only about 3 percent of existing coal-fired generating capacity (less than 4 gigawatts out of a total of 140 gigawatts) had FGD equipment in place.
To date, major coal importing countries in the region have typically relied on the use of low-sulfur coal from Australia and Indonesia as a strategy for controlling emissions of sulfur dioxide.
In the future, however, greater use of FGD equipment at new coal plants is expected as a result of increased opposition from environmental groups and local residents, stricter adherence to World Bank standards on environmental performance by project developers, and adoption of stricter environmental standards by national governments.
In addition to sulfur dioxide, increased restrictions on emissions of nitrogen oxides, particulates, and carbon dioxide are likely, especially in the industrialized countries.
Although the potential magnitudes and costs of additional environmental restrictions for coal are uncertain, it seems likely that coal-fired generation worldwide will face steeper environmental cost penalties than will new gas-fired generating plants.
For nuclear and hydropower, which compete with coal for baseload power generation, the future is unclear.
Proposals have been put forth in several of the developed countries to phase out nuclear capacity in full or in large measure. In other countries, it has become difficult to site new capacity because of unfavorable public reaction.
The siting of new large hydroelectric dams is also becoming more difficult because of increased environmental scrutiny. In addition, suitable sites for new large hydropower projects in the industrialized countries are limited.
By far the most significant emerging issue for coal is the potential for a binding international agreement to reduce emissions of carbon dioxide and other greenhouse gases.
On a Btu basis, the combustion of coal produces more carbon dioxide than that of natural gas or of most petroleum products.
Carbon dioxide emissions per unit of energy obtained from coal are nearly 80 percent higher than from natural gas and approximately 20 percent higher than from residual fuel oil—the petroleum product most widely used for electricity generation.
In the IEO2000 forecast, carbon emissions are projected to rise between 1990 and 2010 in many countries, including increases of 33 percent for the United States, 21 percent for Japan, and 9 percent for Western Europe.
On the other hand, carbon emissions for the FSU are projected to be 30 percent lower in 2010, and emissions in Eastern Europe are projected to be 13 percent lower than in 1990.
Ratification of the Kyoto Protocol could have a substantial adverse impact on coal, particularly in the United States, which relies heavily on coal to meet its energy needs and could face relatively severe cutbacks in carbon emissions under the Protocol from those currently projected for 2010.
In the IEO2000 forecast, coal continues to be the second largest source of carbon emissions, accounting for 34 percent of the world total in 2020.
Oil, at 41 percent in 2020, remains the largest source of carbon emissions, and natural gas, at 25 percent, accounts for the remaining portion.
By country, the world’s dominant coal consumers—the United States and China—were also the top two contributors to world carbon emissions in 1997, at 24 percent and 13 percent of the world total, respectively.
By 2020, however, the U.S. share of world carbon emissions is projected to decline to 20 percent, with China’s share increasing to 21 percent.
The substantial increase in carbon emissions in China over the period is attributable to expectations of strong economic growth and the country’s continuing reliance on coal as its primary source of energy.
Reserves:
Total recoverable reserves of coal around the world are estimated at 1,088 billion tons—enough to last approximately 200 years at current production levels.
Although coal deposits are widely distributed, 60 percent of the world’s recoverable reserves are located in three regions: the United States (25 percent); FSU (23 percent); and China (12 percent). Another four countries—Australia, India, Germany, and South Africa— account for an additional 29 percent. In 1997, these seven regions accounted for 81 percent of total world coal production.
Quality and geological characteristics of coal deposits are other important parameters for coal reserves. Coal is a much more heterogeneous source of energy than is oil or natural gas, and its quality varies significantly from one region to the next and even within an individual coal seam.
For example, Australia, the United States, and Canada are endowed with substantial reserves of premium coals that can be used to manufacture coke. Together, these three countries supplied 85 percent of the coking coal traded worldwide in 1998.
At the other end of the spectrum are reserves of low-Btu lignite or “brown coal.” Coal of this type is not traded to any significant extent in world markets, because of its relatively low heat content (which raises transportation costs on a Btu basis) and other problems related to transport and storage.
In 1997, lignite accounted for 18 percent of total world coal production (on a tonnage basis). The top three producers were Germany (195 million tons), Russia (91 million tons), and the United States (86 million tons), which as a group accounted for 40 percent of the world’s total lignite production in 1997.
