Coal

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Peak coal is now in sight.  Chinese coal consumption is now expected to peak in 2025.

This expected future role for coal, as a backup power source, is apparent in the technical requirements Chinese power planners demanded of the batch of coal-fired power plants approved over the last year. Each has to be able to reduce its power output to as low as 30% load during periods of low demand, but still be able to cycle back up to full load during high demand hours — operating requirements virtually unheard-of in coal-fired power plants elsewhere in the world, which simply don’t have the ability to cycle up and down so quickly and efficiently.

All power plants are capable of hot standby and or variable power loads. Many plant operators were never trained to operate in these conditions. primarily because powerplants operate most efficiently at 100% load. With the increase in renewables most if not all powerplants should have this capability. Engineering consultants need to be contracted to determine the settings but this is not a huge expense and is only required once. In hot standby where just enough fuel is used to keep the plant at operating temperature is more important for renewables. All or nearly all thermal power plants should plan for this.


I commend China for planning for these variable operations. They still need to stop building any coal plants.

[gerontocrat]

Peak coal is now in sight.  Chinese coal consumption is now expected to peak in 2025.

And what a peak - China annual coal production over over 5 billion tons in 2025?

[Yuha]

Peak coal is now in sight.  Chinese coal consumption is now expected to peak in 2025.

And what a peak - China annual coal production over over 5 billion tons in 2025?

According to the following article, there are two reasons for the increase in coal production and simultaneous increase in coal imports:

• There was a coal shortage in autumn 2021 and they have been restocking since then.
• The calorific value of coal has decreased so that a ton of coal now produces less energy.

What is causing the record rise in both China’s coal production and imports?
https://energyandcleanair.org/record-rise-in-chinas-coal-production-and-imports/

Since the coal shortage of autumn 2021, expanding coal mining and increasing coal production has been a key energy policy priority, under the policy of ensuring coal supply. In late 2020 and early 2021, coal supply had fallen behind the rapid growth in coal consumption. In the first half of 2021, coal consumption increased 10.7% year-on-year while coal production only increased 6.4% and imports fell 19.7%. The sum of domestic production and imports increased 4.1%, far behind the growth in demand, which led to a shortfall in supply and depletion of inventories.

At the same time, global fossil fuel prices increased as Russia cut back gas supply to Europe and global demand started to rebound as pandemic controls were relaxed.

The increase in coal production was a necessary response to this situation, once it had emerged. The pressure to increase production rapidly led to new issues, however.

First, the expansion of domestic coal supply has increased costs. The producer price index (PPI) for coal mining and washing increased 45% in 2021 and 17% in 2022. This obviously put upward pressure on domestic prices.

Second, a mismatch has emerged in coal quality between what is produced and what users need. This is evidenced by the increase in price differential between 4500 kcal and 5500 kcal coal and tight supply of higher calorific value coal.

To fulfil the output targets and delivery contracts, miners have prioritised quantity over quality, exploiting lower quality coal reserves to hit the quota, or reducing the coal washing they usually carry out to increase the quality of their mined coal. This was seen for example in a coal market survey report by analysts at CITIC Futures, who in February visited eight coal mines in Inner Mongolia, Shaanxi and Shanxi. According to statistics from the Coal Industry Association, the raw coal washing rate in China has decreased from the peak of 74.1% in 2020 to 69.7% in 2022.

Last August, the state planning agency NDRC (National Development and Reform Commission) released a notice on ensuring the quality of coal under mid- and long-term contracts for coal used in power generation, in response to a recent “decline in the calorific value of coal purchased by power companies”.

In January 2023, a China Electricity Council official identified a “clear decline in coal quality” as a problem associated with long-term coal contracts, as well as deliveries of coal that don’t meet the quality specified in contracts.

Cinda Securities Research and Development Center also noted in a recent report that since the policy of ensuring coal supply was announced, the growth rate of physical coal consumption for electricity has been significantly faster than the growth rate of thermal power generation. The proportion of standard coal consumption in thermal power generation has continued to decrease, so the increase reflects a clear decline in the average calorific value of domestic coal. Cinda Securities points out that the main mining areas in northern Shanxi have depleted their reserves of high-quality thermal coal and have shifted entirely to mining lower-quality coal seams. The proportion of low calorific value coal in imported coal has also significantly increased, and the quality of imported coal has also declined noticeably.

