Chapter 4 - Coal
In the IEO2008 reference case, world coal consumption increases by 65 percent
and international coal trade increases by 53 percent from 2005 to 2030, and coals share of world energy consumption increases from 27 percent in 2005 to 29 percent in 2030. |
In the IEO2008 reference case, world coal consumption increases by 65 percent
over the projection period, from 122.5 quadrillion Btu in 2005 to 202.2
quadrillion Btu in 2030 (Figure 46). The increase in coal consumption averages
2.6 percent per year from 2005 to 2015, then slows to an average of 1.7
percent per year from 2015 to 2030. World GDP and primary energy consumption
also grow more rapidly in the first half than in the second half of the
projections, reflecting a gradual slowdown of economic activity, especially
in non-OECD Asia. Regionally, increased use of coal in non-OECD countries
accounts for 91 percent of the total growth in world coal consumption over
the entire period.
In 2005, coal accounted for 27 percent of world energy consumption (Figure
47). Of the coal produced worldwide in 2005, 63 percent was shipped to
electricity producers, 34 percent to industrial consumers, and most of
the remaining 3 percent went to coal consumers in the residential and commercial
sectors. Coals share of total world energy consumption is projected to
increase to 29 percent in 2030, and its share in the electric power sector
is projected to rise from 42 percent in 2005 to 46 percent in 2030.
International coal trade increases by 53 percent in the reference case,
from 18.4 quadrillion Btu in 2005 to 28.1 quadrillion Btu in 2030. Because
the largest increase in consumption is projected for coal that is produced
and consumed domestically in China, the share of total world coal consumption
accounted for by internationally traded coal declines slightly, from 15
percent in 2005 to 14 percent in 2030.
World Coal Consumption
OECD Countries
Coal consumption in the OECD countries increases in the reference case
from 47.3 quadrillion Btu in 2005 to 49.9 quadrillion Btu in 2015 and 55.0
quadrillion Btu in 2030 (Figure 48). The increase represents average growth
of 0.6 percent per year over the entire period and 0.7 percent per year
from 2015 to 2030. Coal consumption in the OECD countries represented 39
percent of the world total in 2005. In 2030 it is only 27 percent of the
total, despite increases in North America and OECD Asia.
North America
Coal use in the United States totaled 22.8 quadrillion Btu in 2005, accounting
for 92 percent of total coal use in North America and 48 percent of the
OECD total. U.S. coal demand rises to 29.9 quadrillion Btu in 2030 in the IEO2008 reference
case. The United States has substantial coal reserves and relies heavily
on coal for electricity generation, a position that continues in the projections.
Coals share of total U.S. electricity generation (including electricity
produced at combined heat and power plants in the industrial and commercial
sectors) declines from 50 percent in 2005 to 49 percent in 2015, then rises
to 54 percent in 2030.
Much of the projected growth in U.S. coal consumption occurs after 2015,
when a substantial amount of new coal-fired generating capacity is projected
to come on line. Between 2005 and 2015, natural gas continues to be the
top choice for new generating capacity, with renewables and coal accounting
for most of the remaining additions during the period. After 2015, the
combination of increased need for baseload generating capacity, rising
natural gas prices, continuing growth in electricity demand, and the absence
of national-level restrictions on greenhouse gas emissions gradually tips
capacity expansion decisions toward new coal-fired power plants. From 2015
to 2030, 86 gigawatts of new coal-fired capacity is projected to be built,
representing 82 percent of all the new coal-fired generating plants built
in the United States from 2005 through 2030. The projections could change
significantly, however, if changes were made in U.S. laws and policies,
particularly those regarding greenhouse gas emissions.
In Canada and Mexico, small increases in coal consumption (0.3 and 0.1
quadrillion Btu, respectively) are expected over the period. As a result,
the two countries essentially maintain their combined 8-percent share of
North Americas total coal consumption through 2030. In Mexico, 0.7 gigawatts
of coal-fired generating capacity currently is under construction at Lazaro
Cardenas on the Pacific coast. In addition, Mexicos Energy Ministry has
indicated the potential for additional coal-fired generating projects in
the next decade, contingent on the confirmation of newly discovered coal
reserves in the Sabinas region and subject to future fuel prices.
