The outlook for coal
The outlook for coal László Varró Head of Gas, Coal and Power Markets
© OECD/IEA 2014
An industry just about to die… Incremental coal demand during the outlook period
© OECD/IEA 2014
What do we need for peak coal in China? 600
Coal equivalent of Chinese investments till 2020
500
coal plant efficiency
400
nuclear
Power demand growth at 3.1%
300 wind and solar
parasitic load
200
100
coal conversion hydro
0 diversifying electricity © OECD/IEA 2014
coal demand INCREASE to reduce pollution
Will local air pollution in China give rise to a big coal-to-gas switch in power? Gas and retrofitted coal plants generation in China (2014-2019) 1 800 1 600 1 400
TWh
1 200 1 000
800 600 400 200 0 Retrofitted coal generation
© OECD/IEA 2014
Gas generation increase
Cement and steel in China uses more coal than the entire US
A marked construction slowdown could bring peak coal forward to before 2020 © OECD/IEA 2014
Do gas or liquids from coal make economic sense? Estimated gas price break-even cost depending on the coal price 12
USD per Mbtu
10 8
6 4 2 0 0
20
40
60 USD per tonne
© OECD/IEA 2014
80
100
Electrification in Asia without coal? 5
Per capita electricity supply, Mwh/year
4
3
2
15 times EU wind and solar or 6 times EU gas imports from Russia
1
0
India, Indonesia, Vietnam
© OECD/IEA 2014
Malaysia
Energy access needs new coal even in a decarbonisation pathway
© OECD/IEA 2014
1960s subcritical technology locks in emissions for decades
© OECD/IEA 2014
Why ultra supercritical is difficult? Operating parameters
Subcritical
Ultra supercritical
Temperature
Around 500 C
600+ C
Pressure
Around 170 Bar
250+ Bar
Higher temperature and pressure improves efficiency, but needs • Special steel alloys • Very precise manufacturing • High quality project management and control • Professional, trained maintenance © OECD/IEA 2014
Who is waging a war on US coal? LCOE for retrofitted coal plants and CCGTs at different gas prices 120 LNG extracost
$/MWh
100
Cleaning extracosts
80
60 Fuel + OPEX 40
20
CAPEX
0 COAL
GAS
Shale gas has around 5 times bigger impact on the economics of coal investment than the EPA regulations © OECD/IEA 2014
The EPA rules are in line with expectations of a modern energy system
© OECD/IEA 2014
The so called coal renaissance in Europe is over Thermal coal and lignite demand in Europe 600
Mtce
500
EU - 28
400 300 200 EU - 28 forecast
100 0 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
© OECD/IEA 2014
Were investment in coal plants in Europe triggered by low coal prices after 2010? Timeline of new German coal plants 6 000
25.0 Startup
20.0
4 000
15.0
3 000 10.0
2 000
5.0
1 000 0
0.0 2005
© OECD/IEA 2014
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
EUR/MWh
MW
5 000
Final Investment Decision
Coal advantage over gas
Only 99.8% to go till we clean coal use Cumulative CO2 captured from production and use of different fuels 70 60
Million tonnes of CO2 captured
Other fuels 50 40 30 20
Coal
10 0 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
© OECD/IEA 2014
Thanks for your attention
© OECD/IEA 2014
© OECD/IEA 2014
An industry just about to die… Incremental coal demand during the outlook period
© OECD/IEA 2014
What do we need for peak coal in China? 600
Coal equivalent of Chinese investments till 2020
500
coal plant efficiency
400
nuclear
Power demand growth at 3.1%
300 wind and solar
parasitic load
200
100
coal conversion hydro
0 diversifying electricity © OECD/IEA 2014
coal demand INCREASE to reduce pollution
Will local air pollution in China give rise to a big coal-to-gas switch in power? Gas and retrofitted coal plants generation in China (2014-2019) 1 800 1 600 1 400
TWh
1 200 1 000
800 600 400 200 0 Retrofitted coal generation
© OECD/IEA 2014
Gas generation increase
Cement and steel in China uses more coal than the entire US
A marked construction slowdown could bring peak coal forward to before 2020 © OECD/IEA 2014
Do gas or liquids from coal make economic sense? Estimated gas price break-even cost depending on the coal price 12
USD per Mbtu
10 8
6 4 2 0 0
20
40
60 USD per tonne
© OECD/IEA 2014
80
100
Electrification in Asia without coal? 5
Per capita electricity supply, Mwh/year
4
3
2
15 times EU wind and solar or 6 times EU gas imports from Russia
1
0
India, Indonesia, Vietnam
© OECD/IEA 2014
Malaysia
Energy access needs new coal even in a decarbonisation pathway
© OECD/IEA 2014
1960s subcritical technology locks in emissions for decades
© OECD/IEA 2014
Why ultra supercritical is difficult? Operating parameters
Subcritical
Ultra supercritical
Temperature
Around 500 C
600+ C
Pressure
Around 170 Bar
250+ Bar
Higher temperature and pressure improves efficiency, but needs • Special steel alloys • Very precise manufacturing • High quality project management and control • Professional, trained maintenance © OECD/IEA 2014
Who is waging a war on US coal? LCOE for retrofitted coal plants and CCGTs at different gas prices 120 LNG extracost
$/MWh
100
Cleaning extracosts
80
60 Fuel + OPEX 40
20
CAPEX
0 COAL
GAS
Shale gas has around 5 times bigger impact on the economics of coal investment than the EPA regulations © OECD/IEA 2014
The EPA rules are in line with expectations of a modern energy system
© OECD/IEA 2014
The so called coal renaissance in Europe is over Thermal coal and lignite demand in Europe 600
Mtce
500
EU - 28
400 300 200 EU - 28 forecast
100 0 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
© OECD/IEA 2014
Were investment in coal plants in Europe triggered by low coal prices after 2010? Timeline of new German coal plants 6 000
25.0 Startup
20.0
4 000
15.0
3 000 10.0
2 000
5.0
1 000 0
0.0 2005
© OECD/IEA 2014
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
EUR/MWh
MW
5 000
Final Investment Decision
Coal advantage over gas
Only 99.8% to go till we clean coal use Cumulative CO2 captured from production and use of different fuels 70 60
Million tonnes of CO2 captured
Other fuels 50 40 30 20
Coal
10 0 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
© OECD/IEA 2014
Thanks for your attention
© OECD/IEA 2014