On a Btu basis, lignite deposits show considerable variation. Estimates by the International Energy Agency for coal produced in 1997 show that the average heat content of lignite from major producers in countries of the Organization for Economic Cooperation and Development (OECD) varied from a low of 4.7 million Btu per ton in Greece to a high of 12.3 million Btu per ton in Canada.
Middle East:
Turkey accounts for most of the coal consumed in the Middle East. In 1997, a total of 70 million tons of coal was consumed in Turkey, most of it low-Btu, locally produced lignite (approximately 7.4 million Btu per ton). Over the forecast period, Turkey’s coal consumption (both lignite and hard coal) increases by 15 million tons, primarily to fuel additional coal-fired generating capacity.
Israel and Iran accounted for most of the remaining 11 million tons of coal consumed in the Middle East in 1997. Over the forecast, Israel’s coal consumption is projected to rise by approximately 3 million tons with the completion of two new coal-fired generating units at Israel Electric Corporation’s Rutenberg plant between 2000 and 2005.
Currently, coal accounts for approximately 75 percent of the country’s total electricity generation. In Iran, approximately 1 million tons of coal consumption has been met historically by indigenous suppliers.
In addition, Iran’s National Steel Corporation imports approximately 0.5 million tons of coking coal annually.
Trade Overview:
The amount of coal traded in international markets is small in comparison with total world consumption. In 1998, world imports of coal amounted to 546 million tons (Table 18 and Figure 66), representing 10 percent of total consumption.
By 2020, coal imports are projected to rise to 708 million tons, accounting for a 9-percent share of world coal consumption.
Although coal trade has made up a relatively constant share of world coal consumption over time and should continue to do so in future years, the geographical composition of trade is shifting.
In recent years, international coal trade has been characterized by relatively stable demand for coal imports in Western Europe and expanding demand in Asia.
Rising production costs in the indigenous coal industries in Western Europe, combined with continuing pressure to reduce industry subsidies, have led to substantial declines in production there, creating the potential for significant increases in coal imports; however, slow economic growth in recent years and increased electricity generation from natural gas, nuclear, and hydropower have curtailed the growth in coal imports.
Conversely, growth in coal demand in Japan, South Korea, and Taiwan in recent years has contributed to a substantial rise in Asian coal imports.
International coal markets have gone through some significant changes over the past couple of years. Most noteworthy has been a decline in the price of traded coal. Price cuts have benefitted electricity generators and steel producers in coal-importing countries and improved the competitiveness of coal-fired generation, but they have also, in most cases, reduced the overall revenues received by coal producers in major exporting countries. U.S. coal producers have been hit particularly hard by the decline in international coal prices, given that coal prices are negotiated internationally in U.S. dollars, and the dollar has increased in value against the currencies of other major coal-exporting countries. In 1999, U.S. coal exports fell sharply, even as coal shipments from most other exporting countries continued to increase. South Africa displaced the United States as the world’s number two coal-exporting country in 1999, a position that the United States had held since 1984.
Europe, Middle East, and Africa:
Coal imports to Europe (which for the analysis of coal imports includes shipments to the Middle East and Africa) are projected to remain relatively constant over the forecast period. Projected declines in overall imports to the countries of Western Europe are offset by small increases projected for Turkey, Romania, Morocco, and Israel.
In Western Europe, strong environmental lobbies and competition from natural gas are expected gradually to reduce the reliance on steam coal for electricity generation, and further improvements in the steelmaking process will continue to reduce the amount of coal required for steel production. Strict environmental standards are expected to result in the closure of some of Western Europe’s older coke batteries, increasing import requirements for coal coke but reducing imports of coking coal.
Projected reductions in indigenous coal production in the United Kingdom, Germany, Spain, and France are not expected to be replaced by equivalent volumes of coal imports. Rather, increased use of natural gas, renewable energy, and nuclear power (primarily in France) is expected to fill much of the gap in energy supply left by the continuing declines in the region’s indigenous coal production.
In 1998, the leading suppliers of imported coal to Europe were South Africa (26 percent), the United States (20 percent), Australia (16 percent), and South America (14 percent).
Over the forecast period, low-cost coal from South America is projected to meet an increasing share of European coal import demand, displacing some coal from such higher cost suppliers as the United States and Poland.
Please note:full version can be found on the EIA web site.
Source: United States Energy Information Administration
© 2001 Mena Report (www.menareport.com)
