- In its annual report, the IEA said demand for oil was likely to rebound but that was not the case for thermal coal
- Renewables were forecast to deliver 80 per cent of the world’s energy by 2030
- Australian coal regions were advised to look to renewable energy for jobs
In its annual report on the World Energy Outlook the IEA said demand for oil was likely to rebound but that was not the case for thermal coal.
During the COVID-19 pandemic, Australia has been saved by its mineral exports, especially iron ore and coal.
Exports are worth $70 billion and they have doubled in the past decade.
But the IEA’s report said the global economic slump caused by the pandemic would cause a fall in demand for energy, with oil and coal the hardest hit.
Co-author of the report Tim Gould said while demand for energy was expected to rebound when the pandemic was brought under control, demand for coal was not expected to recover with it.
“Energy demand is set to fall by 5 per cent this year, the largest shock in 70 years,” he said.
The IEA is forecasting that coal’s share in the 2040 energy mix will fall below 20 per cent for the first time since the Industrial Revolution, and demand from Asia will be lower than anticipated and not enough to offset falls elsewhere.
Renewables set to dominate energy production
The IEA report indicated that growth in energy supply over the next 10 years would come mainly from natural gas, but that the biggest winners would be renewables.
Mr Gould said that was because solar and wind were getting cheaper to install, government policies in many parts of the world were providing additional impetus for development, and investors were backing renewables over coal.
“That combination of falling technology cost, policy support and favourable financing terms is a really formidable value proposition,” he said.
Solar power will dominate energy supply, according to the other author of the report, Laura Cozzi.
“We are expecting renewables to account for 80 per cent of electricity going forward,” Ms Cozzi said.
“We’re going to see solar breaking records for capacity, going at two digits for 20 years.”
Coal regions in transition
The pro-renewables Institute For Energy Economics and Financial Analysis has been warning of the change coming for coal.
Tim Buckley said the industry in New South Wales was exposed to these global trends but had been in denial and slow to respond.
He agreed that NSW would be exporting thermal coal for another two decades, but said major energy companies and governments around the world were making commitments to reduce emissions to zero by 2050.
“We’ve seen BP, Shell, Equinor, Eni of Italy, Repsol of Spain, we’ve seen PetroChina come out and commit to net zero by 2050, and in fact two weeks ago we saw the president of China commit to net zero for the whole country by 2060.”
Jobs in renewables
Energy Professor Thomas Nann from the University of Newcastle said coal regions should look at creating new jobs in the renewables field.
That is because it is already cheaper to produce electricity in Australia from solar, even when storage costs are included and there are a lot of jobs in the renewable sector beyond the maintenance and installation of solar energy.
Not everyone is forecasting a decline in coal, however.
Financial analysts Bloomberg said that post-COVID a number of factors, including the low price of thermal coal, would improve demand for energy, while government spending on infrastructure around the world could trigger a resurgence.
Stephen Galilee from the NSW Minerals Council said falling demand in the US and Europe would be partially offset by ongoing growth in coal demand in developing economies, and the state would benefit from the transition to renewables due to the presence of mines producing gold, copper, nickel, silver and other metals.”