Coal Supply/Demand and Projections

Contributed by Robert Lyman @ 2015

As the phase-out coal debate continues in Alberta, it may be useful to get some perspective on world coal resources and use.

Coal Resources

Coal is the most widely available fossil fuel energy resource. Further, it is widely distributed geographically, with coal resources available in almost every country in the world and recoverable reserves present in around 70 countries. The largest coal reserves are in the USA, Russia, China and India.

It is estimated that there are over 860 billion tonnes of proven coal reserves worldwide. This means that there is enough coal already discovered and economic to produce at present prices to last the world at least 118 years at 2014 rates of consumption. In addition, potential coal resources dwarf proven reserves. Some deposits are estimated to have as much as 400 years of production remaining. New technologies, such as coal gasification, are likely to boost coal’s future role in energy supply even more.

Coal reserves are broadly available in countries that currently have low levels of use and access to modern energy supplies. To Illustrate, here are illustrative lists of the coal reserves in a number of Asian and Sib-Saharan African countries:

Table 1: Proved Recoverable Coal Reserves

In Asia Countries in 2008 (million tonnes)

Country                                  Total Reserves

China                                      114,500

India                                       60.600

Kazakhstan                            33,600

Indonesia                                  5,529

Mongolia                                   2,520

Turkey                                       2,343

Pakistan                                     2,070

Uzbekistan                                1,900

Thailand                                    1,239

Kyrgyzstan                                    812

Source: World Coal Association

Table 2: Proved Recoverable Coal Reserves

In sub-Saharan Africa in 2008 (million tonnes)

Country                                  Total Reserves

South Africa                           30,156

Zimbabwe                                   502

Mozambique                               212

Tanzania                                     200

Nigeria                                         190

Swaziland                                    144

Congo                                            88

Source: World Coal Association

Coal in Electricity Generation

Coal plays a vital, sometimes dominant, role in electricity generation worldwide. Coal-fired power plants currently fuel 41% of global electricity. In some countries, the percentage of electricity generated by coal-fired plants is even higher.

Table 3: Coal in Electricity Generation

Country                                  Percentage

South Africa                              93

Poland                                        92

PR China                                    79

Australia                                    77

Kazakhstan                               70

India                                          69

Israel                                         63

Czech Republic                         60

Morocco                                    55

Greece                                       52

USA                                            49

Germany                                     46

Source: World Coal Association

Recent Trends in Coal Use

Measured in terms of millions of tonnes of oil equivalent (Mtoe), annual world coal consumption has risen from just under 1500 Mtoe in 1965 to about 3600 Mtoe in 2010, with 1200 Mtoe of that increase occurring in the period since 2001. The overall major increase masks the declines in use in the developed countries’ economies. In 1980, for example, the combined coal consumption of the U.S and European Union was 866 Mtoe. By 2010, the combined consumption of the two was 741 Mtoe. The gradual decline in the developing countries is continuing. U.S. coal consumption went down by more than 20% from 2007 to 2013 (to 455.7 Mtoe). In the EU, coal consumption fell by 12%. Canada, Australia and New Zealand have also reduced their coal consumption since 2008. Japan’s coal consumption was declining until the 2010 Fukushima nuclear power plant accident, but has been increasing since as Japan tries to make up for the loss of nuclear power. Germany, also reacting to the Fukushima incident, has been increasing its coal consumption since 2010.

These trends in the OECD are overwhelmed by the truly impressive growth in coal consumption in the Asia Pacific countries. China is the world’s top consumer of coal, and was responsible for 74% of the growth in the Asia Pacific area from 1980 to 2010. From 1980 to 2013, China increased its coal consumption by more than six times to 1925 Mtoe, half of the world’s total consumption. Additions to coal-fired electricity generation capacity rose sharply after 2000, peaking at over 90 gigawatts (GW) in 2006, and were still 50 GW in 2012.

In 2013, coal added more primary energy to the world’s energy system than any other fuel. It was the fastest growing fossil fuel, according to the International Energy Agency. In 2013, coal demand grew 2.4% on a tonnage basis. In 2013, coal demand in China (196 Mtoe) represented more than 100% of global growth, as the global total was offset by declines in the US and Europe.

Future Trends

The expansion of coal production capacity worldwide has, surprisingly, exceeded even the sharp increases in consumption. Consequently, the worldwide coal market is experiencing over-supply and low prices. Imported European steam coal prices, one of the main reference prices worldwide, were in the USD $70-80 per tonne range during 2014, compared to over USD $120 per tonne in March 2011.

There are a number of different sources of information and analysis concerning future coal consumption. Two prominent sources that have recently issued medium and long-term (i.e. to 2035) projections are the International Energy Agency (IEA) and British Petroleum.

In the IEA’s medium term outlook to 2019, it projected that global coal demand would continue rising and that China, despite efforts to develop more substitutes to coal in power generation, would still account for 60% of all demand growth during the forecast period. The growth in global coal demand is slowing slightly, but will still occur at an average rate of 2.1% annually to 2019.

Reports from other sources confirm these trends. The World Resources Institute (WRI), in a recent report on projected emissions from coal, noted that in 2012 China had 363 new coal-fired plants, with a total capacity of 558 GW, in the construction “pipeline”. China has introduced new policies and standards as part of a so-called “Anything but Coal” Action Plan. The Plan would ban new coal plant construction near three major cities. Most regions, however, are not covered by the Action Plan, and more than 80% of the plants in the pipeline in 2012 were not affected by it. The planned additions will increase China’s coal-fired capacity by another 127%.

Both the IEA and British Petroleum project that China’s growth in coal consumption will drop sharply from about 6% per year in 2005 to 2015 to 0.1% per year in the 2025-2035 period.

Standing behind China and ready to take up the growth in coal demand, however, lies India and a large number of other Asian countries. India is where China was 15 years ago at the beginning of its power generation surge. The WRI report noted that in 2012 India had 455 coal-fired power plants in the planning or early implementation phases, which if built will add 519 GW to India’s power generation capacity. In 2010, India had an average electricity use of 700 Kwh per capita per year, compared to a global average of 2100 Kwh per capita per year. Three hundred million Indians remain without access to electricity or modern cooking fuels. The addition of coal-fired power generation thus represents for India an important component of its plans for social and industrial development. BP projects India’s coal demand growth to rise from 142 Mtoe (5.9% per annum) in 2005-2015 to 159 Mtoe (3.0% per annum) in 2015-2035 as the country industrializes.

Significant expansion in coal-fired generating capacity will also occur in Russia, Turkey and Vietnam, according to WRI. In fact, WRI included in its inventory of plants in the “pipeline” 1199 worldwide, with 1401 GW in capacity.

The IEA and BP project that globally coal’s share in primary energy will decline over time. BP considers that it will decline from 30% in 2012 to 27% in 2035, mainly due to growth in the use of natural gas and some renewables. By 2035, however, coal will still represent more than half of primary energy in China and India.

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