By Rohan Somwanshi

International Energy Agency Executive Director Maria van der Hoeven said Dec. 15 that global coal demand will continue to grow at a moderate rate and all the pledges and policies aimed at emission control "will mostly fail to arrest the growth in coal demand" in the next five years.

"The low price of coal, combined with the existence of large reserves in some Asian countries, compounded by the non-existence of a carbon price, makes coal more attractive than other options," van der Hoeven said during the launch of IEA's Medium-Term Market Report 2014.

According to the latest report released by the IEA, coal demand at global levels is expected to grow 2.1% per year on average until 2019, with Asian countries, particularly China, continuing to remain the driving force.

Coal demand globally is expected to reach 6.46 billion tonnes of coal-equivalent by 2019, compared to 5.69 billion tonnes of coal-equivalent in 2013, according to the report. Coal will remain the fastest-growing fossil fuel until 2019, the agency said.

China coal demand to increase, just slower

Coal demand in China is expected to grow at a significantly slower rate than over the previous 10 years, rising 2.5% per year during the outlook period. The IEA attributed the relative decline in Chinese coal demand to several factors, including slowing economic growth, the push for a diversification of the country's energy mix and efforts to improve air quality.

The IEA executive in her speech addressed a possible peak in China's coal demand. "We believe that the Chinese government is making serious efforts to improve air quality in the cities and to diversify from coal," van der Hoeven said. "However, under normal macroeconomic conditions, we do not expect coal demand to peak in China during the outlook period," she added.

Chinese thermal coal and lignite coal demand is expected to grow by 2.6% per year to 2.82 billion tonnes of coal-equivalent by 2019. In China, thermal coal and lignite coal would provide most incremental volumes, compared to metallurgical coal. However, China will still account for 69.9% of global incremental met coal demand in 2019.

Due to difficulties realizing energy policy targets in India, the IEA said the country's total thermal and lignite coal demand would grow by 4.7% per year, to 491 million tonnes of coal-equivalent, or Mtce, in 2019 from 372 Mtce in 2013. India will surpass the U.S. as the second-largest thermal and lignite coal consumer in the world, the agency said.

Coal demand in the U.S. to fall on coal plant retirements

In the OECD Europe and Americas, coal demand will decline from 2013 through 2019, the bulk of decline coming from the U.S., where coal demand is expected to decrease by 1.7% per year, or 62 Mtce. Met coal demand in the U.S. is projected to decline by 1% per year through 2019. Thermal coal and lignite coal demand in the U.S. accounted for 48% of overall OECD consumption in 2013.

Newer regulations targeting coal-fired power generation and a combination of an ageing plant fleet could lead to the decommissioning of about 40 GW to 50 GW, or 15% of existing coal-based plant capacity, through 2019, the IEA said.

The IEA expects no significant coal investment activities in Europe during 2013-2019, with exceptions being Germany and the Netherlands, according to the IEA report. Increasing renewable generation and energy efficiency as well as moderate growth projects could lead to a decrease in European thermal and lignite coal demand, totaling 314 Mtce in 2019, the IEA said in its factsheet released with the market report.

"Poor economic growth, coal plant retirement (especially in the U.K.) and increasing renewable energy do not leave room for coal growth despite a favorable spread compared with gas, nuclear retirements and the new high efficient plants coming online," according to van der Hoeven.

Seaborne coal trade to remain robust, according to report

The IEA projected seaborne thermal coal trade to provide the biggest spark and grow by 3.2% per year, to reach 950 Mtce in 2019. Met coal trade is expected to grow to 301 Mtce by 2019. Total global seaborne hard coal trade is expected to rise by 3.1% per year, reaching 1.25 billion tonnes of coal-equivalent by 2019.

The shift in global coal trade to the Pacific Basin will continue, with imports from India growing by 9.7% per year until 2019. India will become the largest thermal coal importer by 2019, surpassing China, the agency said. China's imports are projected to slow and peak in 2017, growing only 0.7% per year by 2019.

Australia and Indonesia would supply the bulk of incremental thermal coal exports by 2019. Australia's thermal coal exports are projected to grow by 5% per year through 2019, while Indonesia's exports are expected to slow down in the same period, the report said.