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December 27, 2019

IEA: Asia Set to Support Global Coal Demand for the Next Five Years

Global coal demand is expected to decline in 2019 but remain broadly stable over the next five years, supported by robust growth in major Asian markets, according to Coal 2019, the IEA's latest market analysis and forecast.
It is too soon to say whether the expected global decrease in coal power generation this year will be the start of a lasting trend - renewable sources are forecast to supply a major portion of the increase in global electricity demand over the next five years while electricity generation from coal will rise only marginally over the same period. However, coal remains by far the single largest source of power supply worldwide.
"Wind and solar PV are growing rapidly in many parts of the world. With investment in new plants drying up, coal power capacity outside Asia is clearly declining and will continue to do so in the coming years," said Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, who launched the report in Johannesburg alongside Gwede Mantashe, South Africa’s Minister of Mineral and Energy Resources.
"But this is not the end of coal, since demand continues to expand in Asia," Mr Sadamori added. "The region’s share of global coal power generation has climbed from just over 20% in 1990 to almost 80% in 2019, meaning coal’s fate is increasingly tied to decisions made in Asian capitals."
Learn more by reading our press release, or the Coal 2019 executive summary.
Technology improvements must accelerate to tackle emissions
A new phase of technology-driven transformation is emerging in the energy sector, propelled by advances in digital technologies, mass manufacturing and environmental awareness. However, the breadth and pace of these changes are not yet enough to reach sustainability goals. In many cases, the pace of technology improvement needs to increase sharply to improve competitiveness, reduce transition costs and tackle so-called hard-to-abate emissions in a timely manner.
For established technologies with high potential for improvement, there is a need to accelerate market uptake and improve performance and costs, for example by incentivising better or cheaper components and designs. For technologies that have not yet been commercialised, such as steel smelting with integrated CCUS and low-carbon cement production, a different set of policies will be needed.
Designing and implementing such strategies and policies benefits from long-term vision combined with market support for clean energy solutions. Governments in particular have a unique opportunity to set the direction of the research agenda through smart policies and funding, for example by redirecting CO2 pricing revenues to clean energy research grants, loans and other instruments.
Energy efficiency means more comfortable lives and lower energy bills, but improvements have slowed in recent years
Energy efficiency must be at the forefront of global policy-making in order to meet long term climate goals. And yet we are headed in the opposite direction. What we are actually witnessing is an alarming slowdown in global efficiency progress. In fact, last year saw the slowest improvement rate this decade.

What can we do today to change course? The International Energy Agency has made energy efficiency a top strategic priority. Two weeks ago, the Global Commission for Urgent Action on Energy Efficiency met for the first time at the IEA headquarters in Paris. Ministers, business leaders and thought leaders from around the world came together to discuss how to accelerate global progress on energy efficiency.
Read more from Brian Motherway, the IEA head of energy efficiency, on how to scale up and speed up action on all fronts to see more efficient technologies deployed and more efficient behaviours take hold in his latest commentary.

Annual change in global coal power generation and breakdown, 2001-2019
In the United States, coal generation is plummeting, following a big wave of coal plant retirements in 2018. The industry is facing fierce pressure from the continued expansion of electricity generation from renewables like solar PV and wind, as well as from cheap and abundant natural gas supplies.
In the European Union, low natural gas prices and increased carbon prices have led to a massive shift from coal to gas in the power sector. In some cases, gas plants have even replaced lignite-fired power generation, the cheapest coal-based electricity in Europe. As a result, coal power generation in the European Union is expected to experience its biggest ever decline this year.
In Asia, the picture is very different. Coal power generation continues to rise in the region, driven by economic growth, an increasing population and an expanding middle class using electrical appliances.
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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