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Coal Demand in Asia Surges Despite IPCC Report Findings

Coal Demand in Asia Surges Despite IPCC Report Findings

Thursday, September 16, 2021 Industry Insights

The 2021 IPCC report offered stark warnings to the impact current energy practices have on the mitigation of temperature rise.

The IPCC report highlighted the prevalence of coal power stations as one of the major barriers to achieving warming below an acceptable level. Despite this, there has been a surge in coal demand within Asia. As of December 2020, more than 350 new coal-fired power plants were under construction across Asia, including 184 in China, 52 in India, 7 in South Korea and 13 in Japan.

Reuters reported that a total of 80.32 million tons of all grades of coal was discharged at Asian ports in July, according to vessel tracking and port data from Refinitiv. This demonstrates the scale of the problem representing a month-on-month increase explaining the increase in coal prices over the past three months.

China has been leading this current surge for coal. As the world's biggest producer, consumer and importer, China brought in a total of 30.18 million tonnes in July, a seven-month high, according to official data.

Last week, the Chinese state economic planner and energy regulator ordered 15 idle coal mines in five provincial-level regions to resume operations. They directed the mines to extend their “pilot operation” for another year, increasing the country’s daily coal output by 150,000 tonnes.

Additionally, over the first half of 2021, there was an expansion of coal-powered steel mills, with 18 steel making blast furnaces and 43 coal-fired power plants announced in the first half of this year. If these projects are completed, emissions will equate to 150m tonnes of carbon dioxide per year, equivalent to the Netherlands’ total emission level.

China has pledged that by 2030 it will reach peak CO2 and achieve net-zero by 2060 which is ten years later than most countries. Therefore, it seems likely that continual upscaling of coal-powered stations in addition to most government-directed stimulus packages being directed towards traditional infrastructure projects will prevent seriously limit China’s capability of reaching net zero by 2060 let alone 2050.

Kathryn Porter, founder of energy consulting firm Watt-Logic stated: “When governments are faced with the choice of not supplying electricity or using coal, they will use coal.” This is a crucial problem for much of Asia, as coal still represents the primary fuel in periods of high demand, which has been stoked further as the region’s economies emerge from the COVID-19 pandemic, leading to an over-reliance on coal as a cheap energy alternative.

Despite much of the demand for coal in Asia being driven by short-term factors, which may change in the coming months, the larger picture conflicts with the findings of the latest IPCC report. Several Asian countries remain steadfast in pursuing large coal-fired building programmes, which are expected to remain in operation for at least 40 years, which could greatly disrupt the decarbonisation of many of these societies past 2030 where CO2 emissions are expected to peak.

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