Good afternoon im senior fellow at csi National Security program and it is my great honor to welcome peter for the International Energy agency who is here to launch it has been more than a century but the future use under quite a bit of scrutiny. With that deployment of renewables but putting quite a bit of pressure so the iea is the signature publication with the cold Market Report this provides comprehensive analysis of recent trends and forecasts not only with supply and trade at the local level but regional wet level as well peter is here to walk us through those Key Highlights and essentially help us understand what is happening and where the markets are headed to in the future 2022. And through 2016 in his current position ahead of the gas and Coal Division and previously between 1998 a senior electricity policy advisor between at the regulator at that canadian province most recently as the Vice President for Consumer Protection and industry performance. 1989 an Energy Policy advisor at the minister of energy. With my great pleasure he will speak 20 or 30 minutes then i have a couple questions and some discussion and open the floor for questions and answers. Good afternoon everyone it is a pleasure to be here at the center for strategic and International Studies for the United States launch for the call report 2017 hour analysis of the markets and the forecast through 2022. Two. Our global launch took place earlier today the first time we have launched a major iea report in india as it became an associate member of the International Energy agency earlier this year. Thank you to csis for the work done with this event as jane mentioned cole has played a big role in the Energy System and it took through 1910 the consumption of coal to reach 1 billion tons per year to get from 1 billion tons about 3 billion tons took nearly 90 years in part we increased oil in the 20th century. To get a 3,000,000,005,000,000,000 in 12 years just with the big expansion but since 2012 and 2013 demand plateaued and demand has been dropping and in fact last year marks the largest twoyear drop we have ever seen in cool demand. Unlike the previous occasions this occurred during a period of Global Economic growth. Also the third and second of year the consumption in china occurred that is not surprising with the source of the increase. It is also worth noting unlike many areas it is driven by consumption that it actually grew during this period. It is very much a Power Generation story away from coal to gas which is cheaper so these two large coal consuming countries have significant progress but also europe dropped so with these cool users reducing demand, india contributed to the growth by Power Generation demand so with this drop in 2017 we see a rebound the u. S. May have a little bit of growth but it is flat and also supported higher prices throughout the year. So was what we see in 2017 a trend or a blip . Lets find out. Let me start by talking about transformation. Accounting for two thirds of consumption. It is important to understand that Power Generation and with 2012 or 2016 with other generations this first chart is United Kingdom probably the quickest transition from coal generation the culmination of the decline of the old coal fleet with new environmental regulations, and last but not these and next are 18 pounds per ton forces the closure of some coal plants. Going from 40 in 2012 down to less than 10 in 2016. Turning to the United States you will notice a different scale as a factor of ten. Certainly natural gas has hit drop but since 2012 we have have seen a drop of 275 terawatts hours of coal electricity come in 2016 but also by renewables that has grown considerably. Adding into that demand is very weak. So going back ten years ago which is close at 50 now is 30 and last year Gas Generation accounted for more of the electricity supply. But next, germany note the scale that in the german case we have a different situation it is interesting to compare germany and the u. K. There is a big growth of renewables but there is no corresponding shrinkage. A couple of factors to explain that is a demand increase and second, Gas Generation decreased in germany over the period. Means more nuclear and more natural gas and the generation mix. The power has been bigger than them. Then the others combined. As a result, coal generation has increased during this time. We see four Different Countries and stories with different impact on cogeneration. One of the common things is the growth of renewables. That will affect fossil fuel generation in years to come. Growth or lack of in these countries is not the whole story. The reality and electricity access and main developing countries thats different than the more developed countries and different from china. If we combine bangladesh, pakistan, india, as the first four cross their, their more than 2 billion people there. The per capita consumption is rather low, averaging about 100. Thats already low compared to what you see in china. Thats already above the global average. But lower still when we compare the average of the oe cd countries. We did not put the u. S. On this chart. Because the u. S. Capital perk consumption is literally off the chart. So it is possible and even likely that developing countries will not reach the oecd level even in the future. They will probably follow less energy pathway. But no doubt it will increase with economic growth. While