Welcome back. Today, we have the opportunity of conducting an interview with Mr Peter Fraser, who's the head of the gas, coal, and power division at the International Energy Agency. With him, we're going to explore the situation about coal, what is the current consumption, and what are the prospects for the future of coal. So to begin with, coal remains one of the most important sources of energy today. Well, that's right. Although oil is a bigger part of the energy picture than coal and has been for the last 50 years, coal still accounts for a quarter of the primary energy that we consume, and about 38 percent of the electricity produced in the world every year is coming from coal. So that creates problem for emissions because. Yes. Of course. Coal-fired power generate alone accounts for about 30 percent of the carbon dioxide emissions from energy sources in the world each year. It's about 10 billion tons of CO2 emissions from coal-fired power generation alone. Coal is also used in steel making and cement and in other industries as well. So really the priority would be for us to eliminate coal from power generation. Is that a realistic proposition? Well, it's interesting to see how things have changed in recent decades. So for a long time, most of the coal use that we saw was in more developed economies, in the United States, in Europe, in Japan, Korea, also used fair bit of coal. But in recent decades, it's been developing Asia, which has been increasing their coal use. Much of the increase we saw in coal demand in the last 20 years or so has come from China, and India, and in to a lesser extent Southeast Asia. We think there's still room for coal to grow in those regions. So for them, who have just invested hundreds of billions of dollars in new infrastructure, expecting them to turn off the coal-fired generation may not be very realistic. But even in Europe, I think there is substantial resistance to moving away from coal. We just had the results of the German commission that has fixed the date for complete withdrawal of coal-power generation but it's a distant date. Yes. Well, we see countries certainly moving at different speeds, and it depends partly of course on whether or not they produce the coal they consume. For countries that have coal, they see it as a local fuel, a local resource that of course also generates employment and regional economic activity, and for them, it's not such an easy question just to turn off the coal plants. So you're quite right in pointing out Germany is going to take some time before it eliminates its coal plants. By contrast, United Kingdom which used to be very dependent on coal, has really drastically cut its coal use and aims to eliminate it by 2025. So is it mostly an issue of security of supply, an issue of social impact of moving away from coal, or it is also a matter of economics because coal is cheap? Yeah. Well, it depends where you look and depends when you look to. For example, in Asia, is generally true that coal is a much cheaper fuel than natural gas, and it's often true in Europe before you start counting the cost of the carbon. Yes. But as you start counting the costs, the carbon coal ceases to be an inexpensive fuel in Europe for the most part. The exception is somehow of the soft coal or brown coal plants, where the cost of the fuel is very very inexpensive. Even with the CO2 prices that you see today in Europe, these plants can still be competitive. By contrast, in the United States, even without a CO2 price, the cost of natural gas is so low. That coal has been gradually eliminated from the generating mix. But US coal now is being exported. True, but it's not at nowhere near the levels that exports are up, but nowhere near the levels of that domestic consumption was a decade ago. So it's really very dynamic situation in which there are forces and countervailing forces. Yes. Well, I like to look at it as well, we have one planet it's like we have to coal worlds. We have mostly the developed economies who have used coal for a long time, have mostly old coal generating facilities, and many of whom plan to get out of coal sooner or later. By contrast, in developing Asia, we have growing demand for coal, we have relatively young infrastructure, and we see prospects for continued growth there despite the environmental implications. What about the industrial demand outside of power generation? Their coal cannot really be substituted for, can it? Not in the short run, but there is a lot of interesting work going on looking at substitutes for coal in for example, steel making. Now, of course has always been the alternative route for steel making using electric arc furnaces and scrap steel. But there's also opportunities to use for example, hydrogen in steel making, and there's a lot of research going on. If you can make your hydrogen from a clean source, say from renewable electricity, then you can actually have a coal-free steel production. So that's one alternative for steel making for example. Is that available as a technology in industrial scale or just experimental for the time being? Just experimental but it's really developing. In fact, our agency is producing and special report on hydrogen that