Coal fuel: falling demand in Europe and a sharp rise in consumption in Asia
16 June 2020
Today, there are two opposite trends in the use of coal fuel as a source of electricity. Demand for it in Europe is falling, while in Asia it is growing rapidly. What is the future of coal fuel?According to recent data provided by the Finnish technology group Wartsila, for the period from January to April 2020, the generation of energy obtained from coal fuel in European countries fell by almost 30% compared to the same period last year. The figure is 128 TWh, which is only 12% of the total electricity generation in the region.
In part, these figures reflect the overall decline in electricity demand in Europe, as countries were quarantined due to the coronavirus pandemic. But there are other reasons, among them: record low gas prices, rising renewable energy potential, and government efforts to phase out coal over the coming decade. While gas prices may recover and restrictions on movement and operation of production facilities will be lifted, the latter two factors are unlikely to go away.
Coal trading volumes in European brokerage markets fell 19% in the first quarter to 207 million tonnes, according to data from the London energy brokers ' Association. For comparison, gas volumes increased by 17% over the same period to 11,162 TWh.
At the same time, the opposite situation is observed in Asia. Coal sales figures for China Coal Energy Co. in may, they increased by 27%, and in the first five months of this year — by 10%. The company sold 92.5 million metric tons of coal between January and may. Removing barriers after the pandemic only increased productivity — in may, China produced 9.3 million tons of coal, which is 3.8% more than in April.
In India, the government of Prime Minister Narendra modi last month emphasized its interest in the coal industry by providing a package of additional measures to stimulate the industry in the face of a pandemic. More than $ 6 billion was allocated for coal transport infrastructure, and bonds from 50 mining blocks were auctioned. Meanwhile, the annual production target for the state-owned mining company, Coal India Ltd, the world's leading coal producer, was increased by 18% to 710 million tonnes. This goal is strongly encouraged by the government, and therefore it is expected that demand for electricity will quickly recover. The goal of producing 1 billion tons of coal by 2024 remains unchanged.
According to the IEA, Southeast Asian countries, including Indonesia, Vietnam and the Philippines, are also ready to increase demand for coal in the medium term.
Although the coronavirus pandemic and its consequences mean that Asian demand for coal is likely to fall year-on-year in 2020, according to James Stevenson, an analyst at the British information company IHS Markit, this phenomenon will not become a new trend and will soon die out. He noted that in all Asian countries, coal consumption is expected to increase in the long term.
Thus, despite the fact that many European countries are abandoning coal consumption and significantly reducing demand for it, due to the growing indicators of the Asian region, coal fuel still remains the most popular energy source in the world.