we remain optimistic in the future role of natural gas and some of the countries, coal will supply a significant share of the growing electricity needs. Lets take a look at prices. This chart will plot prices in europe that has the most liquid coal price index. After long decline the coal prices by early 2016 futures market has a outlook. They anticipated the prices will continue to fall. Reality is different. A large part of this was supply in china which push prices up and increased demand. After decline in the First Quarter 2017 prices have been moving up again. Its one of the main reasons, well talk in detail about that later. Heres part of the explanation and influence in prices going forward. Since nearly half of the call is produced in china the policy on coal will be very important to the world coal markets. The government its defined in three areas, the green area which is their comfort zone if the price for chinese coal moves in that range, they are fine with it. When it moves into the blue strip above or below then they say they will monitor what moves into the red they feel action is required. To plot that over the next three years you can see the discomfort they would have felt in 2015 and 16. They took action to limit supply, limit the working hours of minors i met push the prices up a little high. Prices since then falling down and an outer the upper end of the range and certainly something we think will be an important factor influencing prices in the future. As we plot the northwest index you can see good correlation between the two. Let me briefly mention the coal prices and the volatility in the last year and a half. Thats newcastle, the australian hard coking coal. The world depends a lot on queensland coking coal. More than half of the global experts are cu exports are comig from there. When you have weather events can have a strong shortterm impact on the coking coal price. Prices doubling in a very short time as Severe Weather events. As a result prices jump up and down. Now lets turn to the demand supply picture. What i present to use the forecast region by region. First of all, china. In china we see a structural slow decline with annual fluctuation to meet market needs. In 2017 strong power demand growth but in the coming years we expect coal used to decline in the non power sectors as gases substituted for coal in residential and small industrial boilers. With economic changes, lower Energy Intensive growth coal demand is not likely to grow substantially. So now five turn to india power demand growth will be robust. Despite the fact that we forecast over hundred 50 terawatt hours from 2016 to 2022. The gap will have to be filled by coal. Indonesia, vietnam, malaysia and the philippines are increasing Power Capacity in the coal generation as part of that. Now, the u. S. We see a decline driven by sluggish power demand. Growth in renewables and some growth on the gas side. The decline will be slower than we have seen in recent years. In europe coal is in a continuous decline. The e. U. Represents a share of it. This will decline. The main question about europe is to what extent that decline will accelerate. With the others which i did not mention, samuel c increases anothers decreases, canada for example. Overall there is a bit of a growth there. What we see overall is demand being flat after this years increase. When you think about it with a cold demand plateauing what this means is about a decade were coal demand has been roughly the same or stagnant. Let me talk in more detail about some of the countries. Lets turn to china. Some areas of china the growth is going to grow. There is going to see growth in coalfired Power Generation. Growth and demand for coal conversion, coal to liquids and coal to liquids conversion. Theyll be more than offset by the decline is consumption and the changes in economic factors which are leaning to less intensive growth. Also some interesting geographical implications which will affect the International Markets for. When we look at where the boilers are being switched out. The majority is in the coastal area. It is significant coal phases out the other areas the coal use that we think will be eliminated switching principally to gas. Thats not the only factor that will affect coastal consumption. A second factor comes from the construction of ultra high voltage lines. This affects coal consumption for Power Generation coal areas in the interior. In addition theyre not just going to take coal power will also be wind and hydropower. It will reduce demand in the coastal areas and thats important because that is where the imported coal goes to. We think the impact of these developments on global flow demands will be more significant another country where this is important were in port dependency is a big issues india. This shows you how Coal Production increase has been reducing import dependency. The black bars show the contribution from investing in renewables reducing coal use in india which we assume comes from imported coal. Theres a second and more important factor which you can see in the light blue bar. The second set is the production increases were seen in india as a result of reforms and other efforts to improve Coal Production. These are significant. We saw coal imports decline and we see further decline on the imports after 2022 to about 80 million tons in 2022. To do this we assume the changes that are being made