[kassy]

France will close their last two coal energy plants by 2027.

https://www.nu.nl/economie/6282402/frankrijk-stopt-met-steenkool-laatste-twee-centrales-voor-2027-dicht.html

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ARCH resources (US coal mining company) revised 2023 guidance down by as much as 11% (they gave a range). The guidance was 8.9-9.7 million tons now revised to 8.6-8.9 million tons.  Given the third quarter is over I would say fourth quarter volume could drop by as much 44%. In reality I do not expect more than about 20% volume drop compared to the rest of the year.  They did not mention 2024 guidance but they probably did not want to mention the volume change is permanent. The do mention increasing exports but exports are about 16% of production as of June 2023 so exports would have to increase about 150% to make up the difference or be 250% of current levels. Most coal demand is in Asia without a Pacific sea port it seems unlikely to make it to that market. I know I have been predicting this for some time and so far it has not shown up in production data. This revised guidance is the first evidence that this slowdown is indeed coming even if it has not happened yet. The stock declined 3.9%.


https://www.zacks.com/stock/news/2160839/arch-resources-arch-gives-guidance-trims-coal-sales-volume

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European coal imports expected to be down 60% from last October.
this year 2 million tons
last year 4.8 million tons

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US coal days of burn reaches all time high in August with bituminous at 147 days and subbituminous at 148 days. Despite this coal stocks are down only a little the discrepancy between the two charts is because in June the two highest consumption months of July and August are in the immediate future and in August they are in the past. The weekly coal production data shows a decline in the previous week but I will wait for another week to see if it is a fluke. I do not think it is given that prompt delivery coal prices continue to decline week on week in the US.

[gerontocrat]

The US EIA data shows that coal is in longterm decine despite the recent spike in coal use for electricity generation ( graphs attached).

As regards the future of coal in the world, desite the extreme drop in coal price since the glory days of 2022 to early 2023, the price of coal is still well above pre-Covid levels. One can only wait and see how long it will take for coal use by major users  such as India & China  reduces significantly.

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A setback in blocking Wyoming's attempts to export coal on the west coast of US. Background a developer wanted to build a "bulk commodity terminal" in Oakland California. They reached a contract with the city and then revealed they only wanted to ship coal. The city claimed the developer failed to act by the deadline and the developer claimed the city stalled them. The city passed a no coal development rule after the contract in 2016. In 2018 the developer got a judgment that the development preceded the ban. The judge ruled in the developers favor that the developer stalled them.


I sure hope the city finds a way to shut this project down. Wyoming provides about half of all US coal production with strip mines that produce coal profitably and very cheaply at $14 dollars a ton. That is on the spot market for next quarter delivery without a contract with a contract it would be much cheaper though that price does not include delivery. Suffice it to say if it gets to market it will not stop anytime soon. While it is not the higher energy content bituminous coal it is subbituminous coal with an energy content of 8800 btu/lb or for those with a more sane measuring system 20500 kJ/kg (if I converted correctly).

[Richard Rathbone]

While it is not the higher energy content bituminous coal it is subbituminous coal with an energy content of 8800 btu/lb or for those with a more sane measuring system 20500 kJ/kg (if I converted correctly).

20500 kJ/kg is the right  sort  of  number for  that sort  of coal.

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So I came across this table of coal share of electricity by month. The annual averages are 24.1%, 19.7%, 22.3%, and 20.2% for 2019, 2020, 2021, and 2022 respectively. So far the average is 16.6% for 2023. It looks like the average for 2023 will be 17% not the 16% predicted in last months short term energy outlook.


https://ieefa.org/resources/coal-use-us-power-plants-continues-downward-spiral-full-impact-mines-be-felt-2024

"The amount of coal used each day in the U.S. has fallen from about 2.8 million tons a day in 2008 to about 1.1 million tons a day this year—a 62% drop."


"Coal use at U.S. power plants is slumping: The fuel has not achieved a 20% market share in any month so far in 2023 and the current outlook predicts low levels for the rest of the year." Coal was under 15% for the first time this year reaching 13.8%


Utility coal dropped 19.7% this year and independant power producers coal dropped 29.7% because they are more price sensitive.

[gerontocrat]

More analysis from the IEA August 2923 Electricity Data

I attach 2 graphs. Coal is still a big beast and China is the one that matters.

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US coal The number of days of burn is a record for subbituminous at 152 days and near record for bituminous at 143 days. That is nearly 5 months of coal stored on site. So at the end of September they had enough coal to last to the end of February.

[kassy]

Particulate pollution from coal associated with double the risk of mortality than PM2.5 from other sources

Exposure to fine particulate air pollutants from coal-fired power plants (coal PM2.5) is associated with a risk of mortality more than double that of exposure to PM2.5 from other sources, according to a new study. Examining Medicare and emissions data in the U.S. from 1999 to 2020, the researchers also found that 460,000 deaths were attributable to coal PM2.5 during the study period -- most of them occurring between 1999 and 2007, when coal PM2.5 levels were highest.

...

They found that across the U.S. in 1999, the average level of coal PM2.5 was 2.34 micrograms per cubic meter of air (μg/m3). This level decreased significantly by 2020, to 0.07 μg/m3. The researchers calculated that a one μg/m3 increase in annual average coal PM2.5 was associated with a 1.12% increase in all-cause mortality, a risk 2.1 times greater than that of PM2.5 from any other source.

They also found that 460,000 deaths were attributable to coal PM2.5, representing 25% of all PM2.5-related deaths among Medicare enrollees before 2009.

...

https://www.sciencedaily.com/releases/2023/11/231123164711.htm

[gerontocrat]

INDIA

India's official target for annual coal production by 2030 is 1.5 billion tons, an increase of about 600 million tons from 2023.