OECD Europe
Total coal consumption in the countries of OECD Europe declines slightly
in the reference case, from 13.2 quadrillion Btu in 2005 (28 percent of
the OECD total) to 12.6 quadrillion Btu in 2030. In 2005, the major coal-consuming
countries of OECD Europe included Germany, Poland, the United Kingdom,
Spain, Turkey, and the Czech Republic. Low-Btu coal is an important domestic
source of energy for the nations of OECD Europe, which also rely heavily
on imports of hard coal.11 In 2005, lignite accounted for 47 percent of
their total combined coal consumption on a tonnage basis and 24 percent
on a Btu basis [1]. Plans to replace or refurbish existing coal-fired capacity
in a number of the countries of OECD Europe are an indication that coal
will continue to play an important role in their overall energy mix [2].
Coal consumption remains fairly flat throughout 2030, as governments enact
policies to discourage the use of the fuel, largely in response to environmental
concerns. Among the most important factors preventing OECD Europes coal
consumption from increasing in the long term is relatively slow growth
in overall energy consumption, averaging 0.5 percent per year. Other factors
include continued penetration of natural gas in both the electricity and
the industrial sectors, growing use of renewable fuels, and continuing
pressure on member countries of the European Union to reduce subsidies
that support domestic production of hard coal.
OECD Asia
In addition to remaining prominent consumers of coal, the nations of OECD
Asia play an important role in international coal trade. In 2005 they used
9.3 quadrillion Btu of coal, representing 20 percent of total OECD coal
consumption. OECD Asias coal demand is projected to increase by 0.6 quadrillion
Btu over the projection period, to 10.0 quadrillion Btu in 2030 (18 percent
of the OECD total). In 2005, Australia was the worlds leading coal exporter,
supplying 6.1 quadrillion Btu of coal to the international market, while
Japan and South Korea were the worlds leading importers, receiving 4.5
and 1.9 quadrillion Btu of coal, respectively [3]. Japans coal consumption
decreases in the long term; Australia, New Zealand, and South Korea account for nearly all the projected growth
in OECD Asias demand for coal.
Coal consumption in Australia/New Zealand increases by an average of 0.6
percent per year, from 2.6 quadrillion Btu in 2005 to 3.0 quadrillion Btu
in 2030. With substantial coal reserves (primarily in Australia), the region
continues to rely heavily on coal for electricity generation; however,
coals share of total generation declines gradually as more natural gas
is consumed in the electric power sector. Coal-fired power plants supplied
73 percent of the regions total electricity generation in 2005, as compared
with a projected 68-percent share in 2030 in the reference case.
South Koreas total coal consumption increases by 0.7 quadrillion Btu from
2005 to 2030, primarily to fuel existing and planned electric power plants.
South Koreas generating companies have announced plans to construct more
than 6 gigawatts of new coal-fired capacity at existing sites over the
next few years, including three 500-megawatt units that began operation
at Korea East-West Power Companys Dangjin plant in 2006 and 2007 [4].
Non-OECD Countries
Led by strong economic growth and rising demand for energy in China and
India, non-OECD coal consumption is projected to rise to 147.3 quadrillion
Btu in 2030, nearly double the quantity consumed in 2005 (Figure 49). The
increase of 72.1 quadrillion Btu, which represents 90 percent of the projected
increase in total world coal consumption, underscores the growing importance
of coal in meeting overall energy demand in the non-OECD nations. Total
coal consumption in the non-OECD countries grows at an average annual rate
of 3.7 percent from 2005 to 2015, then slows to 2.1 percent per year from
2015 to 2030 as the regions overall rate of economic growth begins to
moderate in the later years of the projection period.
Non-OECD Asia
China and India together account for 79 percent of the projected increase
in world coal consumption from 2005 to 2030. Strong economic growth is
projected for both countries (averaging 6.4 percent per year in China and
5.8 percent per year in India from 2005 to 2030), and much of the increase
in their demand for energy, particularly in the electric power and industrial
sectors, is expected to be met by coal.
