The IEA foresees the power sector shaping the energy outlook for Southeast Asia, as electricity demand almost triples by 2040, an increase greater than the current power output of Japan.
“The sector continues its shift towards coal due to its abundance and relative affordability,” the EIA said in its forecast scenario.
However, the IEEFA sees things differently, as yesterday’s note from director of energy finance studies Tim Buckley and finance director Tom Sanzillo said.
“A more reality-based outlook than what IEA published on Monday would consider the likely impact of what’s happening in the three largest coal-import nations: China, Japan and India,” they said.
“Together, the big three accounted for 51% of all globally traded thermal coal in 2014. Southeast Asia, by comparison, accounted for just 6%.
“We don’t think Southeast Asia will save global coal markets. Our view is rooted in different approach than what IEA adheres to – we read actual markets, actual production levels, actual shipments and actual prices.
“IEA, by contrast, runs on assumptions that can be useful for establishing consensus forecasts but often miss the many-faceted interplay between markets and public policy.”
The activists said that while “old-school modelling” exercises like what IEA produces have a certain academic rationale, they are “increasingly removed from prices, profits, policy and people – the real forces shaping the new energy economy”
They cited Reuters’ analysis that China’s coal imports were down 16% last month year over year and that from January to September they were down 29.8% yoy.
Platts, they noted, also said this week that Japanese utilities’ coal imports from April 2014 through September 2015 dropped 4% yoy, which they said marked a “faster rate of decline” than the corresponding 2.3 yoy drop in electricity consumption.
As for India, the great white hope of Australia’s coal sector, the IEEFA pair were also bearish, saying its utilities’ coal imports had fallen 14% yoy and 6% in the first six months of 2015, after six years of 20-30% yoy growth.
“Coal India this week also reported domestic coal dispatches for the month of September up 15% year over year,” the pair said.
“Record domestic production growth plus a surge in renewable investment – Bridge to India puts traffic in the solar-project pipeline in India at 12 gigawatts, up from virtually zero at the start of 2015 – in fact means reduced coal-import demand.
“So the actual data from the three largest coal-import markets, in short, tells a rather different story from what IEA is putting forth. Peak import coal has happened in China and Japan and it will happen this year in India.
“Total global thermal coal demand peaked in 2013, declined marginally in 2014 and has declined at an accelerating rate this year. Structural changes and electricity-market transitions are unfolding fast. Coal mines, more and more, are stranded assets in the making.”