That will certainly be more than the reduction we can expoect from the US and Europe, and maybe more than we can expect from China.

cavaeat: All targets / projections assume BAU for GDP growth. Extreme weather events may become more frequent, longer lasting, and strong enough to interrupt remorseless GDP growth locally, then regionally and eventually globally.

https://indianexpress.com/article/explained/india-coal-power-demand-9051441/#:~:text=As%20a%20result%2C%20it%20has,1.5%20billion%20tons%20by%202030.

Why India will continue to rely on coal for foreseeable future
In recent years India has steadily increased its coal production.

However, it stands in stark contrast to the country’s ambitious plans of achieving net-zero. What's behind the contradiction?

With coal use set to be a key topic during the ongoing COP28 summit, India on Thursday (November 30) said it would continue to rely on coal for electricity generation for the foreseeable future, even as it rapidly expanded its renewable energy sources.

This isn’t surprising, as in recent years India has steadily increased its coal production. However, it stands in stark contrast to the country’s ambitious plans of achieving net-zero — it has promised to meet 50% of its electricity requirements from renewable energy sources by 2030, and 100% by 2070.

So, why is India so heavily dependent on coal? How much energy is generated by non-fossil fuel resources? And what might happen next?

India’s growing energy demand
The power demand in India is surging. In 2022, the requirement grew about 8% — or at nearly double the pace of the Asia Pacific region, around more than 149.7 terawatt-hours (TWh) in comparison to the previous year, according to a recent report by Reuters. In the first two months of 2023, demand jumped 10% from a year ago, it added.

The primary reason for this increase is higher economic activity. Industrial and commercial activity are among the biggest consumers of energy in the country. Homes account for a fourth of India’s power use and agriculture for more than a sixth in recent years, the report said.

Moreover, India will witness the largest energy demand growth of any country or region in the world over the next 30 years, according to the latest World Energy Outlook by the International Energy Agency (IEA). It also added that the country’s requirement for electricity for running household air conditioners is estimated to expand nine-fold by 2050 and will exceed total power consumption in the whole of Africa today.

Coal, the only fix

The staggering levels of power demand have become a formidable challenge for India. As a result, it has doubled down on its coal production. It spiked from 778 million tons in 2021-22 to 893 million tons in 2022-23, a 14% growth, according to the coal ministry. India has also set a target of 1.31 billion tonnes of coal production for 2024-25 and aims to increase it to 1.5 billion tons by 2030.

But why is coal so essential to India’s plan to meet the growing power demand? Because coal is the only viable option for the country right now. There are four reasons for this.

First, although India has been trying to push up its renewable share of power generation in recent years, it’s nowhere near meeting the requirement. Currently, out of the total energy produced in the country, only 22% of it comes from renewable sources, according to a recent report by Wood Mackenzie, a global research and consultancy group. Fossil fuels, mainly coal, still provide 75% of India’s power supply, it added.

Second, renewables aren’t a reliable source of power generation. Energy sources like solar and wind are variable as they rely on natural factors like sunlight, wind and water availability. To ensure a steady supply, India has to heavily invest in battery storage — it “needs more than 60 GW of battery storage to fully utilise the potential of its 2030 renewables goal,” a report by Context News said. However, grid-scale battery storage is expensive due to supply chain disruptions.

Third, hydropower, a key renewable energy source for India, has its own complexities. Numerous hydropower projects are under construction or in the planning stages in the Himalayan region, including in Arunachal Pradesh and Sikkim. But they have come under fire as the projects have caused ecological damage and raised concerns about the potential conflicts over water resources in the area. Another issue is that hydropower requires a more “advanced infrastructure… to ensure it serves as a reliable alternative to coal in the future,” a report by CNBC noted.

Fourth, the country’s plans to generate energy with the help of nuclear power plants have not really taken off. During 2021-22, the plants produced about 3.15% of the total electricity generated in India, said Union Minister Jitendra Singh in a reply to the Lok Sabha last month.

What’s next

India aims to reach 500 GW of renewable energy capacity by 2030, about three times the current capacity of about 180 GW. However, given the constraints regarding renewable energy, it will continue to fall back on coal-generated electricity.

Last year, Union Minister of Power and New and Renewable Energy, R K Singh, in an Idea Exchange with The Indian Express, had said it was wrong to expect India to start reducing its coal capacities and the country would implement plans to phase down coal use, not phase out.

“As per the targets we have set for 2030, the fossil fuel capacity (in electricity generation) would come down from the current about 60% to about 35%. This is the phase-down. If you are talking in absolute terms, the numbers (installed capacity of coal) will go up because our demand (for electricity) is going up (between now and 2030). In percentage terms (as a share of overall production), it will come down,” he had explained.

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"Global coal demand is likely to have peaked this year, and could drop by about 2% over the next three years as China brings more renewable energy sources online, the International Energy Agency said Friday."
I would not characterize 2% over 3 years as a drop but a slight decline.