Coal use in Chinas electricity sector is projected to increase from 22.2
quadrillion Btu in 2005 to 60.6 quadrillion Btu in 2030, at an average
rate of 4.1 percent per year (Figure 50). In comparison, coal consumption
in the U.S. electric power sector is projected to grow by 1.1 percent annually,
from 20.7 quadrillion Btu in 2005 to 27.5 quadrillion Btu in 2030. At the
end of 2005, China had an estimated 299 gigawatts of coal-fired capacity
in operation. To meet the demand for electricity that is expected to accompany
its rapid economic growth, an additional 735 gigawatts of coal-fired capacity
(net of retirements) is projected to be brought on line in China by 2030,
requiring large financial investments in new coal-fired power plants and
associated transmission and distribution systems.
More than one-half (53 percent) of Chinas coal use in 2005 was in the
non-electricity sectors, primarily in the industrial sector. China was
the worlds leading producer of both steel and pig iron in 2005 [5]. Over
the projection period, coal demand in Chinas non-electricity sectors is
expected to increase by 18.1 quadrillion Btu, to 73 percent above the 2005
level. Despite such substantial growth, however, the non-electricity share
of total coal demand declines to 41 percent in 2030. Because China has
only limited reserves of oil and natural gas, coal remains the primary
source of energy in its industrial sector, even as electricitys share
of total industrial energy use rises from 17 percent in 2005 to 27 percent
in 2030.
With a substantial portion of the increase in Chinas demand for both liquids
and natural gas projected to be met by imports, the Chinese government
is actively pursuing the development of a coal-to-liquids industry. Production
of coal-based synthetic liquids is scheduled to commence in late 2008 at
the countrys first commercial-scale coal-to-liquids plant. Located in
the Inner Mongolia Autonomous Region, the direct coal liquefaction facility
is being built by the state-owned Shenhua Group and will have an initial
capacity of approximately 20,000 barrels per day [6]. Although initial
plans foresaw an increase in liquids production at the site to 100,000
barrels per day by 2010, the schedule for expansion is now indefinite,
depending on the successful startup and commercial operation of the first
phase.
A number of other coal-to-liquids projects, representing total productive
capacity in excess of 0.2 million barrels per day, are currently at various
stages of development, ranging from feasibility studies to early construction
phases [7]. Shenhua is involved in a number of these projects as well,
and two other Chinese companiesthe Yankuang and Luan Groupsalso are
moving forward with their own coal-to-liquids projects. Despite strong
interest by the Chinese government and industry in developing a coal-to-liquids
industry, substantial uncertainty and risks are associated with the move,
including potential strains on water resources, the general financial risks
associated with technological uncertainties, and the substantial investment
requirements. In the IEO2008 reference case, Chinas coal-to-liquids production
is projected to reach 0.2 million barrels per day in 2030, indicating an
annual coal requirement of approximately 1 quadrillion Btu, or about 1
percent of Chinas total projected coal use in 2030. In comparison, Chinas
coal-to-liquids production in 2030 is projected to be 0.1 million barrels
per day in the IEO2008 low price case and 0.5 million barrels day in the IEO2008 high price case.
Nearly 74 percent of the growth in Indias coal consumption is expected
to be in the electric power sector and most of the remainder in the industrial
sector. In 2005, Indias coal-fired power plants consumed 6.0 quadrillion
Btu of coal, representing 70 percent of the countrys total coal demand.
Coal use for electricity generation in
India is projected to grow by 2.5 percent per year, to 11.1 quadrillion
Btu in 2030, as an additional 95 gigawatts of coal-fired capacity (net
of retirements) is brought on line. As a result, Indias coal-fired generating
capacity more than doubles in the reference case, from 79 gigawatts in
2005 to 173 gigawatts in 2030.
Currently, Indias government has tentative plans to add more than 50 gigawatts
of new coal-fired generating capacity during the period covered by its
eleventh power plan (a 5-year period ending in March 2012) [8]. During
Indias most recent 5-year power plan period, which ended in March 2007,
only about 12 of the 20 gigawatts of new coal-fired generating capacity
that had been planned was actually completed. In addition to the coal projects
listed in the preliminary documents for the eleventh power plan, including
one ultra mega coal-fired plant with a capacity of 4 gigawatts, the Indian
government is pursuing the development of eight more ultra mega projects
with a total combined coal-fired generating capability of 32 gigawatts
[9].
