Chapter 4 - Coal
| In the IEO2009 reference case, world coal consumption increases by 49 percent
from 2006 to 2030, and coal’s share of world energy consumption increases
from 27 percent in 2006 to 28 percent in 2030. |
In the IEO2009 reference case, world coal consumption increases by 49 percent
over the projection period, from 127.5 quadrillion Btu in 2006 to 190.2
quadrillion Btu in 2030 (Figure 42). The growth rate for coal consumption
is fairly even over the period, averaging 1.9 percent per year from 2006
to 2015 and 1.6 percent per year from 2015 to 2030—generally reflecting
the growth trends for both world GDP and world primary energy consumption.
Regionally, increased use of coal in non-OECD countries accounts for 94
percent of the total growth in world coal consumption over the entire period.
In 2006, coal accounted for 27 percent of world energy consumption (Figure
43). Of the coal produced worldwide in 2006, 62 percent was shipped to
electricity producers, 34 percent to industrial consumers, and most of
the remaining 4 percent to coal consumers in the residential and commercial
sectors. Coal’s share of total world energy consumption increases to 28
percent in 2030 in the IEO2009 reference case. In the electric power sector
its share declines slightly, from 42 percent in 2006 to 40 percent in 2020,
and then increases to 42 percent in 2030.
International coal trade grows by 40 percent in the reference case, from
19.7 quadrillion Btu in 2006 to 27.6 quadrillion Btu in 2030. The share
of total world coal consumption accounted for by internationally traded
coal remains near the 2006 level of 15 percent throughout the projection
period.
World Coal Consumption
OECD Countries
Coal consumption in the OECD countries increases in the reference case
from 46.9 quadrillion Btu in 2006 to 47.8 quadrillion Btu in 2015 and 50.7
quadrillion Btu in 2030 (Figure 44). The increase represents average growth
of 0.3 percent per year over the entire period and 0.4 percent per year
from 2015 to 2030. Despite increases in North America and OECD Asia, coal
consumption in the OECD countries, which represented 37 percent of the
world total in 2006, declines to 27 percent of the total in 2030.
North America
Coal use in the United States totaled 22.5 quadrillion Btu in 2006—92 percent
of total coal use in North America and 48 percent of the OECD total. U.S.
coal demand rises to 26.6 quadrillion Btu in 2030 in the IEO2009 reference case. The United States has substantial coal reserves and relies heavily
on coal for electricity generation, a position that continues in the projections.
Coal’s share of total U.S. electricity generation (including electricity
produced at combined heat and power plants in the industrial and commercial
sectors) declines from 49 percent in 2006 to 47 percent in 2030.18
Increasing coal use for electricity generation at new and existing plants,
combined with the startup of several coal-to-liquids (CTL) plants, leads
to modest growth in U.S. coal consumption, averaging 0.7 percent per year
from 2006 to 2030. Although an assumed risk premium for carbon-intensive
technologies dampens investment in new coal-fired power plants in the United
States, the projected increase in coal-fired electricity generation still
is larger than for any other fuel. Increased generation from coal-fired
power plants accounts for 39 percent of the growth in total U.S. electricity
generation from 2006 to 2030.
Generation from renewables (including conventional hydroelectric resources)
also increases substantially in the forecast, accounting for 32 percent
of the growth in total electricity generation, followed by natural gas
at 18 percent. Production of coal-based synthetic liquids increases to
257,000 barrels per day in 2030. The projections for both coal-fired electricity
generation and coal-based synthetic liquids could change significantly,
however, if changes are made in U.S. laws and policies, particularly those
regarding greenhouse gas emissions.
