Chinese translation of press release (pdf)
CLEVELAND, Nov. 16, 2015 — New research by the Institute for Energy Economics and Financial Analysis (IEEFA) finds that global thermal coal consumption likely peaked in 2013 and is set to decline an additional 2-4% in 2015.
“This new analysis illustrates that an epoch-defining shift is shaping the global outlook for coal, driven fundamentally by technology innovation. The global peak reflects a remarkable peak and decline in Chinese coal consumption. China, Japan and India are the three largest coal-importing nations and history is likely to show their thermal coal imports peaked in 2013, 2014 and 2015 respectively,” said Tim Buckley, IEEFA’s director of energy finance studies and the lead author of the report.
“Peak global coal” is the result of declining consumption by big coal consumers, particularly China. Coal production and coal imports in China peaked in 2013 and the rate of decline in both production and imports accelerated throughout 2014 and 2015. China produced and consumed half the world’s coal between 2012 and 2014. Buckley’s study shows the declining energy intensity of growth and renewable share gains are permanent.
Tom Sanzillo, IEEFA’s director of finance, said IEEFA research shows also that China’s government policy is struggling to respond to the rate of decline in coal markets. Between January and September 2015, China issued environmental approvals to 155 coal-fired power plants (four plants per week) with a total capacity of 123 gigawatts—an estimated total capital expenditure of US$70bn/470bn yuan. “With coal demand falling and major overcapacity in coal-fired power generation, this money has been wasted on what are likely to become stranded assets,” Sanzillo said.
IEEFA’s review of global coal consumption trends in the year to date suggests that global coal consumption will decline by 2-4% in 2015. Alongside China’s 5.7% decline, U.S. domestic consumption is down 11%, Germany’s is down 3%, the U.K. is down 16%, Japan is down 5%, Canada is down 5%, and Turkey is down an especially notable 13% year on year. In other important markets, South Korean consumption is flat, Indonesia is down 2% and Mexico is down 1%.
Only two major coal-consuming economies are reporting coal-consumption growth in 2015. Indian coal consumption is up 3-6% year on year, while Australian coal consumption is up marginally in 2015, the first year of domestic coal growth since 2008, when the Abbott government repealed a price on carbon pollution.
Notes for editors
Stranded Assets – China Power Generation
Chinese coal consumption was down 5.7% year on year for the first nine months of 2015.[i] This follows a decline in China’s coal production of 2.6% year on year in 2014, with imports also down 11% year on year. China has commissioned 60GW of new thermal power generation capacity in the 12 months to September 2015[ii] after 45GW in the previous 12 months—equivalent to 1GW per week for the past two years. But total thermal power generation is down 2% year on year in 2015, and is lower today than in 2012. Coal fired power plant utilization rates have fallen from 58% in 2013 to 54% in 2014, to just 49.5% in 201 year to date. So China has been adding 1GW of new idle thermal capacity per week, creating a total of US$70bn in stranded assets.
Stranded Assets – India Power Generation
In November 2014, Indian Energy Minister Piyush Goyal stated: “Possibly in the next two or three years we should be able to stop imports of thermal coal.”[iii] The 27% year-on-year decline in Indian coal imports in September 2015[iv] suggests every forecaster of internationally traded coal should revisit their India coal forecasts.
Energy Minister Goyal stated in October 2015:[v]
“Already, we are not encouraging any fossil fuel projects. We are completing stalled ones. …. In the next two-three years, I don’t see the possibility of fossil fuel plants. I have enough capacity to double power generation in the next five-seven years.”
Global Coal Consumption: Down 2-4% year-on-year in 2015
A weighted average of these figures below from the twelve largest coal consumers suggests global coal consumption is set to decline at least 2-4% year-on-year in 2015.
China – comprising 50.3% of 2014 global coal consumption: China reports a 5.7% yoy decline year to-September 2015 in coal consumption after a 2.9% decline in 2014.[vi]
U.S. – 11.7% of 2014 global consumption: Coal’s share of the U.S. electricity market has declined to 35% in 2015, down from 50% a decade ago, with over 200 US coal-fired power plants (a total of 83GW of capacity) having been scheduled for retirement since 2012.[vii] Peabody Energy forecast U.S. coal consumption would decline 100Mst in 2015 (-11% yoy[viii]), and further in 2016. Record low U.S. as prices, record renewable energy build (9GW of wind plus 8GW of solar in 2015) and flat electricity demand decoupling from economic growth, permanently erode coal demand. U.S. coal rail freight shipments are down 35% year over year in October 2015; an acceleration on the 15% year-to-date decline.[ix]
India – 9.3% of 2014 global consumption: Indian electricity demand year to date is reported up only 3.1% year over year,[x] while steel production has stagnated.