In the other nations of non-OECD Asia, coal consumption is projected to
grow by an average of 2.3 percent per year, from 5.3 quadrillion Btu in
2005 to 9.3 quadrillion Btu in 2030, with increases in both the electric
power and industrial sectors. In the electric power sector, significant
growth in coal consumption is expected in Taiwan, Vietnam, Indonesia, and
Malaysia, where considerable amounts of new coal-fired generating capacity
are either planned or under construction.
Non-OECD Europe and Eurasia
Coal consumption in non-OECD Europe and Eurasia is projected to increase
at an average rate of 0.9 percent per year, from 8.8 quadrillion Btu in
2005 to 11.2 quadrillion Btu in 2030. Russia alone has an estimated 173
billion tons of recoverable reserves (19 percent of the world total), and
the other countries of non-OECD Europe and Eurasia have an additional 95
billion tons (10 percent of the world total).12
Russia is the largest coal consumer among the nations of non-OECD Europe
and Eurasia, at 4.8 quadrillion Btu in 2005, or 54 percent of the total
for non-OECD Europe and Eurasia. In 2030, Russias coal consumption is
projected to total 5.7 quadrillion Btu. Coal supplied 16 percent of Russias
total energy requirements in 2005, and coal-fired power plants provided
24 percent of its electricity. In the IEO2008 reference case, coals share
of Russias total energy consumption drops slightly to 14 percent in 2030,
and its share of electricity generation declines to 22 percent. More than
one-half of the projected growth in electricity demand from 2005 to 2030
is met by natural-gas-fired power plants, with coal and nuclear plants
accounting for most of the remainder. The natural gas share of Russias
total electricity generation increases from 40 percent in 2005 to 46 percent
in 2030.
In March 2008, the Russian government approved a new long-range plan for
the countrys electric power sector through 2020 [10]. In general, the
plan lays out a detailed road map of capacity additions and retirements
and new transmission infrastructure. One of the key objectives of the plan
on the generation side is to curb growth in natural-gas-fired generation
in order to free up natural gas for export. The plan anticipates some additional
growth in natural gas consumption in the power sector through 2020, as
does the IEO2008 reference case, but it differs from the IEO2008 projection
in that it anticipates more generation from coal-fired and nuclear power
plants and more rapid growth in total electricity generation.
One of the key uncertainties in Russias new long-range power plan results
from the current activities of the countrys former power monopoly, Unified
Energy System (UES), which is completing the process of selling off the
many regional generating companies it once controlled. It remains to be
seen how the governments new plan for the power sector will be worked
out with the many private-sector companies that own or soon will own the
various regional generating entities, as the specific planned additions
and retirements outlined in the government plan may not turn out to be
the most economical choices from the perspective of the individual generating
companies.
In the other non-OECD Europe and Eurasia nations, coal consumption is projected
to increase from 4.0 quadrillion Btu in 2005 to 5.5 quadrillion Btu by
2030, growing by 1.2 percent per year on average. Plans for both new coal-fired
capacity and the refurbishment of existing capacity in a number of countries,
including Albania, Bosnia and Herzegovina, Bulgaria, Montenegro, Romania,
Serbia, and Ukraine, are a significant indication that coal will continue
to be an important source of energy for the region [11].
Africa
Africas coal consumption is projected to increase by 1.4 quadrillion Btu
from 2005 to 2030. South Africa currently accounts for 90 percent of the
coal consumed on the continent and is expected to continue to account for
much of the increase in Africas total coal consumption over the projection
period in both the electricity and industrial sectors.
In South Africa, increasing demand for electricity in recent years has
led to a decision by Eskom, the countrys state-owned electricity supplier,
to restart three large coal-fired plants (Camden, Grootvlei, and Komati)
that have been closed for more than a decade [12]. The individual units
at those plants, with a combined generating capacity of 3.8 gigawatts,
are scheduled to return to service between 2006 and 2011. In addition,
Eskom is also proceeding with the construction of a new 4.5-gigawatt coal-fired
power plant consisting of six units, which are scheduled to be fully operational
by 2015. Recent power shortages and the general lack of spare generating
capacity in southern Africa have also led to increased interest in new
coal-fired power projects in Botswana, Mozambique, and Tanzania [13].
