International
If this huge energy appetite of India and China is not met with, the truncated growth of these economies would leave a domino effect on the growth prospects of an ailing, old, anorexic (developed) world. At the same time, meeting this demand would be a major task. The spike in crude prices would put pressure on their balance of payments (BoP), which in turn would affect their currency and growth performance. At such a juncture, the prominence of coal as a fuel appears to be an interesting economic coincidence. but around 23 percent of the world’s proven coal deposits. Between these two countries, India seems to hold an edge due to its late pick-up and lower consumption. At the present level of consumption, India’s proven coal reserves (118 bn tons) would feed the economy for 140 years. In contrast, China has only 12 years stock of crude and 35 years stock of coal, given the current levels of consumption of these resources. It will be interesting to see how the economic giant deals with its energy resource crunch from there on. Meanwhile, both of these countries are aggressively acquiring coal blocks overseas. The Indian companies, led by the Adani Group, Reliance, Tata, GVK and Lanco, have already built up a reserve of more than 20 bn tons, equivalent to the coal reserves of Indonesia. While India’s increasing imports remain a talking point for the domestic planners, the huge reserve in its own backyard may back up as insurance for its future energy needs. Substituting oil in transport
WCA expects that the subjugation of oil to coal may help stop the oil importers dance to the tune of OPEC. How far this is practicable would depend much on how far coal can substitute crude’s hegemony in sector-specific uses. Growth in oil demand since 1980 has been dominated by transportation use – mainly road transportation, but also aviation, internal waterways and international marine. According to OPEC, over the past three decades, the average annual growth in OECD and non-OECD countries has been very similar, each at around 0.3 mboe/d. At the global level, transportation is expected to
highest in China and India. As of 2011, these two countries accounted for 30 percent of total motor vehicle production by the world’s top 20 producers (which include automotive giants like the US, Japan, Germany and South Korea). Realising that the massive growth in road vehicles is putting a strain on the economy (by escalating the country’s oil import bill), the Indian government is trying to encourage the development of electric and hybrid vehicles. However, the extent to which these new generation vehicles can send gasoline vehicles off-road remains doubtful. In such a situation, how far coal is able to replace oil’s
continue to dominate growth over the period 2009-2035. However, this increase will come only from non-OECD countries. Break-up by OPEC, non-OPEC “The key to future 19% demand growth is in transportation in nonOECD countries, which accounts for close to three-quarters of the increase in oil demand in the period to 2035. In contrast to both OECD 81% and Eurasian countries, OPEC Non-OPEC developing countries also see a rise in oil use in other Break-up by OPEC members sectors (petrochemicals, household/ commercial/ 13% Venezuela agriculture, other Saudi Arabia 22% 12% industrial uses). But all Iran regions will see the small Iraq amount of oil that is Kuwait still used for electricity UAE 8% Libya generation decline in Nigeria the future,” the OPEC 8% Qatar 25% report says. 4% Algeria On the whole, 1% 1%1% 2% 3% Angola the transport sector Ecuador accounted for nearly 30 percent of the worldBreak-up by region wide consumption of Middle East energy. Of this, three56% fourths come from road Africa vehicles and oil provides 95 percent of the primary Asia & Oceania energy consumed by North America the transport sector 9% worldwide. 7% 3% Central & 1% The growth of the South America 8% 16% automobile sector, in Europe recent years, has been the
Coal Insights, January 2013
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