In Canada and Mexico, small increases in coal consumption (0.2 quadrillion
Btu for each country) are expected over the period. As a result, the two
countries essentially maintain their combined 8-percent share of North
America’s total coal consumption through 2030. In Mexico, 0.7 gigawatts
of coal-fired generating capacity is currently under construction at Lazaro
Cardenas on the Pacific coast. In addition, Mexico’s Energy Ministry has
indicated the potential for additional coal-fired generating projects in
the next decade, to be supplied by coal produced locally [1]; however,
development of the new coal-fired power plants and associated mines is
contingent on minability and coal quality assessments of some recently
identified resources in the Coahuila coal basin in northeast Mexico.
OECD Europe
Total coal consumption in the countries of OECD Europe declines slightly
in the reference case, from 13.2 quadrillion Btu in 2006 (28 percent of
the OECD total) to 12.0 quadrillion Btu in 2030 (24 percent of the OECD
total). In 2006, the major coal-consuming countries of OECD Europe included
Germany, Poland, the United Kingdom, Spain, Italy, Turkey, and the Czech
Republic. Low-Btu coal is an important domestic source of energy for OECD
Europe, which also relies heavily on imports of hard coal.19 In 2006, lignite
accounted for 47 percent of total coal consumption in OECD Europe on a
tonnage basis and 24 percent on a Btu basis [2]. 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
the overall energy mix [3].
Coal consumption in OECD Europe remains relatively flat throughout 2030,
as governments enact policies to discourage its use, largely in response
to environmental concerns, and growth in overall energy consumption is
modest, averaging 0.5 percent per year. Other factors that are likely to
restrain overall growth in coal consumption in the region include continuing
penetration of natural gas in both the electricity and 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 being major consumers of coal, the nations of OECD Asia
play an important role in international coal trade. In 2006 they used 9.4
quadrillion Btu of coal, representing 20 percent of total OECD coal consumption.
OECD Asia’s coal demand increases by 0.4 quadrillion Btu over the projection period, to 9.8 quadrillion Btu in 2030
(19 percent of the OECD total). In 2006, Australia was the world’s leading
coal exporter, supplying 6.2 quadrillion Btu of coal to the international
market. Japan and South Korea were the leading importers, receiving 4.5
and 2.0 quadrillion Btu of coal, respectively [4]. With Japan’s coal use
decreasing in the long term, Australia, New Zealand, and South Korea account
for nearly all the projected growth in OECD Asia’s demand for coal.
Coal consumption in Australia/New Zealand increases by an average of 0.5
percent per year, from 2.6 quadrillion Btu in 2006 to 2.9 quadrillion Btu
in 2030. Of the two countries, Australia is by far the larger coal consumer,
at 97 percent of the regional total in 2006. With substantial coal reserves
(primarily in Australia), the region continues to rely heavily on coal
for electricity generation; however, coal’s share of total generation declines
gradually. Compared with coal, generation from both renewables and natural
gas increases at a more rapid pace, with the result that those fuels capture
an increasing share of Australia/New Zealand’s total generation. Coal-fired
power plants supplied 70 percent of the region’s total electricity generation
in 2006, as compared with a projected 58-percent share in 2030 in the reference
case.
South Korea’s total coal consumption increases by 0.7 quadrillion Btu from
2006 to 2030, primarily to fuel existing and planned electric power plants.
South Korea’s 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 Company’s Dangjin plant in 2006 and 2007 [5].
Non-OECD Countries
Led by strong economic growth and rising energy demand in non-OECD Asia,
total coal consumption in the non-OECD countries increases to 139.6 quadrillion
Btu in 2030, an increase of 73 percent over the 2006 total (Figure 45).
The increase of 59.0 quadrillion Btu, which represents 94 percent of the
projected increase in total world coal consumption, underscores the continuing
importance of coal in meeting overall energy demand in the non-OECD nations.
Over the entire IEO2009 reference case horizon, coal accounts for about
one-third of total non-OECD energy consumption.
