Coal: The Energy of New Economies

Of the energy resources available on Earth, oil is the primary one. It is used to propel automobiles and airplanes and used to manufacture things that have improved our day-to-day life. Coal is different. It does not benefit from a modern image. It invokes the sad images of the Industrial Revolution of the nineteenth century. Also, it is easy to produce and its reserves are relatively diversified. As a consequence, coal is never at the core of international discussions or geopolitical conflicts. From an energy point of view, though, it is as important as oil. From an environmental point of view, coal is a key resource ... and a key issue.

The Chinese Market

Worldwide the amount of coal produced in 2013 was 3880 Mtoe. This corresponds to 95% of oil production (BP 2014) (Fig. 3.17).

Almost half of the world’s coal is produced in China, which has a considerable appetite for it. India, Australia, Japan, South Korea, Taiwan and Indonesia are also large producers.

The evolution of coal production in the last 10 years shows how China dominates the market. Its growth represented 71% of the total increase in coal production. The increase in China was 7% per year, versus 4.2% worldwide (Fig. 3.18).

Its huge production capacity gives China the means to remain independent as it produces 96% of what it needs. This percentage was 105% in 2003, which means that China’s energy independence has slightly eroded over time. Indeed, the fast

Worldwide coal production (BP 2014)

Fig. 3.17 Worldwide coal production (BP 2014)

Worldwide coal production per region (BP 2014)

Fig. 3.18 Worldwide coal production per region (BP 2014)

growth of its economy led China to more than double its consumption of coal in the last decade.

In Asia (excluding China), coal production has increased by 11% on average, much more than its consumption (3.7% on average). While the region imported 60% of its coal 10 years ago, this has fallen to 20% today. India is also a net importer of coal; it imports around 30% of its coal needs. Its own production does not meet the growth in consumption, which tops 7% per year on average.

Fig. 3.19 Coal usages (© OECD/IEA, WEO 2012)

Europe imports 40% of the coal it consumes. This percentage slightly decreased, essentially from reduced consumption, which has steadily decreased by 1% per year on average. North America is both a key producer and consumer of coal. In the last 10 years, it became a net exporter of coal. Indeed, production slightly decreased, but consumption reduced even faster, around 2% per year. North America produces today around 10% more coal than it consumes.

Coal is mainly used to produce electricity (68% of the total usage). The growth in the demand for electricity thus has a direct impact on coal consumption (Fig. 3.19).

In summary, coal is the energy source that posted the highest growth in the last 10 years (4.2%), far above oil (1%) or natural gas (2.5%), despite its reputation as being in decline. Coal consumption only represented 70% of oil’s consumption 70 years ago, compared to 95% today. The growth in demand for this resource is essentially related to the economic transition in Asia, in particular China. As coal is essential for electricity production, it supports the economic transition of these regions. It is thus at the heart of the world energy transition.

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