will continue to be effective in increasing Domestic Production and ensuring coal is able to be delivered to power plants and other users. The return to the u. S. In particular looking at the coal capacity situation the coal capacity situation looking out at the new and retired capacity together there been no new ones coming into Service Since 2013. On a net basis which we can show they have a drop off in capacity but we see the rate of capacity retirements declining. What we anticipate is a much slower decline and coal generation the United States compared to recent years. Our reasoning is along the lines that gas prices have gotten about as low as they can go in the older and less efficient plans have closed. As a result the coal industry is a more efficient and Competitive Industry than what was a few years ago. As a consequence it will be more resilient in the future. Then we talk about trade. As you may have surmised, what we are looking at a change in trade starting with imports in 2016. We look at how they involve evolve to 2022. We look at the imports the biggest coal uses, were forecasting they will all reduce imports. However there is a lot of uncertainty about whether this will occur. China and india are big markets were these compete. China, depending on the situation imports could go up. In japan where the decline in coal imports is due to Nuclear Restarts as well as the uptake of renewables, imports would increase with the restart. Theres already 4. 6 gigawatts capacity under construction. In korea things are more uncertain. Over ten gig locks are being commissioned and that government is working to reduce coal share. If you look from the right side this is how it looks on the export side. On the export, indonesia would be seen a decrease in exports. Increasing domestic demand because more coal plants in indonesia and difficulties with cost production. They will significantly reduce their exports. The u. S. Has a very small increase, not nearly the scale were seen this year. It has enough mining capacity on the east coast and can reactive prices are right. I like to focus now on Carbon Capture. And utilization of storage. Thats because Carbon Capture and utilization has been making some progress but not nearly enough. The technology has been proven in four examples recently commissioned. First in the United States and illinois theres an ethanol facility where co2 is stored in an aquifer. About 1 million tons of co2 per year. The petronella were plant in texas captures up to 1. 6 millioe use. Quest is a canadian project which can capture up to 1 million tons of co2 and stored in the structure nearby. And ccs steel can capture 8 million tons per year. The projects have common characteristics. The cc u. S. Is installed on existing and has relatively low Technology Risk with attractive understory to geology. They exist because of coalition in public and private stakeholders. With the right approach it can work and in some cases is working. Despite these examples, progress on cc u. S. Is lagging behind another. Broad agreement among Energy Leaders in government and industry that urgent action is needed to support cc u. S. Without it the climate challenge will be bigger in the Climate Change litigation will be more costly. Thats why together with countries and leaders are working to give a new momentum to the technology. Without cc u. S. , coal use will be constrained in the future. The iea is committed to pushing this forward. Must involve government and industry last month, the u. S. Secretary of energy, rick perry cochaired a highlevel summit that brought together more than 20 countries the ceos of the Largest Companies that share with the u. S. We must build on this and move forward and act. Finally, the may conclude with main messages. Global coal demand is set to steak night in 2022. Second, the structural the slow decline in china is taking place fluctuations up and down determined by market needs. We may see china go up but it can go down again depending on conditions. India, south asia are leading the last sets of the decline this is all the finally, will use the constrained without utilization of storage when implemented widely. With todays launch in delhi after presentation we had comments from the secretary of coal about the report. The secretary, that coal continue to supply energies that he was also supportive of the Carbon Capture and utilization he wanted to emphasize carbon co2 had to be use. I think the messages are getting through in the outreach to new countries is paying dividends. And were having an influence on the coal policies in the world today. With that, thank you for listening. [applause] think you so much. Its very comprehensive. Were looking at all these measure market mover countries. Within them as fast evolving. Certainly it is impacted by different concerns with associated economic or political, but since youre in washington i wanted to ask you some u. S. Focus questions. You already mentioned increase u. S. Coal export. I realize well talk about market fundamentals. Recently the u. S. Started exporting coal to the crane. Looking like a specific type of coal. I guess theres always lower parts that the potential markets that it could still be appealing, or might be mistaken . First, theres the call markets are different, even though her overall demand for test are quite flat, there certain growth in countries, particularly india were we see