 “Coal remained the fastest-growing fossil fuel in 2013 in both absolute and
relative terms, accounting for approximately 30 percent of global primary energy
consumption, second only to oil,” said an IEA report on coal markets, released
in December.
Another IEA report, published in May, tracking the progress of clean energy
showed low-priced coal was the fastest-growing fossil fuel in 2013 and that coal
production worldwide outpaced the growth of oil and gas in 2012.
“Despite coal’s reputation as a 19th-century industry, coal markets are changing
at a fast pace,” the IEA’s Medium-Term Coal Market Report 2014’s executive
summary said. “Demand is moving to Asia, and trade flows are following.”
The IEA’s findings don’t surprise Robert Bryce, an energy writer whose recent
book, “Smaller Faster Lighter Denser Cheaper,” included a look at the future of
coal.
“There’s no question what we’re seeing is really the bifurcation of the coal
market,” Bryce told Watchdog.org. “We have coal here on the downturn
domestically, but globally, particularly in Asia, coal demand is booming.”
The dominant player in Asia is China, and though more energy diversification
there is predicted, “additional coal is still needed to meet energy demand,” the
IEA says.
India’s use of coal is also predicted to remain steady with 5 percent annual
growth. “We project that India will become the second-largest coal consumer,
surpassing the United States, and the second-largest coal importer, close to
China, as well as the world’s largest thermal coal importer,” the report said.
Coal-based electricity generation among selected non-members of the Organization
for Economic Cooperation and Development (OECD) nations. Charts from the
International Energy Agency
Coal-based electricity generation among selected non-members of the Organization
for Economic Cooperation and Development (OECD) nations. Charts from the
International Energy Agency
But at the same time, coal is shrinking in the U.S. as health and climate
concerns about CO2 emissions drive states and the federal government to curb the
use of coal-fired power plants.
Recent actions include:
* The Obama administration and the Environmental Protection Agency putting the
final touches on the Clean Power Plan, which is expected to put significant
curbs on existing as well as future power plants. The final rule is expected to
be released next month.
* On Thursday, the administration announced a new rule administered by the U.S.
Interior Department to limit coal mining near streams by requiring companies to
monitor water quality and protect the environment through a series of steps,
including planting trees and other vegetation when operations are completed.
*On Wednesday, a utility in Iowa agreed to phase out coal in five of its
facilities after reaching a settlement with the Environmental Protection Agency
and the Department of Justice.
“There is simply no question that the domestic coal business is getting hit and
hit hard,” Bryce said in a telephone interview. “It’s not just the prospect of
the coal power plant, it’s the low cost of natural gas” in the U.S.
Natural gas prices have stayed low for the past seven years, with the current
price on the spot market hovering between $2.75 and $2.80 per million BTUs.
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 “The price of natural gas is effectively
undercutting the market for the price of coal,” Bryce said.
The IEA expects a “downward trajectory” for coal in the U.S. and,
last week, the U.S. Energy Information Administration noted that for
the first time since it has kept records coal slipped from the No. 1
producer of electric power generation to No. 2, falling behind
natural gas.
In recent years, Europe recorded a temporary spike in coal, but the
report cited gains in energy efficiency, the retirement of coal
plants on the continent and increasing use of renewable energy
leading to a decline in demand. “The coal renaissance in Europe was
only a dream,” the report said.
But for every sign of negative growth, other signs of increased coal
demand pop up elsewhere.
Turkey’s economy calls for more capacity, “giving rise to a
steady increase of coal consumption,” and Japan — which swore off
nuclear power after the Fukushima disaster in 2011 — needs other
sources of energy and is turning to liquefied natural gas and coal
to make up the difference.
“High LNG prices make coal very competitive,” the IEA report said,
which will lead to more demand for coal in Japan.
Overall, “coal markets show great dynamism,” the report concluded.
That’s bad news for environmentalists who want to see coal
production eliminated.
“There should be very strong regulation of coal around the world to
stop new coal,” Nicholas Stern, chairman of the Grantham Research
Institute on Climate Change and the Environment, said in London last
month. “Without those policies and without public pressure on
reputation, I don’t think the incumbents will move anywhere near
enough.”
The IEA reports didn’t cheer up the agency’s own director, who is
pushing for countries to come up with policies to reduce a global
temperature rise of 2 degrees Celsius.
“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,” IEA Executive
Director Maria van der Hoeven wrote. “For this to change, we need to
radically accelerate deployment of carbon capture and
sequestration.”
Carbon capture and sequestration is a process in which carbon
dioxide from coal is collected and then stored, usually buried deep
into underground rock formations, instead of going into the air.
It’s been tried overseas with varying degrees of success, but in the
U.S. the record is spotty at best.
In February, the U.S. Department of Energy pulled all future federal
dollars from the FutureGen 2.0 coal plant in Illinois; the Kemper
Project in Mississippi — designed to convert lignite coal into a
natural gas-like substance called synthesis gas — has run way over
budget, is two years behind schedule and has sparked a series of
lawsuits.
Bryce, also a senior fellow at the Manhattan Institute, a
free-market think tank, is skeptical as to whether carbon capture
and sequestration projects will prove financially viable, but he
says the larger issue for energy-starved, developing countries is
that coal is reliable and inexpensive.
“They’re not looking to use natural gas. It’s too expensive for
them,” Bryce said. “They’re not looking to build nuclear. They don’t
have the capability and again, it’s too expensive for them. So
they’re looking to the coal market.”
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