Singapore — Russia is expected to overtake Indonesia as the biggest exporter of coal by 2040, as the Southeast Asian country's thermal coal production stagnates, the International Energy Agency said Wednesday.
In the report, IEA Southeast Asia Energy Outlook, released at the Singapore International Energy Week 2019, the agency said that with stagnating investment in coal mines in the 2020s, Indonesia will likely see its output decrease through 2030.
Indonesia is the world's largest thermal coal exporter and accounts for almost 90% of Southeast Asia's coal production, IEA said in its report.
The IEA stated that in its outlook scenario, Indonesia's exports are likely to decline from 350 million mt of coal equivalent presently to 210 million mt of coal equivalent in 2040.
The outlook scenario is based on present day policy framework, the report noted.
"A growing share of production is destined to serve increasing domestic demand, while output declines by 14%," it said.
However, the report highlighted that Indonesian suppliers might also respond rapidly to price signals from international markets and ramp up production and exports when seaborne prices become more attractive.
The report noted that with the volume of coal traded in the world projected to stay broadly flat up to 2040, Australia and Russia are well-positioned to increase exports to offset the reduced role of Indonesia, which serves Asian markets predominantly.
"By 2040, Indonesia is overtaken by Russia in terms of export volumes," the report said.
Russia, the world's third largest coal exporter, aims to boost coal exports to Asia amid falling demand in Europe.
The country's thermal coal production is set to grow by more than 100 million mt to 550 million mt by 2035, as the country looks to invest in new coal infrastructure and focus increasingly on the growing Asia-Pacific region.
According to the September edition of Australia's Resource and Energy Quarterly, Russia's thermal coal exports grew by 9.1% to 173 million mt in 2018 and have continued to grow in 2019, although at a slower pace.
While the trend for global coal demand is expected to stay flat, the IEA report highlighted that Southeast Asian demand for coal is robust, doubling to nearly 400 million mt of coal equivalent by 2040 at an annual average growth rate of 3%.
"Based on today's policies and plans, coal is set to retain a strong position in the region's electricity generation mix," it said.
"Over the projection period, strong demand increases in Southeast Asia (excluding Indonesia) outpaces production growth and imports increase to some 170 million mt of coal equivalent by 2040."
The Singapore International Energy Week, organized annually by the Singapore Energy Market Authority, is held from October 29 to November 1.
--Hui Min Lee, email@example.com
--Edited by Norazlina Jumaat, firstname.lastname@example.org