IEA: Global coal use flatlining on weak Chinese demand

Paris climate deal reinforces tough outlook for mining sector, with prices set to remain low to 2020, says International Energy Agency

The coal train is slowing down (Pic: LHOON/Flickr)

The coal train is slowing down (Pic: LHOON/Flickr)

By Megan Darby

Global coal use has stalled after more than a decade of rapid growth, an International Energy Agency report showed on Friday.

Demand from China – the driver of global trends – has fallen for the second year in a row, according to preliminary data by the world’s leading energy forecaster. Beijing is restructuring the economy from energy-intensive industry to services.

Last Saturday’s Paris Agreement on climate change is also set to dampen enthusiasm for the most polluting fossil fuel, analysts said.

“The coal industry is facing huge pressures, and the main reason is China – but it is not the only reason,” IEA executive director Fatih Birol said.

“The economic transformation in China and environmental policies worldwide – including the recent climate agreement in Paris – will likely continue to constrain global coal demand.”

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Considering the trends, the IEA cut its global coal demand forecast by more than 500 million tonnes over the next five years. Prices are expected to stay low.

For the first time, the IEA also considered a scenario in which China’s coal use has permanently peaked – although it did not take that as the central forecast.

The biggest growth market is now southeast Asia, with Indonesia, Vietnam, Malaysia and Philippines among the countries rolling out new power plants.

In Paris, 195 governments agreed to limit global warming “well below 2C”, which implies a rapid phase-out of fossil fuel use. It puts emerging economies under pressure to find a cleaner path to development.

The only way for coal burning to continue in the long term is with carbon capture and storage (CCS), a technology that has yet to be commercially proven.

“Governments and industry must increase their focus on this technology if they are serious about long-term climate goals,” said Birol.

“CCS is not just a coal technology. It is not a technology just for power generation. It is an emissions reduction technology that will need to be widely deployed to achieve our low-carbon future.”

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