"The IEA expects coal demand to have fallen this year in nearly all advanced economies, driven by a record plunge of around 20% in both the European Union and the United States."


https://www.cnn.com/2023/12/15/business/iea-coal-demand-fall-first-time/index.html

[gerontocrat]

"Global coal demand is likely to have peaked this year, and could drop by about 2% over the next three years as China brings more renewable energy sources online, the International Energy Agency said Friday."
I would not characterize 2% over 3 years as a drop but a slight decline.

"The IEA expects coal demand to have fallen this year in nearly all advanced economies, driven by a record plunge of around 20% in both the European Union and the United States."

https://www.cnn.com/2023/12/15/business/iea-coal-demand-fall-first-time/index.html

Don't forget India who are going for broke on coal production at least to 2030- targeting an increase in annual production by then of 600 million tons, and also a vast increase in the use of AC. I don't think that is a good outlook for India's big cities; heat islands and air pollution.

[Rodius]

"Global coal demand is likely to have peaked this year, and could drop by about 2% over the next three years as China brings more renewable energy sources online, the International Energy Agency said Friday."
I would not characterize 2% over 3 years as a drop but a slight decline.

"The IEA expects coal demand to have fallen this year in nearly all advanced economies, driven by a record plunge of around 20% in both the European Union and the United States."

https://www.cnn.com/2023/12/15/business/iea-coal-demand-fall-first-time/index.html

Don't forget India who are going for broke on coal production at least to 2030- targeting an increase in annual production by then of 600 million tons, and also a vast increase in the use of AC. I don't think that is a good outlook for India's big cities; heat islands and air pollution.

Australia is okay with India wanting more coal.... (I find this vomit material)
https://www.afr.com/policy/foreign-affairs/india-s-love-of-australian-coal-is-one-that-dare-not-speak-its-name-20230309-p5cqml

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I did not forget India and its stated goals. I am not sure how to reconcile the two news items as one seems to preclude the other. I will say this India expressed displeasure that they did not get financing at COP 28. I will also note that forecasts can be aspirational more than reality. I will also note that even if the IEA turns out to be correct three more years at essentially current coal levels is not great. Substantial progress a 20% drop in coal consumption in advanced economies this year was completely negated. That is probably my biggest takeaway from this.

[vox_mundi]

Researchers Find Cancer-Causing Metals In a Chesapeake Bay Tributary Adjacent to a Coal Ash Landfill
https://phys.org/news/2023-12-cancer-causing-metals-chesapeake-bay-tributary.html

A recent study in Environmental Pollution unveils alarming discoveries: Researchers have identified cancer-causing contaminants in sediments and fish in a Chesapeake Bay tributary near a coal ash landfill.

The study, led by Dr. Tyler Frankel, the project's principal investigator and Assistant Professor of Environmental Sciences at the University of Mary Washington, uncovered long-overlooked impacts of trace metal contamination on waterways and aquatic species adjacent to coal ash landfills. Frankel emphasized the study's focus was on addressing the missing risk management component, spotlighting the role of sediments in storing, releasing, and transporting trace metals in aquatic ecosystems.

The research team examined water and sediment samples from aquatic environments surrounding five Virginia coal ash facilities. Coal ash, a prevalent industrial waste product produced in the United States, contains several water-soluble metals, including cadmium, selenium, mercury, lead, and arsenic. The study revealed significantly heightened concentrations of these trace metals in sediments at waterway bottoms and in banded killifish tissues near these coal ash landfills.

The implications are grave. Long-term exposure to metals like arsenic, cadmium, and chromium has been linked to cancer, increased cardiovascular risks, and other detrimental health issues, impacting both wildlife and humans. Furthermore, these contaminants increase in concentration as they progress up the food web, posing threats to predatory fish and birds, Frankel said.

T.E. Frankel et al, Assessing the presence, concentration, and impacts of trace element contamination in a Chesapeake Bay tributary adjacent to a coal ash landfill (Possum Point, VA), Environmental Pollution (2023)
https://www.sciencedirect.com/science/article/abs/pii/S0269749123017700

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India can not make up its mind about coal
https://www.mining-technology.com/news/india-puts-26-coal-mines-for-auction/?cf-view


"India’s Government launched its 9th round of commercial auctions for its coal mines on Wednesday, as the country looks to boost domestic production of the fossil fuel to meet increasing energy demand."


"At the start of the year, the government announced that no coal-fired power plants would be retired until at least 2030 in a bid to maintain energy security. In March, India’s Coal Minister, Pralhad Joshi, said that the country will have enough coal reserves by 2026 to begin exporting the fuel, a move that would shift India from a net importer to a net exporter of coal. Then in May, the Ministry of Coal said that the country had grown domestic coal production by 47% over the last nine years."


"India’s commitment to coal power wavered in the second half of this year. In May, the government set out plans to close approximately 30 coal mines over the next three years, stating that it will use the free land for reforestation and increasing water supplies. One month later, the ministry announced that it will not consider any proposals for new coal plants for the next five years as it looked to boost its renewables capacity. Currently, the country is the second-biggest consumer and producer of coal after China."