In the industrial sector, increasing use of coal in Africa is expected
for several purposes, including the production of steam and process heat
for industrial applications, production of coke for the steel industry,
and production of coal-based synthetic liquids. Currently, two commercial-size
coal-to-liquids plants in South Africa (Sasol II and Sasol III) supply
about 25 percent of the countrys total liquid fuel requirements [14].
The two plants together are capable of producing 150,000 barrels of synthetic
liquids per day.
Central and South America
Central and South America consumed 0.9 quadrillion Btu of coal in 2005.
Brazil, with the worlds tenth-largest steel industry in 2005, accounted
for 51 percent of the regions coal demand. Chile, Colombia, Puerto Rico,
Peru, and Argentina accounted for most of the remainder [15].
In the projections, coal consumption in Central and South America increases
by 1.0 quadrillion Btu from 2005 to 2030, with 76 percent of the increase
in Brazil, primarily for coke manufacture and electricity generation. Brazils
steel companies currently plan to expand production capacity by a substantial
amount over the next few years to meet increasing domestic and international
demand for steel [16].
Middle East
Countries of the Middle East consumed 0.4 quadrillion Btu of coal in 2005.
Israel accounted for 87 percent of the total and Iran most of the remainder.
The regions coal use increases only slightly in the reference case, to
0.5 quadrillion Btu in 2030.
World Coal Production
From 2005 to 2030, coal production in China, the United States, and India
is projected to increase by 52.4 quadrillion Btu, 6.0 quadrillion Btu,
and 4.3 quadrillion Btu, respectively, in the IEO2008 reference case (Table
7-Quadrillion Btu and Table 7-Million Short Tons), which assumes that most of the demand for coal in the three countries
will continue to be met by domestic production. Coal production in Australia
is also projected to rise substantially (by 5.0 quadrillion Btu) over the
projection period, primarily to supply an expanding market for world coal
trade. The projected increases in coal production for these four countries
dominate the overall trends for the OECD and non-OECD, accounting for 99
percent of the increase in net production for all the OECD countries and
82 percent of the increase for the non-OECD countries. Rising international
trade also is expected to support production increases in Russia, other
non-OECD Asia, Africa, and Central and South America (excluding Brazil).
World Coal Trade
Because relatively few countries export coal, a disruption in one segment
of the international coal supply chain can reverberate throughout the global
market and limit the availability of coal for trade. In 2007 and 2008,
several such disruptions took place. Power shortages at coal mines in South
Africa and rail car shortages in Russia restricted the availability of
coal in 2007. In early 2008, flooding in Australian coal mines and continued
port congestion caused delays and even cancellations of coal deliveries.
Also in 2008, heavy snow in China and the rail transportation problems
it caused contributed to tight coal markets. As domestic coal stockpiles
dwindled, the Chinese government temporarily stopped all coal exports.
Despite the potential for disruptive events, bottlenecks and temporary
supply problems in major coal exporting countries are expected to be overcome
in the long run, and the volumes of coal traded internationally are projected
to increase through 2030. The upward trend in coal trade reflects the worldwide
growth in coal consumption projected through 2030. International coal trade
made up 15 percent of total world consumption in 2005, and in the IEO2008 reference case, it is projected to grow at an average annual rate of 1.5
percent, from about 19.7 quadrillion Btu in 2006 to 28.1 quadrillion Btu
in 2030 (Table 8-Quadrillion Btu and Table 8-Million Short Tons). Because the largest increases in coal consumption through
2030 are projected for non-OECD Asiaparticularly China, which is expected
to meet most of the increase in its coal demand with domestic supply rather
than importsthe share of coal trade as a percentage of global coal consumption
declines slightly, to 14 percent in 2030. Australia and Indonesia are geographically
well situated to continue as the leading suppliers of internationally traded
coal, especially to Asia, over the period. South America is projected to
expand its role as an international supplier of coal, primarily as a result
of increasing coal production in Colombia.
Although both steam and metallurgical coal are traded internationally,
most of the trade is in steam coal, which is projected to represent 72
percent of world coal trade in 2030. In 2006, 56 percent of the worlds
exported steam coal was imported by Asian countries, and their share of
the total in 2030 is projected to be 61 percent. The share of metallurgical
coal imports destined for Asian countries also increases, from 61 percent
in 2006 to 65 percent in 2030.