Japan – 3.3% of 2014 global consumption: Japan’s power generation was down 2.5% year over year in January-August 2015, according to Ministry of Economy, Trade and Industry data.[xi] Renewable electricity generation (up 33% yoy) and lower electricity demand both ate into coal-fired generation, with thermal power generation falling 5.2% year over year.[xii]
South Africa – 2.3% of 2014 global consumption: In South Africa, the state utility Eskom reported a 2.1% year-over-year-to-October 2015 fall in power output.[xiii] As coal is well over 90% of Eskom’s portfolio, coal-fired generation will have fallen a similar amount.
South Korea – 2.2% of 2014 global consumption: The IEA reports 2015 electricity production is down 0.2% year-to-date (YTD), with thermal production -1.2% year over year. [xiv]
Russia – 2.0% of 2014 global consumption: No preliminary data is available for Russia but the country’s GDP is projected to contract by 3.4%,[xv] making it highly likely that coal consumption will fall as well.
Germany – 2.0% of 2014 global consumption: Coal fired electricity production continues to lose market share – down 2.8% in January-July 2015.[xvi] In 2015 generation from renewables has grown 29% year over year.
Indonesia – 1.6% of 2014 global consumption: Domestic Indonesian coal consumption is reported to be down 2% year over year January to August 2015.[xvii]
Australia – 1.1% of 2014 global consumption: Australian 2015 electricity production is up 0.3% year over year YTD, with domestic coal use also up 0.3% on carbon tax repeal.[xviii]
Turkey – 0.9% of 2014 global consumption: In Turkey thermal electricity production is down 13.4% year over year. [xix] By contrast, 2015 electricity generation from renewable energy in Turkey has grown 47% year over year and hydro is up 65% year over year.
U.K. – 0.8% of 2014 global consumption:[xx] in the June 2015 half U.K. power generation coal consumption fell 16% as coal-fired plants closed down/converted to biomass.[xxi]
In its Coal Medium Term Market Report 2014, the International Energy Agency forecast China coal demand would grow 2.6% annually over 2014-2019. The IEA forecast 2.6% growth for 2014 but China’s consumption in tonnes (metric tons) was down 2.9% year on year. The IEA forecast 2.6% growth for China in 2015 but year-to-date growth has been negative 5.7% year over year. As such, the IEA’s forecasts made just one year ago for China have been too optimistic by a cumulative 13% or 500 million tonnes in just two years. IEEFA notes that China’s February 2015 revisions to coal consumption statistics prior to 2014 have no impact on the fact that coal consumption declined in each of 2014 and 2015.
For more information contact Karl Cates
P +1 917 439 8225 [email protected] (New York)
______________________
About IEEFA
IEEFA conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy and to reduce dependence on coal and other non-renewable energy resources.
More here on IEEFA research: https://ieefa.org/category/subject/reports/
[i] China Shenhua Energy Company Limited, Third Quarterly Report for the year 2015, page 14, referencing the National Bureau of Statistics, China Coal Market Network, China Electricity Council.
[ii] http://uk.reuters.com/article/2015/10/19/china-economy-output-power-idUKL3N12J1PO20151019
[iii] http://in.reuters.com/article/2014/11/12/india-coal-imports-idINKCN0IW0FJ20141112?feedType=nl&feedName=inmoney
[iv] http://in.reuters.com/article/2015/10/19/india-coal-imports-idINKCN0SD0C920151019
[v] http://economictimes.indiatimes.com/opinion/interviews/indias-investment-thrust-will-be-towards-renewable-energy-piyush-goyal/articleshow/49532254.cms
[vi] For a good explanation of the CSA2015 revisions to tonnes of coal equivalent (tce), refer to the US Energy Information Administration (EIA) at the link: http://www.eia.gov/todayinenergy/detail.cfm?id=22952.
[vii] http://content.sierraclub.org/coal/victories
[viii] http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_2_01_a
[ix] http://investors.csx.com/phoenix.zhtml?c=92932&p=irol-reportsaar
[x] http://www.thehindubusinessline.com/economy/coal-indias-output-up-9-in-aprilaug-but-overall-fuel-output-stagnant/article7716246.ece
[xi] http://www.meti.go.jp/english/statistics/tyo/iip/b2010_result-2.html
[xii] https://www.iea.org/media/statistics/surveys/electricity/mes.pdf
[xiii] http://www.eskom.co.za/Whatweredoing/SupplyStatus/SupplyStatus/AdeqRep2015w43.swf
[xiv] https://www.iea.org/media/statistics/surveys/electricity/mes.pdf
[xv] https://www.imf.org/external/pubs/ft/survey/so/2015/car080315b.htm
[xvi] http://www.ag-energiebilanzen.de/index.php?article_id=29&fileName=quartalsbericht_q2_2015.pdf
[xvii] http://www.indonesia-investments.com/news/news-columns/coal-production-in-indonesia-down-15.4-to-263-million-in-january-august/item5930
[xviii] https://www.iea.org/media/statistics/surveys/electricity/mes.pdf
[xix] https://www.iea.org/media/statistics/surveys/electricity/mes.pdf
[xx] https://www.iea.org/media/statistics/surveys/electricity/mes.pdf
[xxi]https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/466160/Energy_Trends_September_2015.pdf