"More recently, at the end of November, the government announced plans to revive India’s ailing underground coal mining industry as the struggle to meet rising power demand across the country continues. Most of India’s domestic coal production comes from opencast mines.
The ministry now aims to triple output from its underground coal mines by 2028 after the industry has remained in decline for decades. In its press statement on the latest coal mine auction round, the ministry reaffirmed its “unwavering commitment to propel the [coal] sector forward”."
At the moment coal seems to be winning though.

[gerontocrat]

Inia's Govt has announced its energy plan for electricity. One commentator says India has little choice but to expand is's coal fleet...

https://www.business-standard.com/amp/industry/news/govt-plans-to-expand-coal-power-fleet-to-meet-soaring-demand-report-123122200397_1.html

Govt plans to expand coal power fleet to meet soaring demand: Report

By Rajesh Kumar Singh
India plans to further expand its thermal power fleet, the power minister Raj Kumar Singh announced, amid an unexpected rise in demand.

The nation intends to add almost 88 gigawatts of new capacity by early 2032, the minister said in parliament on Thursday, a 63% increase from a previous plan published in May.

Coal is likely to account for the lion’s share of this expansion, as gas-fired electricity generation is currently unviable due to the high costs of the fuel. About 25 gigawatts of gas-based electricity plants operated at just 15% capacity so far this fiscal year, ministry data show.

“India has no other alternative than to expand coal-based power for now,” according to R. Srikanth, a professor of energy and climate at the National Institute of Advanced Studies in Bangalore. “You need storage to supply round-the-clock clean energy and we neither have the scale nor the desired costs for storage technology to meet our needs.”

India’s maximum demand exceeded the power ministry’s projections of 229 gigawatts several times this year. Peak demand is expected to rise to 366 gigawatts in the fiscal year ending March 2032, up from 243 gigawatts this year, according to the power ministry.

[Rodius]

Inia's Govt has announced its energy plan for electricity. One commentator says India has little choice but to expand is's coal fleet...

https://www.business-standard.com/amp/industry/news/govt-plans-to-expand-coal-power-fleet-to-meet-soaring-demand-report-123122200397_1.html

Govt plans to expand coal power fleet to meet soaring demand: Report

By Rajesh Kumar Singh
India plans to further expand its thermal power fleet, the power minister Raj Kumar Singh announced, amid an unexpected rise in demand.

The nation intends to add almost 88 gigawatts of new capacity by early 2032, the minister said in parliament on Thursday, a 63% increase from a previous plan published in May.

Coal is likely to account for the lion’s share of this expansion, as gas-fired electricity generation is currently unviable due to the high costs of the fuel. About 25 gigawatts of gas-based electricity plants operated at just 15% capacity so far this fiscal year, ministry data show.

“India has no other alternative than to expand coal-based power for now,” according to R. Srikanth, a professor of energy and climate at the National Institute of Advanced Studies in Bangalore. “You need storage to supply round-the-clock clean energy and we neither have the scale nor the desired costs for storage technology to meet our needs.”

India’s maximum demand exceeded the power ministry’s projections of 229 gigawatts several times this year. Peak demand is expected to rise to 366 gigawatts in the fiscal year ending March 2032, up from 243 gigawatts this year, according to the power ministry.

The wealthy world could pitch in with resources to develop renewables first

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US coal stocks continue to climb.

Number of days of supply based on historical burn rates (I suspect this number is on the low side since generation is declining year over year but they did not share their methodology so I can't be sure)
Bituminous          147
Subbituminous     161
a 90 day supply was more typical between 2012 and 2019.
a 60 day supply was more typical between 2010 and 2012.
I suspect they intend to build 180 day supply but I have not heard anything to indicate this.

[gerontocrat]

The IEAs latest email includes this rmark about itself "As the global authority on energy"

It has also issued a report on coal, suggesting that in 2026 global coal production will be 8,394 million tons, a 2.3% reduction from the 2023 record high of 8,741 million tons.
Any reduction is welcome but hardly sufficient to keep AGW below +1.5.

The IEA also say that the reduction will be due to growth in renewable energy, especially in China.

Of greater significance is that for Coal, the US & Europe are increasingly minor players as their use of coal declines, with China, India, & Indonesia the ones to watch.

https://www.iea.org/reports/coal-2023/executive-summary

Coal Demand
Global coal demand reached a record high in 2022 amid the global energy crisis, rising by 4% year-on-year to 8.42 billion tonnes (Bt). The growth engine for coal demand, which increased in both power and non-power sectors, was once again Asia. In China, demand rose by 4.6%, or 200 million tonnes (Mt). In India, it increased by 9%, or 97 Mt; and in Indonesia, where nickel smelters became a significant source of demand growth, it shot up by 32%, or 49 Mt. The United States saw coal demand fall by 8%, or 37 Mt, more than any other market, while a 4.3% increase in consumption in Europe was more muted than many had feared. Despite subdued hydropower and nuclear electricity generation in some European countries, a weak economy and mild winter in Europe restrained the impact of natural gas price spikes, which encouraged some switching to coal.

