|Coal Communications Kit - International Trade|
Coal represented 30 percent of world energy consumption in 2014, making it the second largest of all energy sources. Population growth and increases in income per capita are the key drivers behind growing world demand for energy. By 2035, the world’s population is projected to reach 8.7 billion, meaning an additional 1.6 billion people will need energy (BP, 2015). Most countries are not energy self-sufficient, and therefore international trade will play an increasingly important role in world energy economics.
By 2040, the global coal trade will grow by 40 percent, due mainly to rising coal imports in China and India. This will increase the share of global coal trade relative to world coal demand from 18 percent in 2012, to 23 percent by 2040 (Umbach, 2010). A map depicting global coal imports and exports, as well as coal price, is pictured below:
In the long-term, not only is global coal trade expected to be higher, but also total world energy demand is projected to be 37 percent higher than present day in 2035. Not surprisingly, India and China will account for half of that growth. Coal demand growth in China and India combined is larger than global growth, more than making up for declines in the rest of the world. Jointly, they will account for 66 percent of total coal demand in 2035.
The United States on the other hand, is projected to become energy self-sufficient by 2021, and by 2035, it could be exporting 9 percent of its total energy supply. Meanwhile, China is projected to overtake the EU as the world’s largest importing country/region by 2025 (BP, 2015). Although China is facing some internal energy struggles with new quality requirements and import duties on coal, their immense coal consumption cannot be replaced entirely by gas or renewables. Therefore, it is expected that China will continue to see coal as the major energy source for the foreseeable future. India will follow suit as import levels are expected to more than triple to 30 percent of global coal trade. India’s coal import dependence will rise sharply from 25 percent in 2012, to 40 percent by 2040 (Umbach, 2010).
Global coal production in 2014 was little changed at 7.2 billion tons. Of that 7.2 billion tons, about 1.3 billion is traded all over the world, shipped great distances by sea to reach global markets (Euracoal, 2015). Over the last twenty years, Seaborne trade in steam coal has increased on average by about 7 percent each year, and Seaborne coking coal trade has increased by 1.6 percent a year, as can be seen in the chart below:
Almost 20 percent of total coal production is internationally traded. The top five coal importers (China, Japan, Korea, India, and Taiwan) are in Asia, while the top five exporters (Indonesia, Australia, Russia, the United States and Colombia) are more scattered around the globe. The new coal trade trend has led to massive investments in coal infrastructure to secure imports and exports (International Energy Agency, 2015). The table below depicts major importers and exporters of coal by country, in million tonnes:
International trade is slowing and steam coal prices are declining, this is due to three major causes (Euracoal, 2015):
These developments will continue in the mid-term. Longer term, it is important that the focus on improved coal technologies continues in order to recognize increased consumption in the Asian market, while mitigating air quality concerns.
ConclusionIn order for everyone to benefit from coal as a sustainable, reliable, and affordable energy source, international trade is necessary to reach all markets. Traditionally coal was (and still can be) a somewhat local resource. However, this isn’t true for all countries. China in particular has a growing need for coal in order to sustain its economic development. This has led to acceleration in growth (both volume and share terms) of internationally traded coal. In fact, all developments in China impact coal markets. However, the fight against pollution is now a driving force of energy policy, and Asian countries are following suit. China will continue to be the biggest consumer and importer of coal in the mid- to long-term future, as it has become their source of reliable energy supporting their industrial and social prosperity. However, to ensure coal can still be the dependable energy source of the future in China, the coal industry needs to continue developing and improving clean coal technology, as this will allow them to continue lighting the way for developing countries while complying with environmental regulations.
International coal trade allows humans to share technologies and master new environments where little to no energy sources are present. Coal also improves living standards for both developed and developing countries by providing abundant, affordable, reliable, and increasingly clean electricity to power human lives.
Most countries are not energy self-sufficient, meaning the international coal trade is playing an increasingly significant role in providing energy to developing countries. The share of coal in the world energy supply increased from 25 percent in 1973, to almost 30 percent in 2014. By 2040, global coal trade is expected to grow by 40 percent, due mainly to rising coal imports in China and India. Traditionally coal has been a local resource, but China's growing need for coal to sustain its rapid economic development has led to acceleration in growth of internationally traded coal. The top five coal importers (China, Japan, Korea, India, and Taiwan) are in Asia, while the top five exporters (Indonesia, Australia, Russia, the United States and Colombia) are scattered around the globe. Global exports totaled 1,300 megatons (MT) in 2013, more than seven times the 185 MT amount 40 years earlier. The growing coal trade trend has led to massive investments in coal infrastructure to secure imports and exports. China and other developing countries in Asia will be the biggest consumers and importers of coal in the mid- to long-term future. The coal industry has shown a willingness to adapt to regulations with technologies such as scrubbers and low NOx burners, and will continue to adapt to carry on providing reliable energy to nations that need it.
Objection: Renewables and alternative energy resources will be available to replace coal generation going forward on a global scale.
Objection:Although coal continues to be an important part of the energy mix, it is not a clean energy that should be shipped around the world for unregulated use. Shipping coal requires further energy consumption and creates additional pollution.
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Coal Trading Conference - 2016