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Cleaning up the coal-fired power market

Published by
World Coal,

Sowmyavadhana Srinivasan, Global Data, India.

Coal, oil and gas are the main fuels that are burnt to extract thermal energy, and power plants use them to generate power with the use of turbines. Thermal power, in spite of being a pollutant, accounts for the majority of most countries’ power mix. Governments across the world are encouraging R&D and the commercial adoption of integrated gasification combined cycle (IGCC), combined cycle gas turbines (CCGT), carbon capture and storage (CCS), and combined heat and power (CHP), which are more efficient and reduce greenhouse gas (GHG) emissions. Various policies and schemes have been rolled out to incentivise their use and, in some cases, they have been made mandatory.

The global installed capacity of thermal power reached 3759 GW in 2014, having increased from 2857 GW in 2006 at a compound annual growth rate (CAGR) of 3.5%. The major drivers of the thermal market are the abundance of fossil fuel reserves in key countries and the higher capacity factor of thermal power plants, as well as growing electricity demand.

Coal power generation

Coal plays an important role in meeting global energy demand. Around 25% of global electricity generation comes from coal and it is likely to remain a key fuel source for power generation in many countries, especially in developing countries.

Total coal installed capacity increased from 1.4 TW in 2006 to 1.9 TW in 2014, and will further increase to 2.6 TW by 2025.

Coal is the most abundant and economical of all the fossil fuels currently used, with prices that are lower and more stable than for oil and gas. Coal-fired power generation technologies have matured to become well established, and expertise in the field is extensive. Additionally, wide-ranging R&D efforts have been made over the years to improve the efficiency and environmental friendliness of coal-fired power plants.

Major markets for coal-fired power generation

Asia-Pacific was the leading region in terms of cumulative installed coal power capacity at the end of 2014, with a market share of 64%, followed by North America with 19%, and Europe, the Middle East and Africa, and South and Central America with a combined share of 17%. In 2025, Asia-Pacific will continue to lead the global coal power market with a share of 75%.

The top 10 coal power-generating countries accounted for over 85% of the world’s total cumulative installed coal power capacity in 2014. China and the US are the leading coal power markets with shares of around 45% and 18% respectively and are expected to retain their top positions in 2025.

Clean coal technologies

Clean coal technologies are used to improve the efficiency of existing coal-fired power plants and to reduce their CO2 emissions without affecting the amount of power generated. One of the ways to achieve this is improving the boilers that are used to generate steam. The types of clean coal technologies that perform this are:

  • Supercritical (SC).
  • Ultra supercritical (USC).
  • Circulating fluidised Bed (CFB).
  • Integrated gasification combined cycle (IGCC).

The global installed capacity of coal-fired power generation increased from 1375 GW in 2006 to 1874 GW in 2014. Of the total capacity additions made during this period, 50 – 60% used SC and USC clean coal technologies – clean coal capacity additions were dominated by SC technology. In 2014, global subcritical coal capacity still constituted around 70% of the installed capacity. By 2025, global coal-fired capacity is expected to amount to 2618 GW, and the share accounted for by subcritical capacity is expected to decline to around 50% or even lower.

Abundant coal reserves

Coal is the most abundant and widely distributed fossil fuel in the world. It is found on every continent and in more than 70 countries, with the US, Russia and China possessing the largest reserves. At the end of 2013, proven coal reserves amounted to 891.5 billion t of oil equivalent (toe). At the present rate of consumption, these reserves are expected to last for at least another 112 years. In comparison, natural gas and oil reserves are expected to last for 60 years. Global coal production amounted to 3.88 billion toe in 2013, an increase of 0.8% over 2012. In 2013, China accounted for 1.8 billion toe of coal production, followed by the US with 500 million t of oil equivalent (toe), Australia with 269 million toe, and India with 229 million toe.

In 2013, global coal consumption amounted to 3.83 billion toe, an increase of 3% over 2012. In 2011, China accounted for 1.93 billion toe of total coal consumption, followed by the US with 456 million toe, and India with 324 million toe.

Growing electricity demand

With populations increasing and industrialisation occurring at a rapid rate, global electricity demand has been rising, in turn placing a greater focus on increasing power generation capacity. Countries with abundant coal reserves, such as China, India, Poland, and South Africa, plan to make increased capacity additions based on coal to not only reduce their power deficit, but also to improve the operational efficiency of their plants through the adoption of clean coal technologies. The improvement of the operational efficiency of coal-fired plants will lead to increased power generation with higher efficiency and reduced emissions.

During the 2014 – 2025 period, China is expected to add 522 GW of capacity, while India is expected to add 135 GW. India, under its 12th Five-Year Plan, is expected to make at least 50% of its coal-fired capacity additions based on SC technology, and aims for all of the coal-fired capacity made during its 13th Five-Year-Plan to be based on SC technology. The government has mandated that all power plants above 600 MW be based on SC and USC technology. China and the US are also expected to install substantial amounts of IGCC capacity by 2022. All of these developments are expected to boost the global clean coal technology market during the forecast period.

