The International Energy Agency said Monday the demand outlook for coal and natural gas may have to be reassessed as it examines the negative impact of the Fukushima nuclear disaster and political turmoil in the Middle East and North Africa on oil-sector investment.
The IEA's World Energy Outlook 2011, to be published November 9, will have a special focus on coal, looking at how coal markets may be affected by those two key events as well as the role of the sector after a surge in gas developments due to the tapping of new shale deposits, IEA senior energy analyst Pawel Olejarnik said at the Coaltrans World Coal conference in Madrid on Monday.
While coal demand in OECD countries may stabilize and never rise above pre-financial crisis levels on a lower power generation share, new Chinese and Indian coal plants may help add more than 600 GW of coal-fired plants globally, further shifting market dynamics, he said.
"There is a new world energy order, coal markets are shifting to Asia," Olejarnik said. "Our projection for coal's position remains solid."
The IEA previously expected China, India and Indonesia to account for 90% of total incremental coal demand growth.
"A drop in coal-fired generation in the OECD is offset by big increases elsewhere, especially China, where 600 GW of new capacity exceeds the current capacity of the US, EU & Japan," the IEA presentation said.
The IEA said gas prices, especially for liquefied natural gas, were often linked to oil, the price of which has risen during the Arab Spring uprisings which have also stifled regional investment into the sector.
That in turn may have increased the attractiveness of developing gas projects.
The Fukushima disaster has threatened nuclear capacity growth, Olejarnik said, with coal executives seeking to capitalize on meeting any resulting incremental demand growth.
Germany for one has reversed a previous decision to extend the lifespans of its fleet of nuclear power reactors and decided to close the older ones immediately and the rest according to the previous schedule.
There has been a consequent rise in coal-fired power generation and talk of new investment in gas-fired plants.
Coal demand rose over the past decade as China led growth in Asia and may accelerate to push up export volumes after the potential shock of Fukushima to the previously anticipated role for nuclear power generation, said Drummond Coal Sales president George Wilbanks.
GOLDEN AGE
The Paris-based body this winter will publish for the first time a "medium term" coal market report, studying demand and supply through to 2016 with a focus on logistics, Olejarnik said.
The new outlook will say a "golden age" for gas is possible, as shale and coal bed methane projects help power output, and climate policy may prioritize gas use, to displace coal and oil-fired plants.
Olejarnik cited industry forecasts that China's gas demand may more than double to 250 billion cubic meters by 2015.
The potential for gas to further boost its share of the primary energy mix is based on there being "the right demand side measures and if enough unconventional sources are developed," he said.
The IEA said that by 2030 natural gas could surpass coal as the second largest contributor to the primary fuel mix, as shale gas developments in China, Europe and North America as well new LNG facilities in Australia help boost supplies from unconventional gas sources.