significant growth. A new coal mine has opened in the u. S. And theres no surprise there are in certain countries and need for more coal. Overall, we did not break it out in the analysis but it is in the actual report that we look at ukraine and Asian Countries together and we do see some opportunity. There is also some possibility for increased consumption. Many areas are rather close to russia. But your cream is in a different situation when it comes to that. Because the russian competitiveness has improved quite a bit. And the met coal export is not more profitable for coal exporters i guess on the thermal coal side. But what extent could that ease the pain that the u. S. Coal industry is experiencing . Thats a hard one. We did not examine the u. S. Balance sheet. Overall coal is flat. There are particular countries were those are the opportunities so you do see a new mine opening. Thats a clear indication that the market thinks there something there. Certainly relying on queensland maybe customers are looking for other sources of supply. With u. S. Discussion on the future of coal, we do Pay Attention to social economic challenges. Coal Mining Sector is under pressure, does your report give a sense of the automation or how its becoming modernized upstream and how that could impact the labor force issue . We looked at it from a cost perspective and weve seen significant improvement in the u. S. Sector. With the recent shakeout in the industry in the low prices they saw until lester. I also want to cover tumor markets quickly. I do want to save some for the audience and of course china has the measure the major importer of coal supply. Youve touched upon how there has been supplyside effort and how reform has been focused on improving safety standards. What is the progress they are making on some of these targets . Thats a good question. We are fortunate issue that we had an official from coal working with us on this report. Sir helpful in terms of getting certain information. Variable to do that thanks for association with china. On that, what we have seen certainly the data we have suggested has been significant improvement in cost reduction. With one of the policies which was the number of working days they found actually causes overcorrection in the prices spiked and imports came in. Think again this is trying to control imposing market mechanism and finding limits of how much they can impose on this but i think they have seen some real progress. Youve also talked upon highvoltage and how that might impact trade flow could you elaborate a little bit on that . Again when it comes to china the scale of this is enormous. So were talking hundreds of terawatt hours of power that can move from western china or southeastern china to the coast. This will make it much easier to have this inter regional trade of electricity. And presumably more efficient. At the same time theyre doing what they can to reduce their own coal consumption. I think it will be an attractive option. Chinas also in the middle power for and with this additional infrastructure bill should hopefully make it more effective. One last question india still has about 3 Million People that do not have a modern form of electricity. Yet the utilization of this may be the high 50s i think the factor in high factors how quickly theyve been building the coal plant they made specific efforts to improve the health of the but at the same time impose a requirement to connect everybody. The two go handinhand with the companies a lot of splendid Distribution Companies to make it happen. But they are quite determines and were told a lot of progress has been made on this. We do expect most people in india who do not yet have electricity will get it. Now it is your chance to ask some questions. I guess some ground rules. Please wait for the microphone and please identify yourself and your affiliation. Fellow at duke. Is there any work projects going on and are you looking in chinas investment in the coal power plant . Thank you. We certainly look at it all the time and turns over to understand where its going. We do look at the chinese coal power plant investment. We publish every year in outlook and china is part of the world energy investment. Thats covered there. Also working on initiatives to look at flexibility because with renewables thats becoming a bigger issue. So were doing that to look at the flexibility of powerplant and to see with the ability of an existing fleet of coal plan plants. Thank you for coming. There is a large number of expert terminals in the pipeline and i wanted to know how you considered those in your analysis of worldwide expert exports. We are producing a separate gas report were were looking at the impact on the lng exports. The u. S. Is exporting about 82 billion cubic meters by 2022. Lester was only five. Will look at gas versus call look at relative economics. As a result is often a policy push for domestic resource which is driven gas use there. When we look forward their we look at with the changes in policy are. Im i wanted to ask you a question about the levels you mentioned at the beginning and the United Kingdom or the u. S. To look at any change in the coal market and how that play . I think the best way to answer your question is to look at the energy outlook. We have main scenario called the main policy scenario. We see coal demand remaining flat out to 2040 even with the commitments to meet