Global coal consumption reached an all-time high in 2022…
In 2023 we expect coal demand to fall in almost all advanced economies. The biggest drops in consumption will occur in the European Union and the United States, where record annual declines of around 20% are expected. Other advanced economies – such as Korea, Japan, Canada and Australia – are set to see lower rates of decline. Nevertheless, the growth in China (around 5%) and India (over 8%), as well as in Indonesia, Viet Nam and the Philippines – which together represent more than 70% of global coal demand – will more than offset these decreases on a global level. In China and India, in particular, rising coal consumption is driven by robust growth in demand for electricity and low hydropower output. Overall, we expect global coal demand to grow slightly (by 1.4%) both in power and non-power sectors in 2023 to around 8.54 Bt, a new record.

… and the world is heading towards a new record in 2023
We forecast that China’s coal consumption will fall in 2024 and plateau through 2026, with hydropower output set to recover while electricity generation from solar PV and wind increases significantly. However, the pace of economic growth in China and its coal use in the coming years is subject to uncertainty. The country’s economy is undergoing major structural changes as it reaches the end of infrastructure-led, energy-intensive growth, but the speed at which it changes gears and continues to expand clean energy capacity will have a significant influence on the outlook for coal. The availability of hydropower is a key variable in the short term, since coal is used as a substitute when hydro underperforms in China.

India, Indonesia and other emerging and developing economies are expected to rely on coal to power strong economic growth, despite commitments to accelerate the deployment of renewables and other low-emissions technologies. By contrast, due to their different economic and energy context, we do not see a major risk of coal use rising again among advanced economies. Coal power plants are being regularly shuttered in these economies, and industrial coal consumption is set to decline due to weak industrial output, improved efficiency, and increased switching to other fuels. Overall, we expect global coal demand to drop in 2024 and plateau through 2026, even in the absence of governments announcing and implementing stronger clean energy and climate policies. As a result, global coal consumption in 2026 is set to be 2.3% lower than in 2023 – although China will have the last word.

Global coal demand is set to decline to 2026 – but China will have the last word
The dominance of China in coal markets is stronger than any other country for any other fuel. It consumes more than half of the world’s coal and produces half of it, and it is the largest importer, accounting for close to one-third of the global coal trade. But India and ASEAN also exert a growing influence – helping further shift the focus of the coal market towards Asia. In 2000, advanced economies accounted for almost half of global coal consumption (48%), while China and India together accounted for 35%. Coal consumption has declined in the European Union since the 1980s and in the United States since the 2000s, whereas it has grown strongly in China, India and ASEAN. As a result, in 2026, we expect China and India to account for more than 70% of global coal consumption. By contrast, the European Union and United States are expected to each account for around 3% of global coal consumption. This increasing gap in reliance on coal between countries could present challenges for future international dialogue on the need for rapid decline in global coal use to reach climate goals.

Coal’s shift to Asia is accelerating
Energy security has moved further up the political agenda after the market disruptions sparked by the Covid-19 pandemic and Russia’s invasion of Ukraine. For China and India, domestic coal production has long been the cornerstone of energy security policy. In recent years, both countries have struggled to keep the lights on during periods of high electricity demand even before these shocks owing to coal shortages and high prices. As a result, both governments have intensified efforts to increase coal production since October 2021.

Output from the three largest producers continue to reach new highs. In China, production in both Shanxi and Inner Mongolia surpassed 1 Bt in recent years. India is also projected to cross this threshold in 2024. And in Indonesia, which has significantly boosted coal output in recent years amid elevated international prices and increasing regional demand, production is expected to reach 700 Mt in 2023 for the first time.

Meanwhile, lignite production in Europe, while still significant, will fall in line with regional demand through 2026. Hard coal production in Poland, which has committed to shut down its coal mines by 2049, is set to continue its slow but inevitable decline. Production dropped in the United States, though the decline was not as steep as the collapse in demand, given higher exports and stock building. US production is set to decline further through 2026 to below 400 Mt, which would be the lowest level in six decades.

In Australia, production is set to decline through 2026, driven by both lower domestic demand and exports.

Major coal producers are increasing their output
The volume of coal trade has increased almost every year this century with very few exceptions. In 2015, China’s measures to protect its domestic coal industry, coupled with a slowing economy that weighed on consumption, led to the first contraction in coal trade since the 1990s. In 2020, the economic downturn driven by the Covid-19 pandemic triggered the second drop. Now, after a recovery in 2021 and 2022, global coal trade volumes are set to rise again in 2023, reaching record levels for seaborne and total trade – though declines are expected in the coming years.

European imports collapsed in 2023 amid low demand and plentiful stocks, while Japan, Korea and Chinese Taipei reduced their imports in line with lower coal demand. However, growth in China, which will record its highest imports ever in 2023, will more than offset these declines. Despite strong domestic production in China, exporters have benefitted from robust demand and massive stock building due to energy security concerns.

