As an abundance of shale gas leads to less coal consumption in the US, the use of coal remains prevalent in countries in other parts of the world.
The domination of shale oil and gas in North America has battered a large slice of the coal industry, but King Coal is still in the hunt for power.
Globally, coal use is on the rise and could within the next several years come close to surpassing oil as the top energy source, according to a Dec. 17 International Energy Agency (IEA) report.
Domestically, the shale-gas revolution has led to a decline in coal consumption in the US as power plants began using cheap natural gas for power generation. Coal industry proponents say coal isn’t out of the picture in the US just yet.
China and India have remained steadfastly coal bound. Both nations devour the organic rock. Indian firms alone have recently grabbed $16.3 billion in coal assets in Australia, Indonesia, South Africa, and the US.
As for China, no other country produces and consumes as much, accounting for more than 45% of both global totals. China alone was responsible for more than three-quarters of incremental coal production in 2011. Domestic consumption was more than three times that of global trade that year.
In 2011, coal demand grew 4.3% to 304 million tonnes (MMt). In China, demand increased by 233 MMt, or more than 76% of the total.
Only China can slow the march of coal. Chinese coal consumption is projected to account for more than 50% of global demand by 2014. An economic slow-down would impact the global coal market, though coal demand would still increase, IEA said.
On the global stage, coal consumption has slowed from the last decade, but by 2017 global coal consumption could reach 4.32 billion tonnes of oil equivalent (Btoe), versus around 4.40 Btoe for oil, based on IEA medium-term projections.
IEA says the trend will endure in the US, and tough times are ahead for the coal industry. Despite holding nearly 30% of the world’s coal reserves, US producers face fierce competition because of low-priced gas.
But some see reports of the wane of domestic coal demand as premature.
Elliott Gue, founder and analyst of Energy & Income Advisor, said utilities are burning natural gas as a baseload fuel instead of coal simply because natural gas is dirt-cheap.
The Energy Information Administration “expects US utilities to shutter about 40 gigawatts of older, inefficient coal-fired plants in the next five years while still running the remaining larger plants—hardly the death of the industry,” he said.
IEA forecasts that in every region of the world except the U.S., coal demand is expected to increase, IEA said.
By 2017, that demand would mean burning 1.2 billion more tonnes of coal per year, or the current combined consumption by Russia and the US.
“Thanks to abundant supplies and insatiable demand for power from emerging markets, coal met nearly half of the rise in global energy demand during the first decade of the 21st century,” said Maria van der Hoeven, IEA executive director.
Only fierce competition from low-priced gas can effectively reduce coal demand, the IEA said.
“The US experience suggests that a more efficient gas market, marked by flexible pricing and fueled by indigenous unconventional resources that are produced sustainably, can reduce coal use, CO2 emissions and consumers’ electricity bills, without harming energy security,” van der Hoeven said. “Europe, China, and other regions should take note.”
The gas-to-coal switch in Europe is a short-term phenomenon, EIA said. However, increasing use of renewables, retirement of coal plants, and more balanced gas and coal prices will decrease coal consumption in most of Europe.
Contact the author, Darren Barbee, at email@example.com.