Coal Exporters
The top four exporters of steam coal in 2006 were Indonesia, Australia,
South America (Colombia and Venezuela), and southern Africa (South Africa,
Mozambique, and Botswana). Although Indonesia currently is the worlds
largest exporter of steam coal, Australia is expected to be the leading
exporter in most years of the IEO2008 projections. China is only the sixth-largest
exporter of steam coal in 2030. For coking coal, Australia, Canada, and
the United States continue to be ranked among the top three exporters over
the projection period. Among the countries expected to expand their international
coal trade in 2030 are Australia, Russia, and Colombia. Indonesia and Vietnam,
like China, are projected to see increasing domestic demand for coal, which
is expected to constrain their coal exports.
Already the worlds leading exporter of coal, Australia is projected to
dominate future international coal trade. Australia continues to improve
its inland transportation and port infrastructure to expedite coal shipments
to international markets. For example, expansions and new terminals at
the port of Newcastle could add more than 1.0 quadrillion Btu of additional
coal export capacity in New South Wales [17]. Queenslands Dalrymple Bay
port is expected to complete its Phase I expansion to 1.8 quadrillion Btu
in early 2008, followed by an increase to about 2.3 quadrillion Btu in
subsequent expansions [18]. Australia remains the primary exporter of metallurgical
coal to Asian markets, supplying 75 percent of Asias import demand for
coking coal over the projection period.
After the breakup of the Soviet Union in 1991, Russian coal supply was
characterized by low mine productivity, relatively poor coal quality, and
long distances between mines and markets. The productivity of its coal
mines has improved since then, however, lowering mining costs and compensating
in part for the expense of transporting coal to ports. Rail and port infrastructure
investments are critical for the continued expansion of Russias coal exports,
and in addition, growth in the countrys domestic coal consumption could
limit the availability of coal for export. Nevertheless, Russia is expected
to play a growing role in seaborne world coal trade. Europe (particularly,
the United Kingdom) has increasingly sought Russias low-sulfur coal as
its own mines have closed. In 2030, Eurasias coal exports are projected
to total 2.5 quadrillion Btu63 percent more than in 2006largely as a
result of growth in Russian exports.
South America is projected to be the second-largest exporter of coal worldwide
in 2030, primarily as a result of increases in exports from Colombia. The
expansion will require investments in mine capacity, rail infrastructure,
and port capacity, such as the current proposal to build a tunnel that
would expedite coal transportation to Pacific Ocean ports. In Colombia,
an expansion project is under development at the Bocas de Ceniza port [19],
and an additional increase of 0.7 quadrillion Btu of capacity has been
proposed for its other Caribbean ports [20].
In non-OECD Asia, China, Indonesia, and Vietnam are examples of countries
that have the potential to export more coal but are focused instead on
meeting domestic demand. From 2003 to 2006, China successively decreased
the amount of coal it exported each year. In the wake of domestic supply
shortages in 2007, China again diverted coal from the export market for
domestic consumption. Thus, the past few years have shown that China has
the ability to turn exports on and off depending on domestic needs, contributing
to uncertainty and volatility in international coal markets. Overall, China
is expected to hold a lower share of world coal trade as its exports stay
fairly flat and other suppliers provide more coal.
In the international market for steam coal, Indonesias coal exports are
expected to peak sometime before 2010 as some coal is redirected for domestic
consumption. Indonesia has low-cost reserves of low-sulfur coal; many ports,
some with the capability to take capesize ships; and proximity to the expanding
markets of Asia. Indonesia has also demonstrated its capacity for significant
growth, tripling its exports in the past decade. From 2006 to 2030, Indonesias
annual coal exports are projected to average about 4 quadrillion Btu; however,
continued strength in Indonesias coal exports depends on investment in
resource exploration and the development of new mines over the period.
Some areas of uncertainty for Indonesian exports include the rate of growth
in its domestic coal demand consumption, the adequacy of its internal transportation
infrastructure, and environmental concerns. As long as international coal
demand is strong and coal exports are profitable, Indonesia is expected
to continue to supply coal to other nations.