On the supply side, Indonesia once again proved to be the most flexible exporter and will export close to 500 Mt in 2023, a level that has never been reached by any country before. Australia will increase exports by 10 Mt as disruptions induced by La Niña in the past few years recede. Russia’s efforts to replace its former European energy customers continue, with about half of exports in 2023 directed to China, up from less than one-quarter in 2021.

Coal trade has expanded to an all-time high in 2023 but will decline afterwards
In October 2021, thermal coal prices reached unprecedented levels when supply was insufficient to meet a sudden rise in demand after Covid restrictions were eased in many countries. After Russia’s invasion of Ukraine in 2022, high gas prices, supply-side constraints, and energy security concerns drove coal prices to all-time highs. Yet after summer 2022, lower gas prices and greater coal supply led to a pullback in coal prices.

In 2023, prices have further receded globally, although they are still higher than pre-Covid levels. Regional disparities are evident, with prices steadier in China owing to strong domestic supply, while weather disruptions jolted prices in Australia. Russian coal has traded at a variable discount, sometimes on the order of USD 200 per tonne, though more recently it has been just a few dollars per tonne cheaper. Coal producers have seen significant cost inflation in the past few years, which has stemmed from increased royalties owed to governments in some parts of the world and surging costs for fuel, explosives, tyres and labour.

In 2023, thermal coal prices are retreating from their 2021 and 2022 highs
Coal prices during the past two years have been much higher than expected. Consumers have struggled to cope as energy bills have jumped. Some countries intervened to provide support through regulatory measures and subsidies, especially in the electricity sector. Meanwhile, producers have enjoyed strong margins even as their costs have risen, and generous royalties have made significant contributions to the public budgets of many producer countries.

Coal mining companies have paid back debts, increased dividends and buybacks, and retained some cash. Diversified miners have often channelled coal profits towards other commodities as growing demand tied to the energy transition is expected to drive up their prices. However, Glencore, the largest thermal coal exporter, will also become a major producer of coking coal after it completes its acquisition of Elk Valley Resources, which was announced earlier this year. Given the difficulty of receiving regulatory approvals and public pushback against new projects, pure coal players are generally opting to acquire existing mines rather than develop projects from scratch.

Supply
Further growth in global coal demand in 2022, after the big rebound in 2021, pushed global coal supplies to new highs of about 8 582 Mt (up 7%). The increase was led by China, which drove up domestic production to reduce its exposure to high import prices and to avoid supply shortages. Indonesian production growth overtook Indian growth, with exports seeing a remarkable uptick to serve increased seaborne demand for thermal coal amid a rise in domestic demand.

Global coal production is forecast to have risen by 1.8% in 2023, with continued growth in India, China and Indonesia more than offsetting declines in the United States and the European Union. Thus, 2023 marks another all-time high in global coal production, totalling 8 741 Mt. Steam coal and lignite account for about 87% of global coal production and their growth in production accounts for similar share of the global production increase. Coking coal accounts for the balance, driven by strong growth in Mongolia.

For the forecast period, we expect a net reduction in global coal production starting in 2024, which would mean global coal production peaking in 2023 in line with global coal demand. Ongoing declines in the United States and the European Union are likely to be complemented by reduced production volumes in Indonesia, as Chinese demand for seaborne thermal coal is likely to decrease. The last bastion of remarkable growth in production is India, serving the growing demand from its power sector. Our model suggests that declines in other countries will more than offset this growth, resulting in global production of 8 394 Mt in 2026.

Global coal supply is likely to have peaked in 2023 and then to decline in line with demand

[SeanAU]

The wealthy world could pitch in with resources to develop renewables first

Australia could send them more of our Coal Resources - high heat is critical for making renewables.

[interstitial]

EIA has posted the latest short term energy outlook now including 2025. It shows US coals share of generation continuing to decline another 2% down to 13% of generation in 2025.

[interstitial]

The lower purple line is weekly coal production in millions of tons and the upper purple line is one year trailing average. As you can see the production decline I expected in the middle of last year is finally starting to happen. There are few US coal plant closures planned for this year and capacity the average annual capacity factor is only 43%. That would imply further closures but efforts to keep plants open continue. The EIA short term energy outlook predicts going from 17% coal in 2023 to 15% coal in 2024. So far in 2024 coal use is above 2023 but high gas price spike that has collapsed and a recent cold snap that should be over soon should see coal use decline soon. 

[interstitial]

The week ending 1/20/2024 was 8133000 tons of coal which is probably the lowest full week of US coal mining since at least the 1970's. There have been smaller part of week values at the beginning and end of the year.

[Sigmetnow]

Possibly related to predictions of warmer-than-average weather for the rest of the winter?  (Besides the abundant existing coal supply.)

[gerontocrat]

USA Data to October/November  2023 from the US EIA
1st graph is monthly production & consumption heat content - 12 month trailing average
2nd graph is simple monthly production & consumption in tons

[Sigmetnow]

Alex ⁦‪@alex_avoigt‬⁩
Wind generate more power than coal in 🇪🇺 Europe
2/6/24, 7:12 AM  https://x.com/alex_avoigt/status/1754840509413982600

[gerontocrat]

A significant change in China?
Reading the artcle below suggests that the word must have come down from on high.

