{"id":1003,"date":"2015-10-13T05:22:16","date_gmt":"2015-10-13T05:22:16","guid":{"rendered":"http:\/\/www.southasiantimes.com.au\/?p=1003"},"modified":"2015-10-18T11:55:37","modified_gmt":"2015-10-18T11:55:37","slug":"australias-coal-exports-set-to-rise-as-south-east-asia-demand-surges","status":"publish","type":"post","link":"http:\/\/www.southasiantimes.com.au\/?p=1003","title":{"rendered":"Australia’s coal exports set to rise as south-east Asia demand surges"},"content":{"rendered":"

\"export\"<\/a>South-east Asian coal demand is set to triple in the next 25 years, bucking a global trend and\u00a0giving Australia’s coal exporters\u00a0a sorely needed boost, a new International Energy Agency\u00a0report predicts.<\/p>\n

The forecast surge in demand for energy coal \u2013\u00a0also known as thermal coal and Australia’s third-biggest export \u2013\u00a0in south-east Asia comes as China’s demand is thought\u00a0by some analysts to have peaked and India focuses on renewables and domestic coal production.<\/p>\n

The report is a rare piece of\u00a0good news for Australia’s struggling\u00a0coal producers because the growth in domestic energy demand in south-east Asia will exceed the capacity\u00a0of domestic suppliers,\u00a0especially Indonesia,\u00a0to expand to meet it.<\/p>\n

As a result, the International Energy Agency predicts that Australia will surpass Indonesia\u00a0as the world’s lar<\/p>\n

The growth of coal power generation in south-east Asia comes\u00a0as Australian financial institutions face\u00a0global pressure to walk away from coal. Many expect a\u00a0United Nations climate conference in December\u00a0to bring a global agreement to reduce planet-warming carbon dioxide\u00a0emissions \u2013 of which coal is the biggest source.<\/p>\n

Chinese group\u00a0Shenhua’s\u00a0Watermark coal mine in north-western NSW and Indian group Adani’s\u00a0Carmichael mine in Queensland\u00a0are awaiting federal government approval,\u00a0in the face of\u00a0persistent protests by farmers and green groups.<\/p>\n

South-east Asia’s embrace of coal comes\u00a0with a geopolitical twist.<\/p>\n

\n

As Western financial institutions such as the World Bank and European and American development banks\u00a0walk away from\u00a0funding coal, the IEA predicts that Chinese-led institutions such as the recently formed Asian Infrastructure Investment Bank will step into the breach to help south-east Asia meet the higher cost of low-emission\u00a0coal technology.<\/p>\n

Paul Flynn, chief executive of Whitehaven Coal, operator of the\u00a0Maules\u00a0Creek mine in north-western NSW, said the IEA projections were consistent with the demand the company was seeing from countries such as Vietnam, Malaysia and the Philippines.<\/p>\n

Mr Flynn said analysts predicting the decline of Australian coal exports ignored the higher energy content of Australian coal, which made\u00a0it more suitable for new high-efficiency coal plants, which\u00a0emit\u00a0up to a third less carbon dioxide than conventional power plants.<\/p>\n

He said 70 gigawatts\u00a0of new coal-fired power stations would be opened across Asia in the next five years, requiring another 150 million to 180 million tonnes of coal a year. Even if only half of that came from Australia, it didn’t have the capacity.<\/p>\n<\/div>\n

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“That does see the supply-demand dynamic tightening,” Mr Flynn said. “You cannot deny the build-out of power stations in those countries. That is happening and they don’t have the coal to service it.”<\/p>\n

Anti-coal activists and “peak coal” advocates dismissed\u00a0the IEA report,\u00a0South-east Asia Energy Outlook 2015<\/em>, which contradicts the economic case for divesting from coal companies on the grounds that their future demand will collapse.<\/p>\n

\n

Only growing coal market<\/h2>\n

Tim Buckley,\u00a0former Citigroup analyst and now director of Australasian energy finance at the Institute for Energy Economics and Financial Analysis, said the report focused on the only growing coal market and south-east Asia’s demand\u00a0growth couldn’t offset future declines in the much larger markets of China, Japan and India.<\/p>\n<\/div>\n

<\/div>\n
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“I can see a scenario where w\u00a0south-east Asian demand grows and I can see a scenario where Australia gains market share because we keep building new capacity,” Mr Buckley said.<\/p>\n

But he said with coal prices at decade-lows,\u00a0most Australian coal miners would have “profitless prosperity and the coal price will keep falling”.<\/p>\n

The IEA predicts energy demand in south-east Asia\u00a0will\u00a0jump\u00a0by 80 per cent as governments seek to extend electricity to 120 million people who don’t have\u00a0it and cleaner cooking and heating fuels to 276 million people who rely on\u00a0polluting\u00a0solid\u00a0fuels such as wood or dung.<\/p>\n

Because the region’s oil production is shrinking and natural gas production is growing more slowly, the majority of the increase in demand will have to be met from the region’s coal production and imports.<\/p>\n

The IEA forecasts that south-east Asian thermal\u00a0coal production will increase from its current level by about 230 million tonnes a year, while demand will increase by about 300 million tonnes.<\/p>\n

 <\/p>\n

Surge in coal use<\/h2>\n

The IEA says the surge in coal use is “underpinned by economic factors, abundant supplies and the need for rapid electrification” to meet the demands of a rapidly growing middle class.<\/p>\n

It\u00a0also highlights the need to accelerate the deployment of more efficient coal plant technologies to address the rise in local pollution and carbon dioxide emissions, with less-efficient, conventional plant still forecast to account for half of coal-fired capacity even as average efficiency increases by five percentage points.<\/p>\n

Energy from renewables\u00a0\u2013\u00a0hydro, wind and solar energy \u2013 will treble, while oil and gas will lose share.<\/p>\n

New Resources Minister Josh Frydenberg, speaking from the Asia-Pacific Economic Co-operation\u00a0energy ministers meeting in Cebu, said coal importance had been reinforced at the meeting.<\/p>\n

“There is a unanimous call for more investment in\u00a0renewables\u00a0but at the same time everyone understands the key role that fossil fuels are playing.<\/p>\n

“Nobody\u00a0is under any\u00a0illusions\u00a0at these international meetings that coal is going away.”<\/p>\n

Source: AFR<\/p>\n<\/div>\n

 <\/p>\n<\/div>\n

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