Modern Mining January 2023

COAL OUTLOOK

2023 coal outlook: why reality matters more than idealism in energy markets By Vuslat Bayoglu: MD of Menar

The IEA estimates that coal consumption for 2023 will likely remain at around 8 billion tons.

T he outlook for coal in 2023 will be determined by the tension between idealism and reality. There is a growing global campaign to end coal usage. It is propelled by idealism – the idea that we can simply decree the replacement of base load coal power with renewable energy sources. Of course, it would be great if it were realistic. The campaign against coal will intensify following COP27 in Egypt. There will be a campaign to magnify the COP27 anti-coal messages. In the process, all other policy statements from world leaders express ing the desire to manage their energy transitions responsibly, and initiatives advocating for clean coal technologies, will be relegated. But the scientific reality of the need for a reliable and cheap supply of power – a combination easily satisfied by coal – will remain intact, independent of any campaign. The World Coal Association, whose constitu ent members participate in the global value chain

of coal markets, is well-placed to appreciate coal’s outlook more than lobbyists who are not interested in the reality of global energy economics. Michelle Manook, the WCA chief executive, is correct when she says coal will remain the most significant con tributor in the energy sector even in 2040. This is being realistic. And that significant contribution will be driven by demand which, in turn, will be driven by affordabil ity, energy security and reliability. While the energy pie will get bigger with renewable energy sources, nuclear, gas and hydro in the mix, coal will remain an important part of the pie. The International Energy Agency estimates that coal consumption for 2023 will most likely remain at 2022 levels, around 8 billion tons. Geopolitical tensions associated with Russia’s war in Ukraine are unlikely to be resolved anytime soon. There is ample evidence that Western democracies have increased their material support for Ukraine and will most likely tighten their sanction regime against Russia. The tension brought into sharper focus the real ism of coal as an important source of baseload power in 2022, far removed from the idealism that punted renewable energy as the panacea. That kind of realism will continue to prevail in 2023 as devel oped economies prolong the life of coal-fired power stations in pursuit of energy independence. In addition to geopolitical tensions, global coal demand will be driven by China’s economic growth and, to some extent, India’s. It is worth noting that for most of 2022, China did not open its economy to fullest extent. The Zero-Covid policy led to numerous lockdowns in some of China’s biggest cities, restrict ing the return to full industrial capacity. It is most likely that in 2023, restrictions will be further relaxed. Coupled with this is China’s lead ership certainty arising from the re-election of President Xi Jinping. These factors, plus China’s

“Coal will remain the most significant contributor in the energy sector even in 2040. This is being realistic,” Michelle Manook.

Coal demand in India is expected to increase.

20  MODERN MINING  January 2023