Non-OECD Asia
The countries of non-OECD Asia account for 90 percent of the projected
increase in world coal consumption from 2006 to 2030. Strong economic growth
is expected for non-OECD Asia, averaging 5.7 percent per year from 2006
to 2030, with China’s economy averaging 6.4 percent per year and India’s
by 5.6 percent per year. Much of the increase in demand for energy in non-OECD
Asia, particularly in the electric power and industrial sectors, is expected
to be met by coal.
Coal use in China’s electricity sector increases from 24.9 quadrillion
Btu in 2006 to 57.3 quadrillion Btu in 2030, at an average rate of 3.5
percent per year (Figure 46). In comparison, coal consumption in the U.S.
electric power sector is projected to grow by 0.7 percent annually, from
20.7 quadrillion Btu in 2006 to 24.3 quadrillion Btu in 2030. At the beginning
of 2006, China had an estimated 350 gigawatts of coal-fired capacity in
operation. To meet the demand for electricity that is expected to accompany
its rapid economic growth, an additional 600 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 electricity transmission and distribution systems. In the near
term, the IEO2009 projections show a substantial amount of new coal builds,
with 192 gigawatts of capacity additions between 2006 and 2010.
In addition to required investments in China’s electric power industry,
the large increase in Chinese coal demand projected in the IEO2009 reference
case indicates a continuing need for substantial investments in both coal
mining and coal transportation infrastructure. Examples of some recent
and forthcoming investments in China’s rail transportation system include
major capacity expansions for some of the country’s existing coal railways,
the planned construction of several new coal railways, the scheduled delivery
of 300 modern General Electric locomotives to the Chinese Railways Ministry
by 2010, and an estimated $100 billion of investment in rail services included
in China’s recently approved stimulus package [6].
More than one-half (52 percent) of China’s coal use in 2006 was in the
non-electricity sectors, primarily in the industrial sector. China was
the world’s leading producer of both steel and pig iron in 2006 [7]. Over
the projection period, coal demand in China’s non-electricity sectors is
expected to increase by 13.9 quadrillion Btu, to 51 percent above the 2006
level.
Because China has limited reserves of oil and natural gas, coal remains
the leading source of energy in its industrial sector. In large part, coal’s
declining share of industrial energy consumption in China is the result
of increasing use of electricity in the sector; however, that increase
also can be viewed indirectly as an increase in coal consumption, given
that coal-fired power plants are projected to satisfy approximately three-fourths
of China’s total power generation requirements throughout the period from
2006 to 2030. Electricity’s share of total industrial energy use rises
from 18 percent in 2006 to 28 percent in 2030, while coal’s share drops
from 61 percent to 51 percent.
Another potential source of future coal demand in China is the production
of coal-based synthetic liquids. Rapid development of a CTL industry in
China was strongly anticipated several years ago, but the government’s
concerns about a number of factors, such as potential strains on water
resources and shortages of coal supply, led to increased oversight of the
emerging industry. As a result, many proposed CTL projects lack official
government approval and are now on hold.
One plant that has been approved is the Shenhua Group’s direct coal liquefaction
facility located in China’s Inner Mongolia Autonomous Region. Construction
of the plant’s first phase was completed in late 2008, but initial production
runs revealed a number of problems in the production process [8]. Following
some corrective modifications, new production trials are expected later
in 2009, with commercial production now scheduled to commence sometime
in 2010. The plant has an initial design capacity of about 20,000 barrels
per day [9]. Depending on the successful startup and commercial operation
of its first phase, Shenhua plans an eventual expansion of the plant’s
capacity to 100,000 barrels per day. In the IEO2009 reference case, China’s
CTL production increases to about 537,000 barrels per day in 2030, corresponding
to a little less than 4 percent of the country’s total liquids consumption.
In India, more than 71 percent of the growth in coal consumption is expected
to be in the electric power sector and most of the remainder in the industrial
sector. In 2006, India’s coal-fired power plants consumed 5.9 quadrillion
Btu of coal, representing 63 percent of the country’s total coal demand.
