keywords :
The long-term shift in demand sources of thermal coal away from advanced economies toward Asia is forcing global coal markets to adjust to a complex transition as the move has gathered pace on a range on fronts, a report released by Australia’s Office of Chief Economist said April 4.
While coal generation in the US is declining at an accelerating rate amid growing domestic competition from gas generation, imports to European nations are expected to decline particularly rapidly in the second half of the outlook period as coal plant retirements gather pace, the Resources and Energy Quarterly report said. The report made forecasts about the global coal market for 2022-2027.
“The global drive towards low carbon energy sources and a sharp decline in the coal plant construction pipeline has changed incentives for investors and miners, deterring long term investment in coal despite the recent surge in prices,” the report said.
Highlighting how imports to Austria, Belgium and Sweden have fallen to zero following the recent closure of the last power stations in each country, the report noted that Denmark, Finland, Italy and Spain are expected to reduce imports to zero by the late 2020s, while the UK is on track to close its last coal power station in 2024.
The report said that Germany is likely to drive closure of 2.5 GW coal-powered plants by end of 2024. However, it noted that the need to secure its energy may lead to delay in closure of thermal coal power plants and may even lead to reopening of plants temporarily.
Four out of six coal-fired plants of Orat Rabin are scheduled to be closed in Israel in 2022 and remaining plants are expected to be replaced with gas-fired power, the report said, adding thermal coal imports to Israel are to fall to zero by 2025.
Lack of investment in coal supply
“The year 2030 looks to be a significant turning point, representing a coal power phase-out date for many OECD countries, but a peak demand date for a number of nations across Asia,” the report said. “The underpinning transition of energy sources across much of the world could lead to significant volatility in coal trade and coal prices in the interim.”
The persistently high coal prices have not prompted investment into coal projects, which would make it harder for coal prices to correct and lead to a fall in its competitiveness and consequently lead to structural decline.
Asian coal import outlook
Meanwhile, imports to Asia are expected to offset much of the decline elsewhere over the outlook period, according to the report, which added coal use in China is likely to remain strong, with the government recently removing energy intensity goals from its energy targets. However, China also continues to seek ways to reduce its dependency on coal imports, which could come about through rising domestic production, it said.
Stating that coal demand in India is expected to rise steadily over the outlook period, the report said imports to India may grow by 20 million mt to 173 million mt by 2027, with growth then slowing thereafter amid expected rise in domestic output.
Meanwhile, efficiency and price competitiveness in coal-fired generation in Malaysia and planned construction of new plants in the Philippines are expected to keep import demand firm.
Rising power demand and difficulty in stepping up domestic production in Vietnam may keep coal imports rising till 2025 and reach a peak in 2030, the report said, adding Thailand may begin phase-outs towards 2027 with coal-powered generation expected to fall to 10% by 2030.
“Imports to nations excluding India, China, Japan and South Korea are expected to rise from 221 million mt in 2021 to 239 million mt in 2027,” it said. Imports are expected to moderate for Japan, Taiwan and South Korea due to their commitments for ‘net zero’ carbon policies.
Source: Platts