Introduction
This is the 3rd installment in a series that examines data from the recently released Statistical Review of World Energy 2014. The previous posts — World Sets New Oil Production and Consumption Records and The U.S. and Russia are Gas Giants — delved into world oil and natural gas production and consumption figures. Today’s post looks at the global coal picture.
Coal Consumption
In the U.S., coal consumption has been flat to declining for the past 20 years. Just since 2007, U.S. coal consumption has fallen by more than 20%. This is the primary reason the U.S. leads all countries in reducing carbon dioxide emissions over that same time period. (This will be covered in an upcoming article). Still, the U.S. accounted for 11.9% of the global demand of coal in 2013. This was good for 2nd place globally among countries for coal consumption, but the 455.7 million metric tons of oil equivalent (Mtoe) that the U.S. consumed in 2013 was roughly the amount we consumed in 1987.
The declining demand story is the same in the European Union (EU). Since 2007, coal consumption in the EU has fallen by 12%. While the consumption decline since 2007 is not as dramatic as that in the U.S., the decline in EU coal consumption since the late 1980s has been greater. In 1989, U.S. and EU coal consumption were almost identical (480.5 Mtoe for the U.S. versus 487.6 Mtoe for the EU), but then consumption in the EU fell sharply during the 1990s. Today the EU share of the world’s coal consumption is 7.5%.
[Read: World Sets New Oil Production and Consumption Records]
The story of declining coal consumption in recent years holds true for most of the developed world. Canada, Australia, and New Zealand have all seen their coal consumption decline since 2008. Japan’s coal consumption was on the decline until the 2010 Fukushima nuclear power plant accident, but has been increasing since as Japan tries to make up for the loss of nuclear power. Germany is a notable exception in the EU. It has seen coal consumption rise in three of the past four years, but there too the general trend for the past 40 years has been sharply lower coal consumption.
So if you live in the West, and you tend to get your news sources from the West, you might believe that global coal consumption is on the decline. But you would be very wrong.
The Chinese Dragon Is Fueled by Coal
In 1980, the U.S., the EU, and Asia Pacific each consumed some 400 to 500 Mtoe of coal. EU coal consumption never went much beyond that level before beginning to decline to the 2013 level of 285.4 Mtoe. U.S. coal consumption rose a little bit, but topped out at 574.2 Mtoe in 2005.
But in the developing world, coal consumption trends have been very different. In fact, coal’s gains in the developing world are shocking:
In 1980 the combined coal consumption of the U.S. and the EU was 866 Mtoe. Today, the combined coal consumption of the two is 741 Mtoe. But the increase in Asia Pacific’s coal consumption since 1980 is 2196 Mtoe — nearly triple today’s combined coal consumption of the U.S. and EU.
China is the world’s top consumer of coal, and was responsible for nearly 74% of Asia Pacific’s gains since 1980. In 2013, China consumed 1925 Mtoe, 50.3% of the global total. This represents a more than six-fold increase in China’s coal consumption since 1980, which is of course partially explained by the outsourcing of manufacturing from developed countries.
[Read Also: China’s War on Smog Will Put the Reins on Global Coal Demand]
No other country comes close to China’s coal consumption. The U.S. was a distant second at 456 Mtoe (11.9% of the global total), followed by India at 324 Mtoe (8.5%), Japan at 129 Mtoe (3.4%), and Russia at 93.5 Mtoe (2.4%).
Coal Production and Exports
China also produces the most coal. The 1840 Mtoe mined there in 2013 was 47.4% of the world’s total, but not enough to satisfy China’s coal demand. As with the consumption figures, the U.S. was also a distant second in production at 500.5 Mtoe, which was more than the U.S. consumed and 12.9% of global production. U.S. coal exports are on the rise as a result. Following the U.S. in coal production were Australia at 269 Mtoe, Indonesia at 259 Mtoe, and India at 229 Mtoe.
Australia and Indonesia both produce far more coal than they consume, and as a result they are major exporters to Asia. In fact Australia is the world’s top coal exporter, with nearly 90 percent of its exports destined for Japan, China or South Korea. U.S. coal producers would love to expand into this market but are at a geographical disadvantage. Further, there aren’t many options for U.S. producers wishing to export coal from the west coast. As a result, most U.S. coal exports are destined for Europe.
Coal Reserves
Nevertheless, the U.S. has 26.6% of global proved coal reserves — the most of any country, with a reserves-to-production (R/P) ratio of 266 years. At current market prices for coal, these reserves would be valued at some $15 trillion, so there will be tremendous economic incentive to mine this coal. But there will also be tremendous environmental pressure to leave it in the ground as concerns about climate change continue to mount.
Following the U.S. in coal reserves are Russia with 17.6% of global reserves, China with 12.8%, Australia with 8.6%, and India with 6.8% of global reserves. The BP Statistical Review indicates that each of these countries has enough proved reserves to produce coal for at least 100 years at 2013 rates except for China, which has only enough reserves for 31 years of production at its 2013 consumption rate. Russia, on the other hand, has enough proved coal reserves to produce at its 2013 rate for over 450 years.
Conclusions
The global coal markets are the story of skyrocketing consumption in the Asia Pacific region that far more than offsets the consumption declines in the West. The U.S. has the world’s largest coal reserves, and because the U.S. Environmental Protection Agency is attempting to phase coal out in the U.S., coal producers would like to grow their coal exports. However, these producers are constrained by geography and the availability of west coast coal export terminals in tapping into the growing Asia Pacific market.