Coal use for electricity generation in India is projected to grow by 1.9
percent per year, to 9.3 quadrillion Btu in 2030, as an additional 65 gigawatts
of coal-fired capacity (net of retirements) is brought on line. As a result,
India’s coal-fired generating capacity increases from 78 gigawatts in 2006
to 142 gigawatts in 2030.
Currently, India’s 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) [10]. During
India’s most recent 5-year power plan period, which ended in March 2007,
only about 12 gigawatts 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 [11].
In the other nations of non-OECD Asia, coal consumption grows by an average
of 3.0 percent per year, from 5.1 quadrillion Btu in 2006 to 10.4 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 Indonesia and Vietnam, where considerable amounts of new coal-fired
generating capacity are expected to come on line before 2030.
Non-OECD Europe and Eurasia
Coal consumption in non-OECD Europe and Eurasia increases in the IEO2009 reference case by an average of 0.3 percent per year, from 8.7 quadrillion
Btu in 2006 to 9.4 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).20
Russia is the largest coal consumer among the nations of non-OECD Europe
and Eurasia, at 4.6 quadrillion Btu in 2006, or 52 percent of the total
for non-OECD Europe and Eurasia. Coal supplied 15 percent of Russia’s total
energy requirements in 2006, and coal-fired power plants provided 23 percent
of its electricity. In the reference case, coal consumption in Russia in
2030 totals 5.2 quadrillion Btu, its share of Russia’s total energy consumption
drops slightly to 14 percent, and its share of electricity generation declines
to 20 percent. Nearly one-half of the projected growth in electricity demand
from 2006 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 Russia’s total electricity generation increases from 39 percent in 2006
to 43 percent in 2030.
In March 2008, the Russian government approved a new long-range plan for
the country’s electric power sector through 2020 [12]. In general, the
plan lays out a detailed roadmap of capacity additions and retirements
and new transmission infrastructure. In terms of capacity additions, one
of the key objectives of the plan 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 IEO2009 reference case, but it differs from the IEO2009 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 Russia’s new long-range power plan is the
extent to which the new owners of Russia’s various regional and wholesale
generating companies will adhere to the specific planned additions and
retirements outlined in the government plan. In mid-2008, Russia’s former
power monopoly, Unified Energy System (UES), completed the process of selling
all but one of the regional and wholesale generating companies it once
controlled. Ownership of those entities is now in the hands of various
domestic and international energy companies. Thus far, the new owners have
shown some reluctance to add the 36 gigawatts of new coal-fired capacity
specified in Russia’s long-range power plan by 2015, with their expansion
plans in mid-2008 indicating a total of about 20 gigawatts of new coal
builds for the period [13].
Coal consumption in other non-OECD Europe and Eurasia remain near the 2006
level of 4.2 quadrillion Btu through 2030, although the reference case
does show some increase in consumption for electricity generation. From
2006 to 2030, coal, natural gas, and nuclear power are projected to satisfy
nearly all the region’s additional electricity requirements, with increased
output from coal-fired plants meeting 19 percent of the growth, natural-gas-fired
plants 57 percent, and nuclear plants 23 percent. Coal’s share of total
electricity generation declines only slightly, from 27 percent in 2006
to 25 percent in 2030. Currently in the region, a number of new coal-fired
power projects are in the planning stages [14]. Lignite mined locally is
the proposed fuel for most of those plants, although imported coal is the
likely fuel source for several plants that may be constructed in coastal
areas.
Africa
Africa’s coal consumption increases by 1.1 quadrillion Btu from 2006 to
2030 in the reference case. South Africa currently accounts for 92 percent
of the coal consumed on the continent and is expected to continue to account
for much of Africa’s total coal consumption over the projection period.
In South Africa, increasing demand for electricity in recent years has
led to a decision by Eskom, the country’s state-owned electricity supplier,
to restart three large coal-fired plants (Camden, Grootvlei, and Komati)
that have been closed for more than a decade [15]. 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 proceeding with the construction of two new coal-fired power plants,
Medupi and Kusile, with a combined generating capacity of 9.6 gigawatts.
