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An industry searching for answers: Coaltrans World Coal Conference 2015

World Coal,


In Copenhagen, Denmark, Samuel Dodson finds coal industry professionals seeking solutions and information on some of the challenges and trends facing the global coal industry.

The 34th Coaltrans World Coal Conference took place on 12 – 14 October in Copenhagen, Denmark. The city, named as the Green Capital of Europe for 2014, was host to over 1400 coal industry professionals from 50 countries. Attendees were keen to discuss trends in an industry currently feeling the effects of an oversupplied market and fearing lower-than-expected demand from China.

Coal is the world’s fastest growing fuel, reflecting its affordability, as well as its abundant supply across all continents. It also accounted for half the increase in global energy use over the last decade and, in 2013, accounted for more than 30% of primary energy use for the first time since 1970. Yet in spite of this, the general mood at the conference was one of concern in regard to the current dip in the market – a dip that has now carried on for longer than many in the industry first predicted.

Questions were rightly asked as to whether current industry trends were cyclical or structural. Those optimists at the conference were convinced that the industry would see an upturn in the near future. Others were cautious, suggesting that the industry could be experiencing fundamental changes, which will realign the shape of the entire coal sector.

Much talk among conference attendees focused on the perception that Chinese demand for coal is falling – a significant concern for an industry that has, for so many years, relied on demand from the Asian behemoth. Of course, rates of growth – particularly those seen in China for the past several years – cannot be sustained indefinitely. Yet the slowing demand has come at a time when anxiety in the coal industry is already high and confidence fading. Recently announced Chinese regulations on imports of certain coal specifications seem another bad omen, which has led to conflicting views among coal industry professionals on how the market will be affected.

Hopes and fears

In an industry searching for answers to important questions, the World Coal Conference offered an opportunity for industry experts to address concerns and allay fears.

Henry Hely Hutchinson, managing director of Coaltrans Conferences, kicked-off proceedings by acknowledging the “difficult” market situation, but stressed that “experienced analysts suggest when the rebound comes it will be both rapid and steep”.

Kevin Crutchfield, CEO of Alpha Natural Resources, added his voice to those who saw coal’s return to prominence as inevitable. Though he acknowledged government support of renewable energy (evidenced clearly in Copenhagen, a city in which windmills abound) was one of many “challenges” for coal, he nonetheless argued, “as long as governments do what is right, coal is going to remain an integral part of our future”.

Crutchfield argued coal was a lead “contributor to US prosperity” and said that as demand for energy grows around the world, coal’s relevance will be underpinned by developing nations. “Demand for coal is rising because coal provides hope for all those who yearn for just a small part of what we take for granted,” he said.

Poverty and inequality

Crutchfield’s remarks picked up on another key theme of the World Coal Conference: that of energy poverty and inequality.

Crutchfield suggested that the enthusiasm for “boutique [energy] alternatives”, such as wind, among “wealthy elites” forced energy prices up and “hit the poor and vulnerable hardest”. In an emotional call to action, he asked delegates “how many lives are enough in the name of the climate?” He then reminded them that “no one should have to choose between heat and eat”. 

Gregory Boyce, chairman and CEO of Peabody Energy, also delivered an impassioned keynote speech in which he claimed, “Energy is life, and coal is energy”.

"One cannot begin to comprehend the gruelling fight against energy poverty that weighs on the shoulders of families day after day throughout the developing world. Humanity deserves so much more. I submit that energy poverty is the most serious crisis that our world faces. It's high time we reset our priorities to address this issue," Boyce said. 

Coal around the world

Other conference sessions looked at the coal industry in relation to various geographic regions, including talks on Turkey and Colombia, as well as Poland – a country attempting to balance low cost energy supply and security with EU decarbonisation targets.

In addressing the Chinese question, Keisuke Sadamori, director for energy markets and security at the International Energy Agency, assessed market forecasts for the Chinese Energy mix to 2030 – providing a long-term outlook that will have benefited many industry professionals. Sadamori also discussed some of the practicalities involved if China is to meet climate change targets, as well as some of the latent factors affecting China’s energy sector.

Alex Tonks, head of thermal coal at CRU, also looked to China, and specifically at seaborne thermal coal requirements. Though Tonks admitted the new Chinese regulations would impact exports of coal to China – particularly from Australia and East Kalimantan – the overall effect of the ban will be positive for seaborne producers of thermal coal. CRU data highlighted the importance of washing and blending coal to meet requirements, while exporters could also divert some shipments to India or South East Asia, which have no such regulations.

Climate change

That such regulations have been introduced in China point to another recurring theme at the World Coal Conference: that of government regulation.

With the potential impact of climate change looming over the heads of governments across the globe, there is increasing pressure to make a shift away from coal towards alternative resources. However, the reality of a transition to a low carbon future is perhaps different to the one sold to the general public by politicians.

In this regard, Nigel Yaxley, managing director of the Association of UK Coal Importers, noted that there is no solution for climate change that does not include a solution for coal. He argued that government policy must not simply concentrate on the short and the long-term for coal. Instead, there must be a “bridge” for coal from the plants of today to the CCS-equipped plants of the future.

During his speech, Crutchfield had also noted that, “by being honest and pragmatic, we [in the coal industry] can stand in sharp contrast to our critics”. His words struck out against a perceived bias against coal among media and political elites, as well as climate activists. As Yaxley noted in a report handed to delegates, such bias, when forming the basis of government regulations, could have a serious and “dramatic reduction on the coal market”.

A number of panellists noted that environmental measures, such as those introduced in Germany and Denmark, enjoyed the support of the vast majority of the general public. However, there has not been adequate public debate on clean coal technologies and advanced coal. With so many delegates agreeing that greater use of advanced coal is the solution to fight both energy inequality and improving emissions, it seems the time has surely come for the proponents of “21st century coal” to say their piece in a public domain.

Boyce concluded his keynote speech by urging delegates to take action. “Our journey is long and begins with a single step. Let's take that step today.” It is indeed time the coal industry began its journey forward into the new century.

Written by Sam Dodson. An abridged version of this article appeared in the November 2014 issue of World Coal. Subscribers can view the full article by logging in and downloading the issue here.

Read the article online at: https://www.worldcoal.com/special-reports/11112014/report-from-coaltrans-copenhagen-sr8-1552/


 

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