Despite the global push for renewable energy sources, coal will continue to be a major source of fuel through 2040, with Northeast and Southeast Asian markets anticipated to drive coal consumption growth, an energy analyst said during a forum in Manila, Philippines.
Demand for coal in the Northeast Asian markets is projected to remain stable in the coming years due in large part to continued import reliance from countries that do not have their own domestic coal production, said Deepak Kannan, managing editor of Asia thermal coal at S&P Global Platts.
Japan, in particular, is a big player in coal procurement in the region. According to S&P Global Platts Analytics data, the country imported 191.7 million tonnes of coal in 2017 and usually enters into discussions with the Australian suppliers to secure its tonnage for the year.
Another market that is equally important in the region is South Korea, which bought 109.5 million tonnes of coal during the year. The bulk of that came from Indonesia, at 41.2 million tonnes, followed by Australia at 31.2 million tonnes, while the U.S. shipped 1.8 million tonnes.
Taiwan was also a major buyer of foreign coal in 2017, with majority of its coal supply coming from Australia, at 27.6 million tonnes, followed by Russia, at 8.6 million tonnes, while U.S. shipments came in at 1.0 million tonnes.
"All these markets are quite important even going forward, and we don't see much decrease in terms of coal-fired capacity additions," Kannan said March 20 at the Philippines Energy Forum.
He also highlighted the growing markets in Southeast Asia, particularly Vietnam, Thailand and the Philippines. Although volumes are relatively low in these markets, he said coal imports are "growing pretty quickly and at a faster pace."
According to Platts Analytics, Vietnam's coal imports are expected to reach roughly 42 million tonnes in 2040, from just 2.3 million tonnes in 2013, while the Philippines is anticipated to increase its coal imports to 24.5 million tonnes from 9.9 million tonnes over the same period. Thailand is expected to grow its foreign coal volumes to 12.8 million tonnes in 2040, from 8.3 million tonnes in 2013.
Malaysia's coal imports are expected to rise to 70 million tonnes by 2040, from 23 million tonnes four years ago.
Citing the International Energy Agency, Kannan said during his presentation that Southeast Asia's economy is expected to "triple in size, with the total population growing 20% and urban population alone growing by over 150 million people."
"It is not a possible task" to transition to cleaner energy sources or to liquefied natural gas when millions of people in the region still don't have access to basic electricity, he said.
"It requires a lot of time, investment and setting up of infrastructure," he said. "So if you ask me personally, I believe that coal will continue to be a major fuel for the next two decades."
S&P Global Market Intelligence, S&P Global Platts and S&P Global Platts Analytics are owned by S&P Global Market Intelligence.