The 12 individual units at the Medupi and Kusile plants are scheduled to
be fully operational by the end of 2016.
Recent power shortages and a general lack of spare generating capacity
in southern Africa also have led to increased interest in new coal-fired
power projects in countries other than South Africa. Of particular significance
are major investments being made by several international energy companies
to develop coal reserves in Mozambique and Botswana for the purpose of
supplying both international markets and domestic coal-fired generating
plants [16].
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 large-scale
CTL plants in South Africa (Sasol II and Sasol III) supply slightly more
than 20 percent of the country’s total liquid fuel requirements [17]. 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 0.8 quadrillion Btu of coal in 2006.
Brazil, with the world’s tenth-largest steel industry in 2006, accounted
for 54 percent of the region’s coal demand; Chile, Colombia, Puerto Rico,
Peru, and Argentina accounted for most of the remainder [18]. In the projections,
coal consumption in Central and South America increases by 0.8 quadrillion
Btu from 2006 to 2030, with 75 percent of the increase in Brazil, primarily
for coke manufacture and electricity generation. Brazil’s steel companies
currently plan to expand production capacity by a substantial amount over
the mid-term to meet increasing domestic and international demand for steel
[19].
Middle East
Countries in the Middle East consumed 0.4 quadrillion Btu of coal in 2006.
Israel accounted for 85 percent of the total and Iran most of the remainder.
The region’s coal use increases only slightly in the reference case, to
0.5 quadrillion Btu in 2030.
World Coal Production
From 2006 to 2030, coal production in China, the United States, and India
increases by 43.5 quadrillion Btu, 3.2 quadrillion Btu, and 1.8 quadrillion
Btu, respectively, in the IEO2009 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/New Zealand
and Other non-OECD Asia also is projected to rise substantially. The increase
in coal production for Australia/New Zealand (4.6 quadrillion Btu) is expected
to be used primarily for exports from Australia. Production growth in other
non-OECD Asia (4.0 quadrillion Btu) is attributable to both rising levels
of coal consumption and exports. The projected increases in coal production
for these five regions dominate the overall trends for the OECD and non-OECD,
accounting for virtually all the increase in net production for OECD countries
and 90 percent of the increase for non-OECD countries. Rising international
trade also is expected to support production increases in Russia, Africa,
and Central and South America (excluding Brazil).
World Coal Trade
At the end of 2008, in response to the global economic crisis, worldwide
demand for coal imports fell precipitously, and the ensuing coal supply
glut prompted many mines in coal exporting countries to lower their production
levels. Although the break from intense global coal demand could provide
an opportunity for coal trade infrastructure—including mine, rail, and
port capacity—an opportunity to catch up with the previous years’ fast-paced
growth, many infrastructure projects in the early stages are likely to
be deferred. Projects that are in progress, however, are assumed to continue.
Despite the global economic crisis, the duration of which is uncertain,
over the long run the volumes of total coal traded internationally increase
steadily through 2030 (Table 8 - Quadrillion Btu and Table 8 - Million short Tons). The increase in coal trade through 2030
reflects the projected worldwide growth in coal consumption for the same
period, particularly in non-OECD Asia.
Trade in coking coal—an essential input for the production of iron used
to make steel—has been subject to recent cutbacks, with some companies
reducing steel output by as much as 30 percent; however, many countries
are adopting economic stimulus packages to support infrastructure investments,
which presumably will require steel. The impact of the stimulus packages
on coal markets is uncertain and is not explicitly represented in the IEO2009 projections. In the long run, when the current glut of steel in the market
has been worked through and economic growth resumes, demand for imports
of coking coal is expected to begin rising again.
