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Global coal demand will drop over next 5 years, IEA report says

The global demand for coal will slow down over the next five years, according to a new report by the International Energy Agency.

The international organization's recently released Medium-Term Coal Market Report 2016 said that coal demand will not reach 2014 totals again until 2021, by which time much of the demand will likely have shifted to China. Coal's share of the global energy market will drop to 36% by 2021, down from the 41% share it had in 2014.

"Our forecast shows a slight increase after a few years of decrease, reaching 2014 levels only in 2021. Such a growth path would depend greatly on the Chinese trajectory," the executive summary of the report said.

The report said that China's need currently accounts for 50% of global demand and nearly half of the world's production. Asia accounts for nearly three quarters of global coal demand.

"Because of the implications for air quality and carbon emissions, coal has come under fire in recent years, but it is too early to say that this is the end for coal," said Keisuke Sadamori, the head of the IEA's energy markets and security directorate, in a press release.

"Coal demand is moving to Asia, where emerging economies with growing populations are seeking affordable and secure energy sources to power their economies. This is the contradiction of coal — while it can provide essential new power generation, it can also lock in large amounts of carbon emissions for decades to come."

The IEA predicted the current high prices for coal will not last, since they are based more on Chinese government policies than any kind of sustained demand. Since China continues to have an overcapacity for coal, the report expected prices to drop from current levels then recover again by the end of the next five-year period. As a result, new investment in mines and mining is unlikely to gain momentum.

The report also addressed the development of carbon capture and storage, saying that "despite the Paris Agreement, there is no major trigger" for the technology.

"One year on from Paris there is little indication that governments are acting to enforce limits on CO2 emissions that will allow investment in CCS to happen," the report said. "Without CCS or technological innovation to use captured CO2 for commercial purposes, coal must be virtually eliminated if Paris targets are to be met, which can be challenging in power generation and even more so in industrial applications."