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The world’s three biggest coal users get ready to burn even more

The world’s three biggest consumers of coal, the dirtiest fossil fuel, are getting ready to boost usage so much that it’ll almost be as if the pandemic-induced drop in emissions never happened.

US power plants are going to consume 16% more coal this year than in 2020, and then another 3% in 2022, the Energy Information Administration said last week. China and India, which together account for almost two-thirds of demand, have no plans to cut back in the near term.

This means higher emissions, a setback for climate action ahead of international talks this year intended to raise the level of ambition from commitments under the Paris Agreement to reduce greenhouse gases. In the US, the gains may undermine President Joe Biden’s push to reestablish America as an environmental leader and raise pressure on him to quickly implement his climate agenda.

“We’re going to see a really marked increase in emissions,” with coal consumption at US power plants returning almost to 2019 levels, said Amanda Levin, policy analyst at the New York-based National Resources Defense Council. But if Biden implements green-energy policies as expected, “we could actually see changes pretty quickly.”

The US increase stems from higher natural gas prices and the recovery from the pandemic. For China and India, it’s a reflection of rising electricity demand that’s keeping coal as the dominant source of power generation even as they add vast amounts of solar and wind capacity.

While Biden’s Covid stimulus didn’t focus on green energy, a pending infrastructure bill is expected to include plans to fulfill his campaign pledges on climate change, making the US best poised to salvage progress in reducing global emissions. Biden has said the US will target carbon neutrality by 2050, and is convening an April meeting that’s expected to include China and India.

China’s President Xi Jinping surprised the world with his promise last year to achieve net-zero emissions by 2060. India has yet to make any similar commitment.

In China’s latest five-year plan announced March 5, Premier Li Keqiang didn’t set a hard target for emissions reduction, and said coal would remain a key component of the electricity strategy. More detailed energy plans to be published later in the year could include specific steps on curbing fossil fuel consumption.

While Beijing has reduced coal’s share in the nation’s energy mix in recent years, total power consumption has risen, so its usage has also climbed. Complicating the picture is that China also has the world’s biggest fleet of coal-fired power plants, and more than half of them are less than ten years old. Because they can run for several more decades, it’ll be tough to shift to alternatives.

“All of that installed capacity doesn’t go away overnight,” said Dennis Wamsted, an analyst for the Institute for Energy Economics and Financial Analysis.

Though a recovery in energy-intensive sectors like construction and metal production is currently boosting short-term coal demand, consumption will fall in the years ahead as China acts on climate promises, said Tang Daqian, an associate director at Fitch Bohua.

India too is a very long way from a clean grid, even as Prime Minister Narendra Modi said this month he’s ahead of schedule for meeting the initial carbon-reduction pledges under the Paris Agreement, reducing emissions intensity 33% to 35% from 2005 levels by 2030.

While the country has implemented an ambitious rollout of solar power, coal continues to account for around 70% of its electricity generation. Consumption at power plants will rise 10% this year, and is set to increase every year through at least 2027, according to Bloomberg Intelligence.

In the US, coal is rebounding after the coronavirus pandemic curtailed electricity usage and cut demand for the fuel by 19% last year. It’s also the result of gains in natural gas prices, which are up more than 40% from a year ago. When gas gets more expensive, utilities will often start burning more coal to bring down costs, even though it puts out twice the emissions. The EIA expects gas prices to remain high into 2022, pointing to strong demand for coal next year.

In the longer term, coal’s prospects are bleaker. While top users’ consumption might be rising in 2021, emerging markets that once seemed like the brightest spot for long-term demand are turning their back on the fuel as financing becomes more difficult and alternatives like gas and renewables are getting more accessible and cheaper. Bangladesh is abandoning almost all of its planned projects and the Philippines last year declared a moratorium on new coal-fired power plants.

“The trend is down, down and continuing to go down,” said IEEFA’s Wamsted.

But first, the fuel is poised for a revival that’ll lift overall global demand this year after two successive annual declines, according to the International Energy Agency. Its projection for a 2.6% increase in consumption this year reflects expectations for a pickup in every region of the world.

Coal India, the world’s largest producer, expects consumption will be boosted as industries including steel, cement and aluminum return to pre-virus levels of output. The company this month approved more than $6 billion in investments in new mines and expansions.

“There are climate-change issues about coal, but India’s energy needs won’t allow it to dump the fuel instantly,” said Binay Dayal, the firm’s technical director. 

Published by Bloomberg, March 16 2021

This month's top international coal headlines

  • Transnet to reopen part of S Africa coal export link — Argus Media
  • South Africa orders quarantine for coal vessels returning from India
    — Platts CTI
  • Eastern Mining Company presents concept of ‘Green Coal Cluster’
    — World Coal
  • S African rail disruption may last until 7 May — Argus Media
  • China urges power plants to increase coal inventories — sxcoal.com
  • Transnet says RBCT track repairs to take at least another week
    — McCloskey Coal Report
  • South Africa March coal exports climb 10% to 6.1Mt: customs — Platts CTI

2021 archive

April 2021
  • Atlantic thermal coal demand rises slightly with price increases — Platts CTI
  • South Africa's Transnet confirms derailment halting coal deliveries to export terminal — Platts CTI
  • Biden’s Risking US Energy Independence for ‘Unattainable’ Green Goals, Experts Say — InsideSources
  • South32's S Africa Energy Coal production slides Jan-Mar — Platts CTI
  • RB prices under pressure as record India COVID cases hit demand — Platts CTI
  • Germany’s HMS Bergbau buys majority stake in Botswana project — Platts CTI
  • Is ResGen’s woes the death knell for SA’s Waterberg coal dreams? — Platts CTI
  • Pakistan’s Jan thermal coal imports up 10% on year: 1.5Mt — Platts CTI
  • A Week After Shutting its Coal-Fired Plants Germany Forced to Reopen Them — Energy Education
  • President Xi pledges to strictly rein in coal-fired power projects — sxcoal.com
  • Atlantic thermal coal prices rise amid strengthening freight — Platts CTI
  • Anglo American Q1 thermal coal production down 7% at 8.08Mt — Platts CTI
  • Global energy CO2 emissions forecast to rise 5% in 2021 on revived coal burn: IEA — Platts CTI
  • Exclusive marketing rights secured by acquisiton of 51% in coal mine project in Botswana — HMS Bergbau AG
  • RB prices fall further, narrowing price gap with Newcastle
    — Southern African Coal Report
  • Morupule Coal to expand output ahead of power plant ramp up
    — Southern African Coal Report
  • China urges power plants to increase coal inventories — sxcoal.com
  • Clean coal’s uncertain future in South Africa 20 Apr 2021 – Coal and Mining
  • Emerging coal changes poised to present new electricity price risk
    — Mining Weekly
  • China’s Coal Frenzy Cancels America’s CO2 Emission Reductions
    — Morning Consult
  • The JSE is getting a new coal company - created out of Anglo assets. Here’s how big it could be — Business Insider SA
  • March thermal coal derivatives volume falls 24% on year to 51.33Mt: LEBA
    — Platts CTI
  • Asian thermal coal prices resilient amid firm Indian demand, tight Indonesian supply — Platts CTI
  • Why China not rushing to cut coal power plants as other countries
    — sxcoal.com
  • Anglo American to demerge South African thermal coal assets — Platts CTI
  • Anglo exits SA coal by setting up a new JSE-listed miner — BusinessLIVE
  • RB prices ease from two-year highs on limited Indian demand
    — Southern African Coal Report
  • South Africa tops G20 list for coal reliance — Southern African Coal Report
  • Indonesian thermal coal prices rises as supply tightens amid rains — Platts CTI
  • South Africa February coal exports unchanged at 5.56Mt: customs — Platts CTI
  • Prices: Nex fell by US$1.83/t from last week — Coalfax
  • Atlantic thermal coal prices supported despite limited spot activity — Platts CTI
March 2021
  • Coal-fired 800 MW Kusile Unit 3 begins commercial operation: Eskom
    — Platts CTI
  • SA Reserve Bank data: SA equities, including mining sector, remain unloved by foreign investors — Business Maverick
  • RB prices may ease from two-year highs on June rollover
    — Southern African Coal Report
  • Supply crunch across thermal coal-producing regions supports prices amid cautious buying — Platts CTI
  • India Feb thermal coal imports tumble on sharp fall from S. Africa
    — sxcoal.com
  • Large banks' lending to fossil fuel companies down 9% in 2020 — sxcoal.com
  • Pakistan's 2020 thermal coal imports up 7% on year: WTS — Platts CTI
  • Low-CV Indonesian coal gains steam amid Australia events — Platts CTI
  • Australia's rain will become India's pain as coal flows halt — Reuters
  • Exxaro warns 2Mt in coal exports at risk amid Transnet railing problems
    — Mining.com
  • European thermal coal price hits multi-year high as freight supports market
    — Platts CTI
  • Feb thermal coal derivatives volume falls 34% on year to 44.98Mt: LEBA
    — Platts CTI
  • Eskom to stick to price hike in Duvha coal deal — BusinessLIVE
  • Transition from coal is required, but must be just and managed well
    — BusinessLIVE
  • Eskom focuses on recovering operational performance — World Coal
  • The world’s three biggest coal users get ready to burn even more
    — Engineering News
  • China provides $1 billion in 'green' finance to coal projects in first half of the year — Reuters
  • After shipping grains, a Capesize is moving logs in a rare move — S&P Global
  • China’s Corporate Earnings Set for Biggest Jump in a Decade — Bloomberg