Although both steam coal and coking coal are traded internationally, most
of the trade is in steam coal, which represents 72 percent of world coal
trade in 2030, similar to current levels. In 2007, 58 percent of the world’s
exported steam coal was imported by Asian countries, and their share of
the total in 2030 is projected to be 65 percent. The share of coking coal
imports destined for Asian countries increases from 61 percent in 2007
to 67 percent in 2030.
International coal trade accounted for about 16 percent of total world
coal consumption in 2007, and in the IEO2009 reference case it is projected
to grow at an average annual rate of 1.2 percent, from about 20.8 quadrillion
Btu in 2007 to 27.6 quadrillion Btu in 2030. Because the largest increases
in coal consumption through 2030 are projected for non-OECD Asia—particularly
China, which is expected to meet most of the increase in its coal demand
with domestic supply rather than seaborne imports—the share of coal trade
as a percentage of global coal consumption falls to 14 percent in 2030.
Australia and Indonesia are well situated geographically 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.
Coal Exports
The top four exporters of steam coal in 2007 were Indonesia, Australia,
South America (Colombia and Venezuela), and southern Africa (South Africa,
Mozambique, and Botswana). Although Indonesia currently is the world’s
largest exporter of steam coal, Australia is expected to be the leader
in most years of the projection, after many of its capacity investments
are in place. China is projected to be only the sixth-largest exporter
of steam coal in 2030. Australia, Canada, and the United States rank as
the three top exporters of coking coal over the projection period. Among
the regions expected to expand their international coal trade by 2030 are
Australia, South America, southern Africa, and Eurasia (primarily Russia).
In Vietnam and China, increases in domestic demand for coal are expected
to constrain coal exports.
Already the world’s leading exporter of coal, Australia dominates future
international coal trade in the reference case as it continues to improve
its inland transportation and port infrastructure to expedite coal shipments
to international markets. A new coal terminal at Kooragang Island, in New
South Wales, will add about 1.5 quadrillion Btu of capacity, about half
of which is expected to be operational by 2011 [20]. Expansion of Queensland’s
Dalrymple Bay port in 2009 is expected to increase its annual export capacity
from about 1.8 quadrillion Btu to 2.2 quadrillion Btu [21]. Australia remains
the primary exporter of metallurgical coal to Asian markets, supplying
about 76 percent of Asia’s import demand for coking coal in 2030, compared
with about 70 percent in 2007.
Russia is among the coal-exporting countries that have shown some indication
of pulling back in the short term in the wake of softening global demand for coal. For example, Mechel, a
Russian producer of metallurgical coal, plans to reduce capital expenditures
over the next 5 years in response to the global economic slowdown [22];
and Evraz, another Russian coal producer, has given up a license to develop
a coking coal resource in the Mezhegey coal deposit [23].
Hurt by weak cash flows, some coal producers are hoping to benefit from
a portion of Russia’s multibillion-dollar stimulus package [24]. Some planned
infrastructure improvements may be delayed in the short term as rail tariffs,
which are needed to support some of the investments, are reduced and some
coal mines close or reduce production [25]; however, as demand growth resumes,
Russia is expected to expand its coal supply capability. For example, coal
exports to Asia will be facilitated by capacity expansion at the new port
of Muchka, where SUEK (Siberian Coal Energy Company) has built about 0.3
quadrillion Btu of an annual export capacity, and Mechel has plans for
about 0.7 quadrillion Btu of export capacity at the new Muchka Bay Terminal
2 [26]. From an 8-percent share in 2007, Eurasia (primarily Russia) is
expected to supply 9 percent of the coal traded internationally in 2030.
South America is projected to remain the third-largest exporter of coal
worldwide in 2030, primarily as a result of continued 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 via truck to Colombia’s
Pacific Ocean port of Buenaventura when it is completed in 2013. Expansion
projects on Colombia’s Caribbean coast include a coal terminal at the port
of Cienaga and an expanded river-to-port terminal at Barranquilla, each
with an annual capacity of about 0.9 quadrillion Btu [27].
