Asia demand for coal to offset falling demand in Europe, US, say analysts

DEMAND for coal is expected to continue falling in Europe and the US, but Asia is expected to prop up the fuel for the foreseeable future, according to a report by Bloomberg Quint.

“The future of coal depends on Asian demand, which is still growing, and is offsetting the decline from the rest of the world over the next decade,” Shirley Zhang, an analyst at Wood Mackenzie, told the newswire service.

The US is forecast to burn 15% less coal this year than previously forecast by the US Energy Information Administration whilst Britain has not burned any coal since April – a function of the lower economic activity brought about by the COVID-19 pandemic.

“Coal has really taken it on the chin,” said Benjamin Nelson, an analyst with Moody’s Investors Service regarding developed economy use of the fuel. “The longer the economic malaise, the more likely it is that coal plants will get shut down,” he said.

But global consumption of coal is forecast to rise slightly to 3.68 billion tons of oil-equivalent by 2030 with Asia’s share of that total expanding from about 77% now to around 81% over new decade, according to IHS Markit data.

China may add as much as 130 gigawatts of coal-fired generating capacity over the next five years to reach a peak of about 1,200 gigawatts and will dominate the nation’s generation mix, said Bloomberg Quint citing Woodmac analyst Frank Yu said in report.

Kevin Tu, a non-resident fellow at Columbia University’s Center on Global Energy Policy, said in a report that rising anxieties over economic growth and energy security could make improving China’s climate ambitions “challenging”.

“Diminishing coal’s role in China’s energy mix will be more difficult, with potential long-term detrimental impacts on global carbon emissions and prospects for China’s renewable development,” he said.