Coal’s fading crown set to get Asian polish, says IEA

Bloomberg

Coal may have fallen out of favour in China, North America and Europe but India and other Asian nations will ensure the dirtiest fossil fuel continues to supply more than a quarter of the world’s energy.
Rapid economic development in parts of Asia will rely on coal-fired plants, the International Energy Agency said in its Coal 2017 market report. After a government anti-pollution drive that resulted in one of the largest ever yearly declines in China, demand there will change little to 2022 to cement its position as the largest market by far.
“As coal use continues to decline in many parts of the world these declines are offset by continued growth in India, Southeast Asia as well as several other countries where today coal’s role is small but is on the rise,” the IEA said. ”Virtually all coal consumption growth will be in power generation.”
Global consumption will rise 0.5 percent a year to 2022, the IEA said, similar to last year’s projection that demand for the fuel would “stall and plateau”. The price volatility that has seen Europe’s benchmark rise about 40 percent this year “is here to stay” as China’s national policies continue to drive the global market.
The five countries with the highest growth rate will be
Pakistan, Indonesia, Vietnam, Malaysia and the Philippines, which already have many coal-fired plants under construction, according to the report. In absolute terms, India will lead the pack with an increase of 135 million metric tons over the five-year period, or about 2.5 percent of global demand last year.
Demand for coal will probably continue to decline in the US as well. While President Donald Trump’s pro-mining policies helped the demand to recover this year, it will start declining again at a rate of about 0.9 percent a year from 2018 to 2022.

TWO-YEAR RALLY TO END IN EUROPE
A two-year rally in coal is set to unravel in northwest Europe as China reasserts an anti-pollution drive it eased to keep citizens warm in a frigid winter. Benchmark coal prices will probably fall about 16% by the end of next year, capping the longest rally in year-ahead rates since 2010, according to a survey of Bloomberg News.
China, which uses almost half the world’s coal, will import less as it cuts its reliance on the dirtiest fossil fuel to curb smog. But the switch to cleaner energy hasn’t been smooth, lending support to coal prices from Australia to Rotterdam. Officials this month reversed a coal-burning ban in some provinces as temperatures plunged, and factories were ordered to cut power use as there wasn’t enough natural gas.
“We expect prices to fall back by the end of the winter,” said Thomas Pugh, a commodities analyst at Capital Economics Ltd. in London. “Supply is picking up, and there is a big push in China away from coal towards gas and renewables. In the long run, that’s only going to go one way, and it will affect prices globally.” Prices for year-ahead European coal will end 2018 at $77.75 a ton, according to the average of six estimates in the survey. The contract will probably trade at about $86 .40/ton by the end of March.

Coal is still king in Germany despite renewables record
Bloomberg

For all the new wind parks, solar farms and hydro plants that will help Europe’s biggest economy generate yet another renewable energy record this year, the world’s dirtiest power fuel still rules in Germany and sets the price for how much factories are paying for electricity.
Wind turbines will this year for the first time produce more power than plants burning hard coal as the nation’s unprecedented shift towards renewable energy has pushed output from solar and wind to more than a third of the nation’s total.
Yet, it is coal prices at their highest level since 2013 that’s pushing up electricity rates for the first time in six years because of the way the market works.