Despite strong growth in coal exports between 2003 and 2007, the Vietnamese government plans to restrict exports in the future. State-owned Vinacomin, the largest coal producer in Vietnam, has announced plans to reduce exports by 17 percent in 2008 and to begin importing coal from Indonesia [21]. Vietnam has been slow to implement coal export reduction policies, however, and was still exporting about 0.7 quadrillion Btu in 2006 and 2007 [22]. In the IEO2008 reference case, Vietnam’s coal exports decline to about 0.2 quadrillion Btu in 2013 from an estimated 0.5 quadrillion Btu in 2006 and to remain below 0.3 quadrillion Btu through 2030.
The African countries of Botswana, Mozambique, and Tanzania are expected to play an emerging role in coal trade as importing countries seek to secure additional sources of supply. For example, India and Brazil are investing in mines and infrastructure projects in Africa. India’s Tata Steel has acquired a 35-percent stake in a coking coal mine in Mozambique [23], and an expansion of the Mozambique port of Beira to a capacity of 0.5 quadrillion Btu to accommodate coal exports is being proposed [24].
South Africa currently is the sole source of seaborne coal exports from Africa. In early 2008, an electricity shortage forced the temporary closure of some of the country’s coal mines, leading to reduced production and the diversion of some coal, originally intended for export, to domestic power plants. Although South Africa has domestic infrastructure and energy supply problems to solve, and its coal exports have remained flat over the past few years, coal mining is expected to continue playing an important role in its economy. A scheduled expansion of the Richards Bay Coal Terminal to add about 0.5 quadrillion Btu of export capacity in 2009 will support South Africa’s continued role as an international coal supplier [25].
Coal Imports
Asia
Asia poses a large area of uncertainty for world coal trade projections. In particular, China has the potential to influence the market both as an importer and as an exporter. For example, a significant increase in China’s coal imports could put upward pressure on world coal prices. In 2030, China’s coal imports are projected to total 3.4 quadrillion Btu and its exports 1.1 quadrillion Btu. Even with a substantial increase in imports, however, most of the coal consumed in China will continue to be supplied by its own coal mines.
In India, demand for coal imports in 2030 is projected to be nearly triple its 2006 demand, as the country continues to encounter problems with domestic coal production and transportation. India is projected to increase imports of both coking coal and steam coal substantially. Its large electricity plants planned for the coast are to be fueled by imported thermal coal. India has domestic resources of coking coal, but their quality is poor in comparison with imports from foreign sources. India plans to expand its steel industry to between 165 and 198 million tons by 2020 from about 50 million tons in 2005 [26], with increased imports of coking coal supporting the expansion. Steel production is necessary for India to expand and improve infrastructure essential for economic development.
Although 2001 marked the final year of significant Japanese coal production [27], Japan has continued to rely on coal and is expected to remain the world’s largest importer of coal through 2030. Japan relies on Australia for about 60 percent of its coal imports (both steam and metallurgical coal) and on China for about 20 percent of its steam coal imports. In addition, its purchases of coal from Indonesia have increased recently, and it has initiated investments in coal production in other countries, including Russia, in order to improve the security of its coal supply [28]. Japan is a leader in steel production, ranking second among world steel producers [29], and is projected to continue to import coking coal for use in its steelmaking plants in 2030.
South Korea also is expected to continue importing most of the coal it consumes. With planned increases in coal-fired capacity, South Korea and Taiwan together are projected to maintain a share of world imports at about 18 percent in 2030 despite sizable increases in steam coal imports by other countries. Thailand is also projected to increase steam coal imports by 2015, when new coal-fired plants are constructed [30].
Europe, Middle East, and Africa
In the IEO2008 reference case, total coal imports to the Europe/Mediterranean market (including the Middle East and Africa) in 2030 are only slightly above 2006 levels (Figure 51). With most European countries placing greater emphasis on natural gas in the power sector, coal becomes a less significant component of the fuel mix for electricity generation. In Turkey, however, electricity demand and steel industry growth are projected to offset some of the decline in Europe’s coal imports. Italy’s conversion of power plants from oil to coal also is projected to increase its coal imports. The initial increase in coal trade to Europe in the projections result in large part from the phaseout of European mining subsidies and higher demand for lower sulfur coal. Germany’s hard-coal-fueled power plants are projected to require imported coal when its hard coal mines close by 2018 [31]. In the Middle East, Israel accounts for the largest portion of the increase in coal imports over the projection period as it expands its use of coal-fired generation. The demand for lower sulfur coal leads to an increase in the projected share of Europe’s coal imports originating from South America and Eurasia.
