Worldwide consumption of the fossil fuel, moreover, is expected to soar 25% by 2020 to 4.5 billion tons of oil equivalent, overtaking oil at 4.4 billion tons, Wood Mackenzie reported in a presentation at the World Energy Congress in Daegu South Korea this week.
Despite a North American natural gas boom, ongoing thirst by Asian powerhouses means the comparatively cheaper fuel will power their economies, as U.S. European and regional Asian demand will hold steady, the firm added. “China’s demand will almost single-handedly propel the growth of coal as the dominant fuel,” said William Durbin, Wood Mackenzie’s president of global markets. “Unlike alternatives, it is plentiful and affordable.”
By consuming more coal than the rest of the world combined, China will drive 75% of global coal growth this decade, according to the statistics. Half of China’s power generation capacity built between 2012 and 2020 will be coal-fired, the survey added; the world’s most populous nation has also witnessed the construction of one new coal-fired power plant every week since 2011.
With domestic gas output limited and natural gas imports more far costly, Durbin noted, the Chinese have no true alternative to coal. “Renewables cannot provide base load power; this leaves coal as the primary energy source,” he said.
Excess supply and faltering demand growth have depressed global coal prices, too. But “if you take China and India out of the equation, under current regulations, coal demand in the rest of the world will remain at current levels,” Durbin said.
High fuel import costs and nuclear issues will bolster coal use throughout northeast Asia while, in North America, coal remains competitive in many place despite cheap natural gas. On the other hand, “the struggling economy and low coal prices rendered the European Union Emissions Trading Scheme ineffective,” Durbin said, referring to the EU’s own carbon reduction strategy.
“The carbon price will need to encourage fuel switching, which is unlikely before 2020,” he added, according to Reuters. There’s good news for coal in Southeast Asia, too, where the fuel will generate nearly half of the region’s electricity by 2035, up from less than a third now, reported the International Energy Agency (IEA) earlier this month.