IEA Predicts End of Coal’s Heyday

In the next 25 years, the world will turn increasingly to renewables and natural gas to meet energy demand, turning away from coal, according to the International Energy Agency’s (IEA’s) World Energy Outlook 2017 (WEO).

The annual outlook makes predictions about the energy sector worldwide through 2040, considering several different scenarios. The two central scenarios that comprise the bulk of the report are the “Current Policies Scenario,” which bases predictions on policies enacted by mid-2017 and acts as a benchmark for the rest of the report, and the “New Policies Scenario,” which incorporates the implementation of announced policy intentions in its projections.

One of the key takeaways of the 2017 WEO is that coal’s hold on the energy sector is likely to falter. As natural gas prices fall, renewables become prevalent, and energy efficiency impacts energy demand significantly, the report finds that absent large-scale carbon capture and storage, global coal consumption will flatline under the New Policies Scenario (Figure 1).

Figure 1_WEO2017
1. Up, down, or sideways. According to the International Energy Agency’s (IEA’s) annual World Energy Outlook, global coal demand could vary markedly through 2040, depending largely on energy policy decisions. If the energy policy landscape doesn’t change at all in the next 22 years, coal demand would continue to grow (red line). However, if announced policy intentions are implemented, the IEA predicts that coal demand would plateau (blue line). If all actions necessary to meet the United Nations’ Sustainable Development Goals are executed, coal demand would plummet (green line). Source: International Energy Agency

The report states: “Compared with the past twenty-five years, the way that the world meets its growing energy needs changes dramatically in the New Policies Scenario, with the lead now taken by natural gas, by the rapid rise of renewables and by energy efficiency.”

From 2000 to 2017, coal-fired generation worldwide has grown by around 900 GW, the report notes. In contrast, net additions of coal-fired energy generation capacity through 2040 are expected to total only around 400 GW under the New Policies Scenario.

IEA’s dim forecast for coal is wide-reaching. Coal use has fallen in Europe, the U.S., and China, the report says. In fact, coal demand fell by 2% globally in 2016, the second year in a row. “Over the past 25 years, coal demand grew, on average, by 2% per year, so this represents a major change in trends,” the report says.

It’s not all downhill for coal, the report says. “In the New Policies Scenario, consumption flattens at around [5,500 million tonnes of coal equivalent] over the period to 2040, a [stabilization] that is the product of counterbalancing trends: coal demand keeps falling in Europe (–61%), China (–13%) and the United States (–11%), but these declines are offset by increases in some developing countries, especially in India and Southeast Asia.”

India may not be a safe bet for coal either, however, as solar power’s share of the energy mix is growing rapidly. The reason for this increase in solar power usage largely boils down to dollars and cents. “In 2010, the auction price for a [solar photovoltaic] tender exceeded $250 per megawatt-hour (MWh), more than five-times what an average coal plant received for a MWh at that time,” the report says. “Seven years later, auction prices have gone as low as $40/MWh (tender for the 750 megawatt Bhadla Solar Park).”

Abby L. Harvey is a POWER reporter.