As Nigeria fails to utilize its abundant coal resources spread across Enugu, Kogi, Nasarawa and Gombe states, the International Energy Agency (IEA) has predicted in its annual Medium-term Coal Market Report that global demand for coal over the next five years will continue soaring, breaking the nine-billion tonne level by 2019.
The IEA report notes that despite China’s efforts to moderate its coal consumption, it will still account for three-fifths of demand growth during the outlook period. Moreover, China will be joined by India, ASEAN countries and other countries in Asia as the main engines of growth in coal consumption, offsetting declines in Europe and the United States.
“We have heard many pledges and policies aimed at mitigating climate change, but over the next five years they will mostly fail to arrest the growth in coal demand,” Maria van der Hoeven, IEA executive director said.
“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 to change, we need to radically accelerate deployment of carbon capture and sequestration.”
The executive director also called for more investments in high-efficiency coal-fired power plants, especially in emerging economies.
“New plants are being built, in an arc running from South Africa to Southeast Asia, but too many of these are based on decades old technology,” she said.
“Regrettably, they will be burning coal inefficiently for many years to come.” The report noted that global coal demand growth has been slowing in recent years, and sees that trend continuing. It explained that coal demand will grow at an average rate of 2.1 per cent per year through 2019. This compares to the 2013 report’s forecast of 2.3 per cent for the five years through 2018 and the actual growth rate of 3.3 per cent per year between 2010 and 2013.
As has been the case for more than a decade, the fate of the global coal market will be determined by China.
China, the world’s biggest coal user, producer and importer has embarked on a campaign to diversify its energy supply and reduce its energy intensity, and the resulting increase in gas, nuclear and renewables will be staggering. However, the IEA report shows that despite these efforts, and under normal macroeconomic circumstances, Chinese coal consumption will not peak during the five-year outlook period.
The report’s forecasts come with considerable uncertainties, especially regarding the prospect of new policies affecting coal. Authorities in China as well as in key markets like Indonesia, Korea, Germany and India, have announced policy changes that could sharply affect coal market fundamentals. The possibility of these policy changes becoming reality is compounding uncertainty resulting from the current economic climate.
Beyond that, the issue of low prices remains a hot topic among coal market participants. Chinedu Nebo, Nigeria’s minister of power, recently said that the federal government was working out a sustainable framework to ensure profitability on future investments in the coal-to-power aspect of Nigeria’s electricity mix.
Coal prices have declined even more since last year, but several factors have helped producers withstand further economic pain.

Folashade Olubayo
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