Growing environmental concern supports clean coal technologies

The need to achieve energy stability, security of energy supply, and energy independence, combined with the need to minimise carbon footprints, is driving countries across the world to explore different renewable energy technologies, such as wind, solar, biopower and geothermal. Battling climate change is as much a concern for most world governments as achieving energy independence and security. The concern over reducing carbon emissions has become prominent in recent years due to the increased use of fossil fuels; global economic and social developments have resulted in a tremendous increase in the world’s total primary energy supply – and a corresponding increase in carbon emissions.

Global CO2 emissions increased from 25 613 million t in 2001 to 36 028 million t in 2014, due to population growth, rising energy demand and the use of fossil fuels. Rising levels of pollution, the fear of global warming, the scarcity of fossil fuels, and increasing levels of GHG emissions have led many countries to opt for clean renewable energy sources. Their use is not only beneficial to consumers and the environment, but also provides employment opportunities, thereby driving economic growth. The global economic crisis resulted in a drop in carbon emissions in 2009, down 1.5% from 2008 levels, due to a decline in global energy demand and a strong focus on green energy. This trend did not continue for long, however, as emissions increased again between 2010 and 2014. Global CO2 emissions are still increasing as major carbon-emitting countries, such as China and the US, have not accepted carbon emissions reduction mandates. However, as these economies have recently introduced carbon funds, emissions are expected to be controlled in the future.

Many countries have signed protocols with pre-defined emission-reduction targets. The Clean Development Mechanism is one process, established under the Kyoto Protocol, to reduce GHG emissions through investment in renewable energy sources, energy efficiency and fuel switching. It encourages sustainable development and GHG emission reductions, and helps industrialised countries to meet their reduction targets.

As the dominant source of power generation worldwide, coal accounts for more than 40% of global CO2 emissions. In 2013, global CO2 emissions from coal amounted to 14.4 billion t, having increased at a CAGR of 2.7% between 2006 and 2013. Emissions from coal use are expected to increase at a CAGR of 1% from 2014 to 2020.

Power generation accounts for around a quarter of global CO2 emissions. Of the total emissions attributed to power generation, more than 70% are accounted for by coal-fired power generation. Of the available technologies, coal-fired power generation produces the most emissions.

Overall, emissions are expected to decrease during the forecast period, owing to the concerted efforts being taken worldwide to reduce carbon emissions, from improving the efficiency of coal-fired power plants, to the adoption of new technologies such as SC, USC, CFB and IGCC.

Countries with growing economies and abundant coal reserves, such as China, India, Poland and South Africa, plan to increase their installed capacity with coal. They also plan to reduce their power deficit and improve the operational efficiency of their plants by adopting clean coal technologies. By improving the operational efficiency of their coal-fired plants, they will increase power generation and reduce emissions. The US, Germany and China have banned installations that neither have clean coal technologies nor adhere to stringent emission norms. Environmental regulations pertaining to the coal industry are designed to reduce the hazardous air pollutants emitted by coal-fired power plants, and countries are pushing utilities to support a more environmentally friendly form of coal power by adopting clean coal technology.

Renewable technology will reduce adoption of coal

Although the short-term threat to coal energy from developments in the wind, solar, hydropower, biomass and biogas sectors is minimal, alternative energy sources are expected to pose a substantial threat in the longterm. Increasing environmental awareness is an important factor supporting the development of renewable technologies, which are much more environmentally friendly than coal energy. Additionally, the cost of power generation from alternative sources of energy is decreasing, which will make them increasingly competitive with coal.

Governments are introducing mandates to reduce emissions, and providing incentives in the form of tax relief, capital cost grants and subsidies to encourage the increased generation of power from clean energy sources.

Substitute fuels, such as gas, are also hindering the development and deployment of clean coal technologies. Gas-powered plants are much cleaner than coal-powered plants, and their emissions are lower. In the US, the recent increase of shale gas production led to gas prices falling below those of coal, which forced some utilities to shelve plans to construct coal-fired power plants, opting for gas-fired plants instead. The rise in gas output in the US is expected to result in the country becoming a gas exporter.

Major markets for clean coal technologies

There are very few upcoming coal projects in Western Europe and the US, and non-retiring retrofit projects will primarily drive these markets. Asia is the biggest market for clean coal technology, and China has the most clean coal installations. Around 45% of its installed capacity is clean coal. China has mandated that all large power plants be constructed with clean coal technologies and has provided strict emission rules for coal power plants, which has resulted in the quick adoption of clean coal technologies in the country.

Most of the mega coal power plant construction carried out in India is also based on SC or USC technology. In Japan, only 25% of coal installed capacity was subcritical as of 2014, with clean coal installations accounting for 75%. South Korea has also been a pioneer in using clean technologies and reducing emissions in many of its industries; clean coal accounts for over 80% of its installed coal capacity. During the forecast period, China is expected to lead the global market for clean coal capacity additions. A substantial amount of SC and USC capacity is expected to come online, supported by government mandates. IGCC technology will also see substantial additions in the 2015 – 2025 forecast period.

The global clean coal market will continue to be dominated by SC technology, which accounted for 50 – 60% of the clean coal installations during the 2011 – 2014 period. USC-based capacity will see growth in market share, while IGCC, which is a nascent technology, is not expected to grow significantly. However, if the technology is proven and becomes less expensive, the share of IGCC installations could grow.

Edited by .

About the author: Sowmyavadhana Srinivasan is Senior Analyst - Reports at GD Research Centre.

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