IEA Official: Coal Report

The Center for Global Energy Policy kicked off its spring-semester activities January 23 with a discussion of the International Energy Agency’s medium-term coal market report with Laszlo Varro, head of IEA’s division for gas, coal, and power markets. Professor Jason Bordoff, a former energy advisor to President Obama and the newest member of SIPA’s energy faculty, welcomed the audience to the first of many events sponsored by the center.

In contrast to the common perception of coal as an outdated energy source, Varro said, “coal demand growth [worldwide] is more rapid than total energy growth, 2.65 percent to 1.2 percent, and on track to catch up with oil.”

The United States is unusual among nations in that the market share of coal is diminishing here. This is in part due to stringent regulation that discourages infrastructure investment in coal power generation, and in part because of the recent shale gas boom and corresponding low prices. Because of the high cost of transporting natural gas, other countries still face significantly higher prices for it, reinforcing the economic rationale for coal. In an ironic development, coal consumption is rising in Europe despite the EU’s emissions trading system, as Germany turns to an available source to replace nuclear power plants.

It is China and India, however, that will be responsible for perhaps 90 percent of the growth in demand for coal over the next five years, as both countries face a rising demand for electricity that they will seek to meet by any means. “China is making the largest investments in renewable energy sources,” Varro said, “but is also seeing historic growth in coal consumption.”

Considering the economic and political pressure to expand energy access and the domestic abundance of coal, this trend is unlikely to slow for China. India finds itself in a similar situation, dealing with crippling brownouts on an ongoing basis, as capacity is too low. Given the truly global nature of the coal market, there is little doubt that supply can meet demand and coal power development will continue.

As for the question of the environmental impact of this development, Varro succinctly stated that carbon dioxide emissions will continue to rise. With regards to carbon capture and sequestration technology as a means of curbing atmospheric carbon, Varro explained that “CCS is too expensive for the private market to implement and it cannot compete without a major regulatory push.”

Students in SIPA’s Energy and Environment concentration can look forward to further exploring this tension between development and environmental responsibility.

— Benjamin Martinez Newman