Indonesia also has demonstrated its potential for significant growth in
coal exports, with an increase of about 3.7 quadrillion Btu in annual exports
over the past decade. From 2007 to 2030, Indonesia’s annual coal exports
are projected to average about 4.5 quadrillion Btu; however, continued
strength in Indonesia’s coal exports depends on investment in resource
exploration, the development of new mines, and the ability to attract foreign
investment. In late 2008, despite global financial uncertainty, Coal India
announced plans to acquire Indonesian coal reserves. The Indonesian company
PT Adaro Energy Tbk also reiterated plans to expand its export capacity
from about 1.0 quadrillion Btu to 1.8 quadrillion Btu by 2013 and pursue
other investments that would lower internal transportation costs [28].
Over the long term, areas of uncertainty for Indonesian exports include
the rate of growth in its domestic coal consumption, the adequacy of its
internal transportation infrastructure, and environmental concerns. Through
2030, Indonesia is expected to continue to be an important source of coal
supply coal to other nations.
Despite strong growth in coal exports from Vietnam between 2003 and 2007,
the government plans to restrict exports in the future. State-owned Vinacomin,
the largest coal producer in Vietnam, has announced plans to begin importing
coal from Indonesia [29]. In the IEO2009 reference case, Vietnam’s coal
exports decline slightly in the short term as a result of softening global
demand (rather than burgeoning domestic coal consumption). In later years,
however, Vietnam’s domestic coal demand is expected to compete more strongly
for the country’s limited domestic coal production.
The African countries of Mozambique and Botswana are expected to play an
emerging role in world coal trade, as importing countries seek to secure
additional sources of supply. For example, India’s Tata Steel, Brazil’s
Companhia Vale do Rio Doce (CVRD), and Australia’s Riversdale all have
financial stakes in mine operations in the Moatize basin of Mozambique
[30]. An expansion of the port of Beira in Mozambique to handle an annual
capacity of about 0.5 quadrillion Btu is also planned [31], and the rail
link between Moatize coal basin and Beira (Sena Railway) is being updated.
Interest in Botswana includes plans to expand mining and to construct a
railroad that will connect inland coal mines to a port on the Namibian
coast.
South Africa’s coal exports have remained flat over the past few years,
with a permanent solution for domestic infrastructure and energy supply
problems yet to be found; however, coal mining is expected to continue
playing an important role in South Africa’s economy. A scheduled expansion
of the Richards Bay Coal Terminal to about 2.2 quadrillion Btu of annual
capacity in 2009 will support South Africa’s continued role as an international
coal supplier [32].
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
the IEO2009 reference case, China’s coal imports total 3.3 quadrillion
Btu and its exports total 1.0 quadrillion Btu in 2030. 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.
India’s coal imports in 2030 are projected to be three times the 2007 level,
spurred by rising imports of both coking and steam coal. India’s large
electricity plants planned for coastal areas are to be fueled by imported
steam coal. In light of current limits on available global investment capital
and the size and associated risk of the projects, however, it is uncertain
whether India’s mega-size coal plants will meet their original timelines.
The Indian government is trying to accelerate investment in generation
and infrastructure, but recent solicitations have resulted in fewer bids
than expected [33]. Planned investments in India also include port expansions
at Paradip and Goa [34].
India has domestic resources of coking coal, but their quality is poor
in comparison with foreign-sourced coking coal. India’s long-term plans
include expansion of its steel industry to between 165 and 198 million
tons of crude steel output by 2020, up from about 59 million tons in 2007
[35], with increased imports of coking coal supporting the expansion. Growth
in 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
[36], Japan has continued to rely on coal and is expected to remain the
world’s largest coal importer in most years of the projection. Australia
provides for about 60 percent of Japan’s coal supply (both steam and metallurgical
coal), and China supplies about 20 percent of its steam coal imports. Japan’s
purchases of coal from Indonesia increased by 157 percent between 2000
and 2007. Japanese companies also have pursued investments in coal production
in other countries, including Russia and Canada [37].
