Abby L. Harvey
GHG Monitor
12/19/2014
Coal use, as it is now, is unsustainable, underscoring the need to drastically accelerate the deployment of carbon capture and sequestration, according to the 2014 Medium-Term Coal Market Report released by the International Energy Agency this week. Because of the many benefits of coal, including its abundance and affordability, the resource will continue to be exploited well into the future, regardless of the potential negative environmental impacts resulting from its unabated use, the study finds. “Although the contribution that coal makes to energy security and access to energy is undeniable, I must emphasize once again that coal use in its current form is simply unsustainable. For this change, we need to radically accelerate deployment of carbon capture and sequestration and high-efficiency coal-fired power plants,” IEA Executive Director Maria van der Hoeven said in her prepared remarks announcing the report.
The report, for the first time, addresses recent advancements in CCS, including the opening of Saskpower’s Boundary Dam CCS project in October, but says this progress, while welcome, is not enough. There are several reasons for the lag in deployment, according to the report, including a high cost of operation and limited support for funding in current climate policies. However, in areas where climate policy does support CCS advancement, projects are taking shape. Such advancements are not being made at the same rate, though, as changes in the coal market, according to the report. “The public and private sectors have made cumulative investments in major CCS projects of approximately USD 10.5 billion. Today, these investments are made in locations where they are supported by climate policies and an expectation of continued fossil fuel use. However, the market for CCS lags a long way behind developments in the coal market. Tackling climate change requires that these two markets begin to develop together,” the report says.
Actions to correct the currently slow rate of deployment for CCS must come from government efforts to incentivize the practice, the report says. “It has been suggested that CCS investments are akin to an insurance policy for the coal industry. Nevertheless, as other factors impact the market outlook for coal, government action is required to raise the likelihood that such a policy will pay off. Putting a price on CO2 emissions, incentivising low-carbon power generation and supporting exploration for suitable CO2 storage are among the necessary actions,” the report says.
China Will Peak Coal Demand, But Not Soon
The IEA report says that between now and 2019, coal demand in China will continue to grow, albeit at a much slower rate than in the past. “So the million-dollar question is when coal demand will peak in China. We believe that the Chinese government is making serious efforts to improve air quality in the cities and to diversify from coal. Developments in PV, hydro, wind and nuclear have been staggering. However, under normal macroeconomic conditions, we do not expect coal demand to peak in China during the outlook period. Despite this, it is important to emphasize that coal demand has entered a new phase, where growth is moderate,” van der Hoeven said.
In the past, coal demand growth in China has been approximately 10 percent per year for the last ten years. When that total is compared to projected growth rates, the results are significant. “China will be the coal giant for many years in the future. We project that coal demand annually grows at 2.6 [percent], more than 100 Mt per year during our outlook period. China will add more coal demand than any other country, but we have entered a new time in which the outstanding growth from the past in all of the coal indicators, such as production, consumption and imports, will not be repeated,” the report says.