  • IEA official says unfair for developing countries to exit coal without financial assistance — sxcoal.com
  • Biden's 2035 net-zero goal would retire 90% of US coal capacity - consultant
    — Platts CTI
  • More South African coal inroads into China — Platts CTI
  • Seaborne thermal coal demand dips as ocean freight rates skyrocket
    — Platts CTI
  • Continuing rise of miners rests on speedy action by regulators and Transnet
    — BusinessDay
  • CME February coal volumes down 46% on year at 16.3Mt — Platts CTI
  • South Africa Jan thermal coal exports down 46% at 3.69Mt: customs
    — Platts CTI
February 2021
  • Indonesia's mining giants are piling into coal gasification projects as the country's biggest export markets and global investors move toward a carbon-neutral future — NIKKEI Asia
  • The wild history of the commodities boys — Reuters
  • Eskom suspends chief procurement officer over 'non-performance in procurement savings' — NEWS24WIRE
  • Atlantic thermal coal markets see supply constraints push up FOB pricing
    — Platts CTI
  • Pakistan's November thermal coal imports fall 7% on year: WTS — Platts CTI
  • Taiwan 2020 thermal coal imports down 6% at 62.69Mt: customs — Platts CTI
  • South African and Australian arbitrages narrowed — Platts CTI
  • Kalimantan thermal coal prices firm on strong seaborne inquires — Platts CTI
  • RB seeks direction with Indian buyers on side-lines
    — Southern African Coal Report
  • SA exporters ramp-up pressure on Transnet to fix coal line
    — Southern African Coal Report
  • Transnet prioritising capacity improvements on coal lines
    — African News Agency
  • Texas Freeze Highlights Benefits of Coal-Fired Power Plants — CNSNews
  • RB finds support from emerging Indian demand
    — Southern African Coal Report
  • Atlantic thermal coal prices bullish on demand, supply issues — Platts CTI
  • Indonesian thermal coal supply tight amid rains, Indian inquiries grow
    — Platts CTI
  • January thermal coal derivatives fall 30% on year to 50.09Mt: LEBA — Platts CTI
  • Pakistan coal demand dampened by high pricing environment: sources
    — Platts CTI
  • Mopane mining right granted — World Coal
  • Sub-Saharan Africa could green-light 74Mtpa LNG capacity by 2030: ACTING
    — S&P Global Platts
  • RB prices find support from supply uncertainty — Platts CTI
  • SA coal future darkens as Exxaro to halt new investment — Reuters
  • CME January coal volumes down 34% on year at 20.6Mt — Platts CTI
  • South African thermal coal prices could rise on rail disruption: sources
    — Platts CTI
  • Glencore's 2020 thermal coal production down 24% at 94Mt — Platts CTI
  • Indonesian thermal coal prices continue falling despite heavy rain — Platts CTI
  • RB prices under pressure for third straight week, eyes on India
    — Southern African Coal Report
  • RBCT eyes record exports in 2021 via de-bottlenecking project — Platts CTI
January 2021
  • Wescoal CEO resigns, efforts continue to diversify customer base
    — Mining Weekly
  • Glencore is looking lonely as rivals look to abandon coal business
    — Bloomberg
  • Richards Bay Coal Terminal sees coal exports decline in 2020 for third straight year — Platts CTI
  • ZAC restarts operation — World Coal
  • Indonesian thermal coal prices stable to lower, seaborne deals thin
    — Platts CTI
  • Falling RB prices could ignite revival in Indian demand
    — Southern African Coal Report
  • Oil-producing Native American tribe seeks exemption from Biden drilling pause — Reuters
  • Richards Bay lower on weak Indian demand, NW Europe also down
    — McCloskey Coal Report
  • Botswana's private coal miner to double output if it wins Eskom contract, says CEO — Reuters
  • China mulls lifting coal ban as Aussie trade war backfires big — MacroBusiness
  • Cape Town says it’s ready to leave Eskom and load shedding behind
    – but needs national government to catch up — BusinessTech
  • Thermal coal traded derivatives volume at nine-year low in 2020: LEBA
    — Platts CTI
  • BHP, Glencore, Anglo American face OECD investigation over environmental damage and human rights abuses at Colombian coal mine — ABC NEWS
  • Strong RB thermal prices mute Indian, Pakistan demand
    — Southern African Coal Report
  • Fossil fuels to dominate Africa’s power grids — Southern African Coal Report
  • Global seaborne hard coal trade down 11% on year in 2020: VDKi — Platts CTI
  • China looks to new markets for coal, but can it do without Australia?
    — South China Morning Post
  • Colombian coal miner Drummond production, exports fell in 2020 — Reuters
  • WCA: Coal still deemed essential by many countries — IEA
  • South Africa’s Transnet postpones works on coal line until Jan. 16 — Platts CTI
  • Fuel-switching and COVID crush European 2020 coal burn — Argus Media
  • Pakistan's Oct thermal coal imports rise 20% on month to 1.6Mt: WTS
    — Platts CTI
  • Exports steady in 2020 — McCloskey Coal Report
  • Transnet delays maintenance to Richards Bay rail line by a week
    — McCloskey Coal Report
  • Atlantic thermal coal prices rebound after mid-week volatility — Platts CTI

2020 archive

 

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