Because Japan lacks significant resources of its own, it is likely to continue
seeking diverse sources of long-term supply even during the global economic
recession. In the short term, however, Japan (along with other countries
that import coking coal) reportedly is trying to cut back on contracted
imports of coking coal. Japan is a leader in steel production, ranking
second only to China among world steel producers [38], 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 generating capacity, South
Korea and Taiwan together are projected to maintain a share of world imports
at about 16 percent in 2030 despite sizable increases in coal imports by
other countries.
Europe, Middle East, and Africa
In the IEO2009 reference case, total coal imports to the Europe/Mediterranean
market (including the Middle East and Africa) in 2030 are slightly above
2007 levels (Figure 47). With most European countries placing greater emphasis
on natural gas in their power sectors, 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, and Germany’s
planned closure of its remaining hard coal mines by 2018 is expected to
result in increasing imports of coal for electricity generation [39]. Europe’s
demand for lower sulfur coal (from South America and Eurasia, for example)
will be tempered over time by the gradual addition of flue gas desulfurization
equipment at existing coal-fired power plants. 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 Americas
In the mid- to long term, port expansions are expected to facilitate U.S.
coal imports, which increase by about 1.1 quadrillion Btu from 2007 to
2030. In 2008, Kinder Morgan Energy Partners LP completed an expansion
of annual capacity at its import terminal in Newport News, Virginia, by
6 million tons (about 0.4 quadrillion Btu); and in late 2009, it received
an air permit enabling it to expand its coal terminal in Jacksonville,
Florida [40]. Although imports remain a relatively small share of U.S.
coal consumption in 2030 (4 percent), the increase represents a shift for
the United States from a net exporter of coal to a net importer. With declining
productivity and mining difficulties in Central Appalachia and 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.
Canada has been the largest importer of U.S. coal in recent years, but
exports of U.S. steam coal to Canada in 2030 are projected to fall below
their 2007 level. A portion of Ontario’s coal-fired generating capacity
is expected to be shut down over the projection period for environmental
reasons, as legislated by the Provincial government.
Brazil’s steelmaking capacity is projected to more than double by 2018,
to 88 million tons from 37 million tons in 2007 [41]. With rich reserves
of iron ore but no coking-grade coal, Brazil’s steel industry will need
more imports of coking coal from Australia, Canada, the United States,
and southern Africa. 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 2007 to 0.9 quadrillion Btu in 2030.
World Coal Reserves
Total recoverable reserves of coal around the world are estimated at 929
billion tons—reflecting a current reserves-to-production ratio of 137 (Table
9).21 Historically, estimates of world recoverable coal reserves, although
relatively stable, have declined gradually from 1,145 billion tons in 1991
to 1,083 billion tons in 2000 and 929 billion tons in 2006 [42]. 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—reportedly attributable to better data, which permitted the estimation
of recoverable coal reserves as compared with previous estimates of in-place
coal reserves. Estimated reserves for OECD Europe of 32 billion tons in
the most recent assessment also are 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 [43].
Although coal deposits are widely distributed, 80 percent of the world’s
recoverable reserves are located in five regions: the United States (28
percent), Russia (19 percent), China (14 percent), other non-OECD Europe
and Eurasia (10 percent), and Australia/New Zealand (9 percent). In 2006
those five regions, taken together, produced 4.9 billion tons (95.8 quadrillion
Btu) of coal, representing 71 percent (75 percent on a Btu basis) of total
world coal production [44]. 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 0.8 percent
by weight [45]. 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 2006 indicate
that the average heat content of lignite in major producing countries varies
from a low of 4.5 million Btu per ton in Greece to a high of 12.4 million
Btu per ton in Canada [46].
Notes and Sources
References
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