The Asia Miner

JAN-MAR 2019

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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the asia miner • volume 16 • issue 1 26 WASTE TO ENERGY New global energy report announces decline of coal With depleঞng resources and increasingly growing demands on the energy sector, as well as increasing energy- related carbon dioxide emissions, the Internaঞonal Energy Agency (IEA) argues that across all regions and fuels, policy choices made by governments will determine the shape of the energy system of the future. Released at the end of 2018, IEA's leading World Energy Outlook 2018 (WEO) report details global energy trends and what possible impact they will have on supply and demand, carbon emissions, air polluঞon, and energy access. The WEO's scenario-based analysis outlines different possible futures for the energy system across all fuels and technologies. It offers a contrast with different pathways, based on current and planned policies, and those that can meet long-term climate goals under the Paris Agreement, reduce air polluঞon, and ensure universal energy access. While the geography of energy consumpঞon conঞnues its historic shi[ to Asia, WEO 2018 finds mixed signals on the pace and direcঞon of change. Oil markets, for instance, are entering a period of renewed uncertainty and volaঞlity, including a possible supply gap in the early 2020s. Demand for natural gas is on the rise, erasing talk of a glut as China emerges as a giant consumer. Solar PV is charging ahead, but other low-carbon technologies and especially efficiency policies sঞll require a big push. In all cases, governments will have a criঞcal influence in the direcঞon of the future energy system. Under current and planned policies, modeled in the New Policies Scenario, energy demand is set to grow by more than 25 per cent to 2040, requiring more than $2 trillion a year of investment in new energy supply. "Our analysis shows that over 70 per cent of global energy investments will be government-driven and as such the message is clear – the world's energy desঞny lies with government decisions," said Dr Faঞh Birol, the IEA's Execuঞve Director. "Cra[ing the right policies and proper incenঞves will be criঞcal to meeঞng our common goals of securing energy supplies, reducing carbon emissions, improving air quality in urban centres, and expanding basic access to energy in Africa and elsewhere." According to IEA, renewables have become the technology of choice, making up almost "two-thirds of global capacity addiঞons to 2040, transforming the global power mix, with the share of renewables in generaঞon rising to over 40 per cent by 2040. But most emissions linked to energy infrastructure are already essenঞally locked-in. In parঞcular, coal-fired power plants, which account for one-third of energy-related CO 2 emissions today, represent more than a third of cumulaঞve locked-in emissions to 2040. The vast majority of these are related to projects in Asia, where average coal plants are just 11-years-old on average with decades le[ to operate. "We have reviewed all current and under-construcঞon energy infrastructure around the world, and find they will account for some 95 per cent of all emissions permied under internaঞonal climate targets in coming decades," said Dr Birol. Tim Buckley, Director of Energy Finance Studies, IEEFA Australasia, says he is not surprised to see another round of cuts to global coal demand under the WEO 2018 New Policies Scenario (NPS). "Whether we use the IEA's NPS or their more realisঞc Sustainable Development Scenario (SDS) – which predicates a -3.7 per cent compound annual decline in global thermal coal trade – it is clear that zero emissions technologies are overtaking coal," Buckley said. "The SDS forecasts coal use in the global power sector down 80 per cent to just 732 million tonnes coal equivalent (Mtce) in 2040. "Coal's long goodbye has well and truly begun. It's ঞme to plan for a transiঞon." According to IEEFA, global thermal coal demand has been revised down another 3.5 per cent by 2040 in the 2018 WEO report, following a 4.9 per cent downgrade in 2017. Cumulaঞvely, this is a downward revision of 8.3 per cent in just two years; a downgrade equivalent to three ঞmes Australia's enঞre export volumes in 2017. "We don't believe global coal consumpঞon will ever regain the 2014 peak, and given relaঞve pricing trends, we can expect to see more coal forecast downgrades in the WEO 2019 report," Buckley said. As cited by IEEFA, a growing number of the world's leading insurers are limiঞng their insurance of coal including AXA, Allianz SE, Zurich Insurance Group and SwissRe, among others. "The IEA is also forecasঞng 560GW of end-of-life coal plant closures by 2040 under the NPS (24GW annually). The IEA assumes coal carbon capture and storage will be commercialised well before 2040 and that will allow financiers to invest upwards of US$1 trillion to build 740GW of new, largely imported coal-fired power by 2040. "This highlights the inevitability of a technological transiঞon to new lower cost soluঞons," Buckley said. Global thermal coal demand looks to fall in the future

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