Fast-developing Asian nations to underpin coal demand

Fast-developing Asian nations to underpin coal demand

Strong economic development in South East Asia and India will underpin global coal demand, which is set to return to 2014 levels in the next four years, paving the way for Australia to increase its share of global trade.

Citing the World Energy Outlook (WEO) 2016 report by the International Energy Agency (IEA), the Minerals Council of Australia (MCA) said on Thursday that demand for coal in Asia would grow at 0.8% a year, with Indian demand for coal growing at 3.6% a year and Southeast Asia at 4.4% a year.

MCA CEO Brendan Pearson said the WEO confirmed the role that Australian coal would continue to play in providing baseload electricity for fast-developing Asian nations in the region.

The report notes that Australian coal exports are forecast to increase from 350-million tonnes to 410-million tonnes by 2040 with the Australian share of international trade growing from 32% to 36%.

The country is currently the world’s largest coal exporter. Coal contributes more than A$40-billion to the Australian economy.

The WEO report states coal’s primary share in global primary energy use remained at 29%, the second-largest provider of energy behind oil. The report notes that coal also remains the mainstay of electricity generation, providing 41% of global supply.

Pearson said that to further reduce carbon emissions while retaining a reliable and secure supply of electricity supplied by coal, there must be a far bigger willingness to embrace new coal technologies including high-efficiency, low-emission (HELE) coal-fired generators and carbon capture and storage.

The IEA report highlights the increase in the use of HELE technology with 400 GW of supercritical and 330 GW of ultra-supercritical coal-fired plants being built.

“These plants require high-quality coal to operate at their most efficient and with Australia having some of the highest quality coal in the world, our production is forecast to increase by 0.5% a year until 2040,” Pearson said.

Meanwhile, the report has also forecast a 50% increase in the demand for natural gas over the next 25 years, to 5.2-trillion cubic meters, with oil and gas together accounting for more than half of all global energy consumption in 2040.

Gas is forecast to remain the fastest growing fossil fuel to 2040, with a yearly growth rate of 1.5%.

“Far from falling, demand for natural gas is forecast to increase by 50% by 2040, increasing its share of global energy demand from 21% today to 24%,” commented the Australian Petroleum Production and Exploration Association CEO Dr Malcolm Roberts.

“The IEA also expects liquefied natural gas (LNG) exports will eventually overtake pipeline gas as the main form of long-distance trading.

“This is very good news for Australia. Our A$200-billion investment in new LNG plants is set to supply a growing global market over the next 25 years. Australians will see a steady stream of high-paying jobs, export dollars and revenue for governments for decades to come.

“However, it is vital that governments heed the IEA’s warning that long-term investment in developing new oil and gas reserves is crucial to meet growing demand and replace declining production.”

Roberts said that in an extremely competitive global market, Australia could not expect to attract further investment while unjustified political restrictions on gas development remain in place.

He said the Council of Australian Government’s Energy Council’s independent review of energy security in the national electricity market must take into account the latest data from the WEO.

“Retaining sufficient gas-fired plant to provide for immediate back-up when renewable output falls or demand spikes is essential for reliable energy supply,” he said.

“To support that gas-fired generation, we need to see more development of new gas resources in eastern Australia. More gas supply and more gas suppliers will deliver greater energy security, enhance competition and put downward pressures on prices.

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