The Americas
In 2008 Kinder Morgan Energy Partners LP will complete a 0.4 quadrillion Btu expansion of its import terminal at Hampton Roads, Virginia; however, with high international coal prices in the near term, the terminal is expected to remain idle while U.S. exports increase to meet short-term international demand [32]. In the mid- to long term, port expansions are expected to facilitate U.S. coal imports, which increase by about 1.2 quadrillion Btu from 2006 to 2030. Although imports remain a relatively small share of U.S. coal consumption in 2030 (7 percent), the increase represents a shift for the United States from a net exporter to a net importer of coal. With declining productivity and mining difficulties in Central Appalachia, and with rising domestic demand for coal, imports are expected to become increasingly competitive for coastal States in the East and Southeast. South America (Colombia, in particular) is expected to be an important source of U.S. coal imports.
Although Canada has been the largest importer of U.S. coal in recent years, exports of U.S. steam coal to Canada in 2030 are projected to be about 0.2 quadrillion Btu below their 2006 level. It is expected that a portion of Ontario’s coal-fired generating capacity will be shut down for environmental reasons.
Brazil’s steelmaking capacity is projected to double by 2011 [33]. With rich reserves of iron ore but no coking-grade coal, Brazil’s steel industry will need more imports of coking coal from Australia, Southern Africa, Canada, and the United States. Overall, South America’s imports of coking coal—driven primarily by demand in Brazil—are projected to grow from about 0.4 quadrillion Btu in 2006 to 0.9 quadrillion Btu in 2030.
World Coal Reserves
Total recoverable reserves of coal around the world are estimated at 930 billion tons—reflecting a current reserves-to-production ratio of 143 (Table 9).13 Historically, estimates of world recoverable coal reserves, although relatively stable, have declined gradually from 1,174 billion tons in 1990 to 1,083 billion tons in 2000 and 930 billion tons in 2006 [34]. The most recent assessment of world coal reserves includes a substantial downward adjustment for India, from 102 billion tons in 2003 to 62 billion tons in 2006. Estimated reserves for OECD Europe of 32 billion tons in the most recent assessment are also substantially lower than the 2003 assessment of 43 billion tons. Much of the downward adjustment for OECD Europe is a result of lower estimates for Poland, Turkey, and the Czech Republic. Poland’s reassessment of estimated recoverable coal reserves from 15 billion tons in 2003 to 8 billion tons in 2006 reflects the use of more restrictive criteria for geologic reliability [35].
Although coal deposits are widely distributed, 76 percent of the world’s recoverable reserves are located in five countries: the United States (28 percent), Russia (19 percent), China (14 percent), Australia (9 percent) and India (7 percent). In 2005 those five countries, taken together, produced 4.8 billion tons (94.0 quadrillion Btu) of coal, representing 73 percent (77 percent on a Btu basis) of total world coal production [36]. By rank, anthracite and bituminous coal account for 51 percent of the world’s estimated recoverable coal reserves on a tonnage basis, subbituminous coal accounts for 32 percent, and lignite accounts for 18 percent.
Quality and geological characteristics of coal deposits are important parameters for coal reserves. Coal is a heterogeneous source of energy, with quality (for example, characteristics such as heat, sulfur, and ash content) varying significantly by region and even within individual coal seams. At the top end of the quality spectrum are premium-grade bituminous coals, or coking coals, used to manufacture coke for the steelmaking process. Coking coals produced in the United States have an estimated heat content of 26.3 million Btu per ton and relatively low sulfur content of approximately 0.9 percent by weight [37]. At the other end of the spectrum are reserves of low-Btu lignite. On a Btu basis, lignite reserves show considerable variation. Estimates published by the International Energy Agency for 2005 indicate that the average heat content of lignite in major producing countries varies from a low of 4.4 million Btu per ton in Greece to a high of 12.4 million Btu per ton in Canada [38].
Notes and Sources
References
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