Australia: Global energy outlook – renewables switch but upside for Australian coal and gas

WHO SHOULD READ THIS

  • Current and prospective producers and consumers of, and investors in, renewables, coal, gas and uranium (including associated infrastructure) in Australia and offshore, together with those seeking to shape policies affecting these sectors.

THINGS YOU NEED TO KNOW

The International Energy Agency (IEA) has released its 2018 World Energy Outlook which assesses global energy supply and demand out to 2040 under three scenarios.

In its core (New Policies) scenario, under which it is assumed that Paris Climate Agreement emission targets are implemented, global energy needs rise more slowly than in the past but still expand by 25% between today and 2040. The largest contribution to demand growth comes from India where energy demand is expected to double, and be half that of China's compared to 30% today. In Southeast Asia energy demand grows by two-thirds.

This year's Outlook includes a special focus on electricity. According to the IEA "the future is electrifying", with low-carbon technologies on the rise and electricity demand set to grow at twice the pace of energy demand as a whole.

The IEA projects a 60% rise in electricity demand to 2040, with nearly 90% of global growth occurring in developing economies.

Contrary to the expectations of many, coal's contribution to meeting overall energy demand continues to grow slowly out to 2040, but coal's share shrinks from 27% today to 22% by 2040.

The IEA view is that once the current wave of coal power generation plant projects under construction is over, the flow of new coal power projects starting operation slows sharply post-2020. However, the IEA points out that the average age of a coal-fired plant in Asia is less than 15 years, compared with around 40 years in advanced economies.

Global trade in thermal coal is expected to flatten out but the trade in coking coal is expected to continue to grow steadily. Indeed, the IEA states that "Australia continues to be well positioned to serve the Asian markets with low-cost coking coal in a growing international coking coal market".

By 2040 India will be the world's largest importer of coal, with a 66% increase over 2017 import levels.

Adjusting for the higher calorific value of our coal, Australia's coal exports out to 2040 are projected to grow by 22 percent. While coking coal is the sweet spot for Australia's dominant position in global coal trade, the IEA concedes that its projections are consistent with development of new thermal coal mines in the Galilee Basin in Queensland.

While we in Australia continue to tie ourselves up in knots in a debate about renewables' appropriate share of power generation, the IEA is saying that the world will produce 40% of its electricity from renewables by 2040. Of the 870 GW in new power plant capacity worldwide that is currently under construction or expected to come online by the end of 2020, almost 60% will use renewables-based technologies.

Under the New Policies Scenario, by 2040 China will be producing 42% of its electricity from renewable sources (exceeding coal's share), and India 38% renewables (including 17% from solar).

The IEA finds that new solar PV is well placed to outcompete new coal almost everywhere, although it struggles to undercut existing thermal plants "without a helping hand from policy". In the New Policies Scenario, renewables and coal switch places in the power mix: the share of generation from renewables rises from 25% today to around 40% in 2040; coal moves from 40% to 25%. As we pointed out recently, this is of course a far cry from the IPCC scenario of close to zero power generation from coal by 2050 (see That Climate Change Report: What did it say, what does it mean?).

The IEA has revised up its global gas demand estimates. Gas is forecast to grow to account for a quarter of global energy demand by 2040 (surpassing coal), and become the second-largest fuel in the global mix after oil. The IEA expects gas demand in China to grow rapidly reflecting strong policy efforts to improve air quality. Developing economies in Asia account for half of the total demand growth through to 2040. The overall gas share of global power generation is expected to remain steady at over 20%.

Finally, nuclear's share of power generation is expected to remain stable at 10%, but with China overtaking the USA and the EU in its use of nuclear. The IEA notes that two-thirds of today's nuclear fleet in advanced economies is more than 30 years old. The IEA observes that "decisions to extend, or shut down, this [nuclear] capacity will have significant implications for energy security, investment and emissions".

WHERE TO FROM HERE

The IEA's latest Outlook confirms that the global switch to renewable power generation is set to continue unabated. However, it also paints a pretty positive next couple of decades for the export of Australia's high quality fossil fuels, reflecting:

  • China's switch from coal to gas to meet air quality imperatives;
  • the investment in new coal power generation in South East Asia which will support growth in Australian thermal coal exports; and
  • Australia's dominant position in the global trade in coking coal for steel-making.

In a future Insight article, we will take a more detailed look at the implications of the latest Outlook for Australia's export coal sector.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
McCullough Robertson
Corrs Chambers Westgarth
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
McCullough Robertson
Corrs Chambers Westgarth
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions