CHINA’S COAL SECTOR-

FEELING THE HEAT

Keisuke Sadamori
International Energy Agency
World energy demand by fuel

Mtoe 5 000
Oil
Coal
4 000 Gas

3 000

2 000
Biomass

1 000 Nuclear
Other renewables
Hydro

1980 1990 2000 2010 2020 2030 2035

June 2014
Coal use grows further albeit at a slower pace than in the past
Incremental world coal demand, historical & by scenario

1987-2001
1987-2011 2001-2011

2011-2020
New Policies
Scenario 2020-2035

Current Policies
Scenario

450 Scenario

-2 000 -1 000 0 1 000 2 000 3 000

Mtce

June 2014
Electricity generation in non-OECD countries has only begun to rise
Electricity generation by source

OECD Non-OECD
TWh 10 000

8 000

6 000

4 000

2 000

1990 2011 2035 1990 2011 2035

Coal Renewables Gas Nuclear Oil

June 2014
Who is the real game changer?
700
Change in energy production since 2005
600

500 US gas

400 US coal

Mtoe Chinese
300 coal

200

100

-100
2005 2006 2007 2008 2009 2010 2011 2012
June 2014
Our image of Chinese energy consumption

June 2014
Another view of the same reality

June 2014
So electricity is catching up more rapidly
120% China’s consumption as a percentage of US consumption

100%

80%

60%

40%

20%
oil electricity

0%

June 2014
Local pollution: public enemy number one

June 2014
Switching from coal in non-power
MAIN FACTORS IMPACTING ON COAL DEMAND IN CHINA

June 2014
South China: the great arbitrager

Heilongjiang

Jilin

Beijing
Xinjiang
Qinhuangdao
Hebei
Ningxia

Qinghai
Henan
Shanghai
Hubei Anhui
Sichuan

Hunan

Guizhou
3-Xi, Ningxia, Gansu and Xinjiang
Yunnan
Yun-Gui Guangxi

Jing-Jin-Ji

Northeast
Imports Hainan
East China
Chinese coal transport
Chuan-Yu-Qing-Zang
This map is without prejudice to the status of or sovereignty over any territory, to the
Central South
delimitation of international frontiers and boundaries and to the name of any territory, city or
area.

June 2014
Take-or-pay contracts: the forgotten reason

AUSTRALIAN STEAM COAL SUPPLY COST CURVES, EXPORT VOLUMES AND PRICE LEVEL

USD/t
180
Exports 2012
160
Exports 2012 covering FOB costs
140
120
100
80
60
40
20
0
0 20 40 60 80 100 120 140 160
Mt
Newcastle FOB (2012 average) FOB costs Short-term marginal costs

June 2014
All in all, coal peak in China must wait

June 2014
The engine of energy demand growth moves to South Asia
Share of global growth
Primary energy demand, 2035 (Mtoe) 2012-2035
Eurasia OECD
Eurasia Latin
Europe America 5% 4%
1 370 8%
1 710 China Africa
8%
United 4 060 Japan
2 240 440
States Middle 1 050 Middle 10%
East East
Southeast 65%
Brazil 1 000
1 540 Asia
480 1 030
Africa India
Non-OECD
Asia

China is the main driver of increasing energy demand in the current decade,
but India takes over in the 2020s as the principal source of growth

June 2014
Electrification in Asia without coal?
Per capita electricity supply, MWh/year

15 times EU wind and

solar or
6 times EU gas imports
from Russia

June 2014
The power sector is fundamental to the energy outlook of
Southeast Asia

ASEAN incremental electricity generation by fuel, 2011-2035

Coal

Renewables

Gas

Nuclear

Oil

-100 0 100 200 300 400 500 600 700

TWh

June 2014
Energy access needs new coal even in a decarbonisation pathway

June 2014
IEA Recommendation: Increase efficiency of coal power plants
CO2 emissions of coal power plants

June 2014
Conclusions

• Development of coal in China in this century has surpassed any

expectation
• Rebalancing of their economy and fight against pollution will make
things change
• But coal will continue to be vital for China
• Projections of coal use for chemicals, synthetic natural gas and
liquid fuels are bullish
• And India and ASEAN countries will take over as engines of growth
• Improving efficiency of coal power plants is critical

June 2014
Thank you for your attention

keisuke.sadamori@iea.org
www.iea.org

June 2014