we'll be releasing in May of this year, that will explore this issue in more depth. How about Cement? Is it possible to substitute for coal in cement production? Today again it's not something that there's a clear path forward, obviously other things could be used but there are significantly more expensive. So I think the barrier is bigger in cement than it is for steel. So cement is going to be used for sure for a long time? Well, I think so unless again the cement and concrete are used around the world, so that's going to be a challenge or whether other materials will have to be used. If the carbon cost, the coal gets so high, that the actually use in the coal gets very expensive. What about carbon capture and sequestration? Do you I think that there is a possibility of extending the commercial life of coal by using carbon capture and sequestration? Yeah. Well, when we analyze the question of how to get our global emissions down by 2040 in our sustainable development scenario that we do for our World Energy Outlook, we were actually counting on carbon capture and storage coming in to be added to coal-fired power plants to much lesser extent industry, in order to get our emissions down to a level that would be consistent with the two degrees target that's been set. So we really need that technology to improve, and we are far from it today. So we've been putting a lot of effort in supporting CCUS governments, supporting CCUS research, developing new technologies that hopefully are going to be more economic and more feasible to deploy in the future. At the moment, you don't see that being taken up in any substantial volume because it's too expensive? It's too expensive, it's interesting. The capturing carbon part is actually quite feasible, It's been proven to be quite feasible. Economics are still a little expensive, and so we are looking at different alternatives to improve the economics. There are some quite clever new technologies that are starting to be deployed. There are a few examples like the boundary dam power plant in Canada, where this is actually being deployed successfully. But we need to get the costs down, and probably we need some further improvements in the technology before we can see this deployed at scale. Okay. So I think that it's clear that there certain countries that still rely to a very great extent on coal for their own domestic consumption, but there are also countries that are major exporters, countries like Australia or Indonesia. What is their position in this Inspector? Well, it's a difficult situation in Australia and Indonesia in slightly different positions. Australia is a major exporter of thermal coal but also of coking coal, is probably a premier exporter of coking coal. Now, as we discussed earlier, in the short term, there are no good substitutes for coking coal. So that market is probably going to stay around for a while. Thermal coal by contrast, that's a little more uncertain. Even for domestic use as Australia aims to get its own emissions down, and it has aging coal plants as many developed economies do. So these plants are starting to close, and so even domestic demand for coal is starting to decline. So the question is to whether they will be more successful going to export markets? It's really an open one. They are in a good position being in Asia, so as Indonesia. But in the case of Indonesia, they had been supplying a lot of coal to China. China doesn't need as much of their coal anymore. As a result, Indonesian has decided to use the call itself, so they have existing mines and now they are building coal-fired power plants to burn that coal. So do you expect that there may be a major economic fallback or major economic impact on this country's if the consumption of coal from the clients significantly in the world. There will certainly be an economic impact from loss of export markets. That's one of the reasons for Indonesia strategy to use the coal domestically that minimize that impact, keep your minds open, and it's substitute what had been a gas-fired generation for coal-fired. In the case of Australia, it's a more diversified economy, and they will certainly have an impact, but it's also an impact on the economy like that can manage. The International Energy Agency believe that coal has already reached it's peak in demand. Question is, how quickly will the decline after the peak happen realistically? Well, in fact, we look at three different scenarios where we look at the our future projections for coal and for energy demand. In our so-called curved policy scenario, we actually think there's room for coal to increase, thanks to growth in India and Southeast Asia. In our new policy scenario, which is more closer to our reference case, we believed coal demand will decline but only very slightly as the declines elsewhere are offset by the increases in India and Southeast Asia. Is only in our sustainable development scenario where we really need to get CO2 emissions down quite significantly, the coal consumption declines quickly. Well, thank you very much, I believe this completes our picture of the future of coal, and it gives a lot of food for thought for the future. Thank you. My pleasure. Thank you.
