International Coal Market: A Focus on Demand-side Policies in India - PowerPoint PPT Presentation

COALMOD World Global Coal-Phase-Out and the International Coal Market: A Focus on Demand-side Policies in India Ivo Kafemann, Franziska Holz, Casimir Lorenz, Roman Mendelevitch, Pao-Yu Oei, Tim Scherwath Vienna, 06.09.2017

Agenda 1. Global Coal Perspectives 2. Coal in India 3. Reference Scenarios 4. Model Structure 5. Results 6. Conclusion 2 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

1 Global Coal Perspectives – Scenarios of Coal Consumption 240 220 Source: Mendelevitch et al. 2016; based on BP (2016), EIA (2016a), ExxonMobil (2016), IEA 200 180 160 (2016), McGlade and Ekins (2015a), MIT (2015), and Statoil (2016). 140 120 EJ 100 80 60 40 20 0 2010 2015 2020 2025 2030 2035 2040 BP (2016) Statoil (2015) - REFS Statoil (2015) - RENS Statoil (2015) - RIVS ExxonMobil (2016) EIA IEO (2016) - RC MIT (2015) M&E (2015) IEA WEO (2016) - CPS IEA WEO (2016) - NPS IEA WEO (2016) - 450ppm A Focus on Demand-side and Supply-side Policies in India 3 Vienna, 06.09.2017

1 Global Coal Perspectives – Scenarios of Coal Consumption • Spread of projections illustrates uncertainty about future coal consumption • Major drivers for differences in scenarios: • Potential of renewable energy sources and storage • structural changes in the energy system (e.g. higher electricity demand due to sector coupling) • CCTS employment • Macro-economic trends and total energy demand • Policy measures (e.g. carbon price) 4 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

1 Global Coal Perspectives – The Global Steam Coal Market Source: IEA 2016b Overview of world steam coal market: supply, demand, trade Major producers in 2014 Major consumers in 2014 China (3,200 Mt) China (3,280 Mt) United States (770 Mt) India (760 Mt) India (560 Mt) United States (750 Mt) Indonesia (470 Mt) World consumption 6,090 Mt World production 6,150 Mt Source: IEA 2016b. 5 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

1 Global Coal Perspectives – Regional Changes 2015-2040 Source: IEA/OECD (2016), p. 212. • Climate pledges by EU, US and China result in coal demand decrease • Increasing coal demand mainly in India and Southeast Asia 6 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

2 Coal in India – Current status • Coal consumption in power generation: 81 % • installed capacity of steam coal power plants: 176 GW  60% of total capacity • Steam coal consumption 2015: 753 Mt • Steam coal production 2015: 585 Mt • Imports by power utilities: 22 % of their total coal consumption • thermal coal imports 2015: 168 Mt • main exporters • Indonesia (125 Mt) • South Africa (35 Mt) • Australia (8 Mt) • Russia (3 Mt) • United States (2 Mt) Sources: Cornot-Gandolphe (2016), IEA/OECD (2016), IEA/OECD (2016b). 7 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

2 Coal in India – Domestic Policies • „ […], it is more than ever environmental policies that determine the evolution of regional coal demand.” (IEA (2016), p. 212) • Specific policies also affect international steam coal trade 8 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

2 Coal in India – Domestic Policies Policy Measures objective 9 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

2 Coal in India – Domestic Policies Policy Measures objective • Expansion of New RES policy: Capacity RES expansion solar, wind 10 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

2 Coal in India – Domestic Policies Policy Measures objective • Expansion of New RES policy: Capacity RES expansion solar, wind • Coal self- Higher domestic production sufficiency (target 1500 Mt) 11 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

2 Coal in India – Domestic Policies Policy Measures objective • Expansion of New RES policy: Capacity RES expansion solar, wind • Coal self- Higher domestic production sufficiency (target 1500 Mt) • Reduction of air Burning coal with lower ash pollution : content • Washing 12 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

2 Coal in India – Domestic Policies Policy Measures objective • Expansion of New RES policy: Capacity RES expansion solar, wind • Coal self- Higher domestic production sufficiency (target 1500 Mt) • Reduction of air Burning coal with lower ash pollution : content • Washing • Efficiency Plants based on supercritical increase technology 13 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

2 Coal in India – Domestic Policies Policy Measures Considered in Scenarios objective by • • Expansion of New RES policy: Capacity Different reference RES expansion solar, wind coal demand based on: • IEA NPS, IEA 450, ECT2 • • Coal self- Higher domestic production Import tax • sufficiency (target 1500 Mt) Import restriction • Minimum required imports of 65 Mt • • Reduction of air Burning coal with lower ash Not considered pollution : content • Washing • • Efficiency Plants based on supercritical Quality Standard for increase technology imported coal • Minimum required imports of 65 Mt 14 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

3 Reference Scenarios – Global Coal Consumption Global Coal Consumption by Scenario 6000 Deviation of aggregated total 5000 consumption: 4000 - 29% Mtpa 3000 - 33% 2000 1000 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 IEA NPS (2016) IEA 450ppm (2016) with ECT2 in India IEA 450ppm (2016) 15 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

3 The Setting Represented countries by type: Source: Adapted from Holz et al. 2016 • 40 consumption nodes (C), 25 producers (P), and 14 exporters (E) • Multi-period model with yearly equilibria in 5-years-steps from 2010 to 2050 • Demand in energy services from coal vs. cost in $/t makes the cost-efficient equilibrium solution non-obvious 16 Climate Policies to Reduce Coal Consumption Mendelevitch, 40th International IAEE, June, 20th 2017

5 Results 18 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

Results – Scenario Overview NPS 450ppm 450ppm but India ECT2 Import Tax Quality Standard Import restriction 19 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

5 Results – Import Tax Indian Imports: Reference Scenario vs. Import Tax (10 $/t) 500 450 400 350 300 Mtpa 250 200 150 100 50 0 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 IndiaECT2 450 NPS NPS NPS NPS NPS NPS NPS NPS NPS NPS NPS NPS NPS NPS NPS NPS NPS NPS 2010 2015 2020 2025 2030 2035 2040 2045 2050 2010 2015 2020 2025 2030 2035 2040 2045 2050 no tax 10 $/t tax AUSTRALIA CHINA COLUMBIA INDONESIA MOZAMBIQUE RUSSIA USA VENEZUELA SOUTH AFRICA 20 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

5 Results – Quality Standard Indian Imports: Reference Case vs. Quality Standard (Calorific value of 22.9 GJ/t ) 500 450 400 350 300 Mtpa 250 200 150 100 50 0 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 2010 2015 2020 2025 2030 2035 2040 2045 2050 2010 2015 2020 2025 2030 2035 2040 2045 2050 AUSTRALIA CHINA COLUMBIA INDONESIA MOZAMBIQUE RUSSIA USA VENEZUELA SOUTH AFRICA 21 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017

5 Results – Quality Standard Indian Imports: Different Quality Standards (Minimum Calorific Value of 22.9 GJ/t vs. 23.1 GJ/t ) 450 400 350 300 250 Mtpa 200 150 100 50 0 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 NPS IndiaECT2 450 2010 2015 2020 2025 2030 2035 2040 2045 2050 2010 2015 2020 2025 2030 2035 2040 2045 2050 AUSTRALIA CHINA COLUMBIA INDONESIA MOZAMBIQUE RUSSIA USA VENEZUELA SOUTH AFRICA 22 A Focus on Demand-side and Supply-side Policies in India Vienna, 06.09.2017