Global coal power set for record fall in 2019
November 25, 2019 (IEEFA) ‒ Coal-fired power used to make electricity is on track for record declines globally in 2019, finds a new briefing note out today by the Institute for Energy Economics and Financial Analysis (IEEFA), the Centre for Research on Energy and Clean Air (CREA) and Sandbag.
The note, Global Coal Power Set for Record Fall in 2019, finds thermal coal declines are likely across China, the U.S., the European Union and Japan.
The long-term decline of unabated thermal coal use is becoming increasingly clear
Tim Buckley, co-author of the report and director of energy finance studies at IEEFA, says growth in Southeast Asian markets is unable to absorb the coming over-supply of thermal coal.
“At just 4.6% of the world’s total coal-fired power generation in 2019, the Southeast Asian region is not big enough to compensate for the dramatic cuts in thermal coal use in the U.S, the European Union and South Korea, and the ongoing slow decline in Japan,” says Buckley.
The U.S. is on track for a record decline in coal-fired power generation in 2019. Coal-fired power is tracking down 13.9% year on year, and coal use in power generation is reported at down 13.0%, he notes.
World electricity markets are experiencing a dramatic technology-driven disruption
“The European Union has surprised all with a staggering 23% year-on-year decline in coal-fired power generation in the calendar year to September 2019.
“And Japan’s thermal coal imports are down some 3.5% year-on-year, reflective of flat overall electricity demand and rising nuclear power and renewables generation, from a low base.”
Co-authored with Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air (CREA), and Dave Jones, Electricity and Coal Analyst with Sandbag, the note finds the rate of decline in global thermal coal-fired power generation is dropping 3% year-on-year in 2019, moderated in part by slower global economic growth.
“World electricity markets are experiencing a dramatic technology-driven disruption,” says Buckley.
“The economics of renewables and batteries are seeing double-digit annual deflation, and new thermal coal-fired power generation increasingly cannot compete.”
The transition away from coal is happening faster than forecasters can keep up with
IEEFA notes global capital is increasingly fleeing coal in the face of rising stranded asset risks. To date, 110 globally significant financial institutions have announced coal financing restrictions across the banking and insurance sectors.
“The long-term decline of unabated thermal coal use is becoming increasingly clear,” says Buckley.
“A stalling in coal-fired power generation in China – despite the illogical continuation of building new, idle coal power plants – and a totally unexpected decline in India during calendar year 2019 to-date might be the wake-up call for forecasters that technology is disrupting the global electricity market, while at the same time driving the convergence of new energy technologies in the transport sector.
“The transition away from coal is happening faster than forecasters can keep up with.”
Read the note: Global Coal Power Set for Record Fall in 2019
Tim Buckley is IEEFA’s director of energy finance studies Asia Pacific.
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About IEEFA
The Institute for Energy Economics and Financial Analysis 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. www.ieefa.org
