World energy-related carbon dioxide emissions in 2013 World energy-related carbon dioxide emissions in 2013
Pledges by the EU, the United States and China to commit to stricter emission reduction targets could have a dampening effect on future coal demand. However, the extent to which shale gas will replace coal in coal-consuming countries such as China remains to be seen.
“In our view, any decline in coal would depend on the availability of viable alternatives, such as large-scale gas developments in China, or renewables,” analysts at Standard & Poor’s said in a recent report.
“While we believe shale gas could be part of the solution, we also note that it has some side effects, which are not always taken into consideration. These include: high demand for freshwater, the production of large amounts of waste water, induced seismicity, greenhouse gas emissions and groundwater contamination,” the report said.
China is the world’s largest consumer of coal, accounting for about 45% of global demand. However, S&P said coal demand in the country could flatten by 2020, as a result of lower GDP growth, renewables expansion and measures to curb CO2 emissions.
Meanwhile, analysts at ANZ bank have revised their forecast for thermal and coking coal prices down by around 10% over the next two-to-three years as a result of relatively weak demand combined with ample supply from China and Australia. The bank forecast average spot thermal coal prices of $82 per ton in 2016, which is $10 lower than its previous estimate.
“That said, we remain positive on the longer-term demand dynamics, with coal remaining a baseload power source in China and industrial and infrastructure activity in India gathering pace. Reduced capital expenditure on new mine capacity in Australia and Indonesia also plants the seeds for a tighter supply backdrop and price recovery in 2016 and 2017,” ANZ said in a research note.
By Andreas Walstad – http://interfaxenergy.com/gasdaily/article/12869/political-risk-dims-outlook-for-coal