We will find out (to some extent) the reality this year.

https://www.straitstimes.com/asia/east-asia/china-s-coal-boom-slows-as-top-mining-hubs-focus-on-renewable-energy

China’s coal boom slows as top mining hubs focus on renewable energy

China's four biggest coal hubs, accounting for over 80% of output, have eschewed the ambitious targets that characterised previous years.

BEIJING – China’s coal boom is slowing as top mining regions limit growth and steer investment to the clean energy that will replace the dirtiest fossil fuel.

Seven straight years of rising output, including a 10 per cent surge in 2022 after nationwide power outages crippled industry, have produced a glut of coal. That kept prices low. But record production, which reached 4.7 billion tonnes in 2023, has incurred other costs, from increased fatalities among miners to poor financial performance at mining companies.

At the same time, China is running up against a deadline to peak coal consumption by 2025 to meet its climate goals. It means output growth could slow to 1.4 per cent in 2024, Guosheng Securities said in a note, which would be the weakest since 2017.

The four biggest coal hubs, accounting for over 80 per cent of output, have eschewed the ambitious targets that characterised previous years, according to annual plans released by local governments.

Instead, much of their efforts are on supporting China’s explosive growth in renewables. The reports will set the tone for discussions at Beijing’s annual legislative meeting in early March, where energy security is likely to be a focus.

Shanxi province, the top coal miner, has cut its annual growth target to 57 million tonnes, from over 100 million tonnes in 2023. Notably, it plans to deploy solar panels on vast swathes of land now too polluted from mining to grow crops or build houses, according to its report.

Inner Mongolia, the second-biggest producer, did not set a target for coal output, but said it would fund 300 billion yuan (S$56 billion) in clean energy expansions.

The plan is to take its capacity to generate renewable power above thermal for the first time. The authorities also vowed to accelerate the construction of four desert mega bases as a part of China’s grand strategy to triple clean power by 2030.

The third-biggest miner, Shaanxi province, said it plans only a marginal increase in coal production, while cutting coal burning to improve air pollution. It will also support the 100-gigawatt expansion of China’s biggest solar panel maker, Longi Green Energy Technology Company.

The Xinjiang region, which has been a prime contributor to China’s coal output growth, said it will slow its expansion to 9 per cent, from 2023’s 11 per cent increase, while pledging to keep pushing on renewables and hydrogen. BLOOMBERG

[interstitial]

(Bloomberg) -- The collapse of a major Baltimore bridge Tuesday is likely to shut down the port’s coal exports for as many as six weeks and block the transport of up to 2.5 million tons of coal, said Ernie Thrasher, chief executive officer of Xcoal Energy & Resources LLC.
https://finance.yahoo.com/news/baltimore-bridge-collapse-likely-block-163530072.html

[SteveMDFP]

(Bloomberg) -- The collapse of a major Baltimore bridge Tuesday is likely to shut down the port’s coal exports for as many as six weeks and block the transport of up to 2.5 million tons of coal, said Ernie Thrasher, chief executive officer of Xcoal Energy & Resources LLC.
https://finance.yahoo.com/news/baltimore-bridge-collapse-likely-block-163530072.html

Indeed, the collapse of the Francis Scott Key (FSK) bridge has shut down operations at the Port of Baltimore, probably for a few weeks.  This is local to me.  This is far from the largest port on the East Coast, but it is a major one, particularly for shipping autos and exporting coal.  I won't shed any tears over the lost coal exports.  Nor most of the autos (I don't know what % are BEVs).  Nor for the interrupted cruise line dockings.  Nor for the illegal drugs smuggled (Baltimore has been the East Coast capital for e.g., heroin).

Local commuting by car was previously challenging, now will be significantly worse.  Public transit options are pretty decent (for a US metro area, anyway).  Commuter rail may get a boost.

In a way, there's as much positive as negative in this event, though no capitalist would see it this way. 

Edit:  photos and commentary at:  https://www.linkedin.com/news/story/6-presumed-dead-in-bridge-collapse-5957644/

[interstitial]

A quick update. Coal weekly production is way down at 7.67 million tons for last week with the lowest value since 1963. The Baltimore bridge may be having an impact but it only represents about 3% of total production. This value is probably below the new normal but it will take a while to see where it settles out. I was expecting it to settle around 8.5-9 million tons a week but that is a rough guess.

[interstitial]

Coal generation hits a daily generation low yesterday(4/13/24) at 1.039 TWH. Almost breaking through the 1 TWH barrier.

[gerontocrat]

https://www.eia.gov/totalenergy/data/monthly/

The USA Energy Information Agency have published Jan 24 Energy Data

Coal use jumped in January, but see previous posts from Interstitial showing coal production and consumption collapsing in Feb March. Due to large late 2023 solar installations coming online?

Just maybe 2024 will see an accelerated decline in coal.