the 2030 nationally defined contributions under the paris agreement. In many countries, some countries that includes an expansion of coal. So overall with other countries not committing to get out of coal we actually still see a world coal demand remaining flat. There we also look at a scenario where theres more aggressive action. So we assume other policies are implemented to reduce co2 emissions. And then coal would drop quite dramatically from quite dramatically. That will take quite strong policy action to change that. Thank you. Theres vast differences in coal quality. From has the report taken that into account and thought about what the economic and environmental tradeoff would be . Not sure i can address that specific example. When were looking at ending coal imports theres an ability, the policy of the government is to decrease imports as much as we can. But theres medical so powerplants relying on imported coal because of the characteristics you mentioned. Where do the analysis we have to look at how much we can reduce imports in that case. The existing plant there are limitations to what coal you can use. How are things looking for met coal versus steam coal . Globally met coal is flat but as you mentioned earlier places like india we see possibilities for increases. Because of the Economic Transformation going on. Steam coal after this use increases pretty flat. With the regional differences i was talking about it really increases in some places and decreases in some. Hello. Im a student at George Washington university, you spoke about how coal demand is raising the demand for energy he spoke about india a lot of Energy Demand is rising in africa. Im curious if call is a Reliable Energy source to these rogue communities and how it can be brought their fitness and how could it be down to see if it sustainable in the long run. Thats a complex question. We looked at our Energy Access report affected areas where current supply of electricity where people do not have access we saw combination of policies had great extension but other policies actually make it more economical to expand access and connect more people give more people access to electricity. Call time in certain countries in africa, south africa is a big user of coal its an option for some countries i think you sit in the big usage of cold weather china, india or the United States. Obviously theres a preference when you have that resource. The question of what technology to use, coal prices are rather competitive to that remains an option for some countries. For example, we see in pakistan today Ac Development because there are coal mines that could be developed as well as imported coal. Thank you. Is interested in the issue of competition between lng and coal particularly in Southeast Asia and south asia. Coal prices are at their lowest you had decisions made to develop coal plants, very much based on importing indonesian call which is been a very lowcost and proximate to these markets. I get the sense that countries are also looking at that as an alternative in the future. I think im not so sure the projections of large growth unnecessarily going to be borne out if gas prices continue to be low. It will vary from country to country. What is your sense in terms of sustainability. Rc mentioned problems in indonesia in terms of both domestic assumption and the governments that enforce policy, either other options for these countries if indonesia is not a reliable supplier in the future . There are certainly other call exporting countries in the region looking at indonesia policy they may turn to australia or other countries. In terms of coal versus lng, our view, although not true today is that lng will be fairly inexpensive because theres a lot of capacity coming online. As a result of be a shortterm opportunity. Think prices will need to move out. I think this applies which will result in low prices will move up over time. Theres also a risk there. A lot of countries where we do if indonesia, we certainly counsel a diversity of sources. With the falling cost of renewables there is more interest in including that in the mix. Part of our work is talking about immigration issues and we do try to engage on that and Energy Efficiency as well. Hello. Im elizabeth from duke university. Im wondering if you track in this reporter elsewhere, potential shocks to the system that may create a significant divergence. And if so, are you most concerned with natural disasters, technical logical innovations and checking if it pushes coal up or down. Absolutely. Certainly Energy Security is very central to the work we do. In the past is oil, today its more natural gas and coal. Also look at the indirect impacts of shock on the gas i. In recent months theres been a diplomatic issue between catarrh and its neighbors. Catarrh supplies 30 of so something would happen theres no reason to suspect that happen but certainly we do keep an eye. So then we ask ourselves what if that happened, what if Something Like that would happen what are the impacts on the other markets. As you can see we also look at natural events in the case of the med coal really impressed us as the fertility of the foot supply chain. But were drawing lessons from the past then say looking ahead. This is a followup question. In terms of looking forward you mentioned china domestically is reducing coal, when you look at the investment overseas to think they are going to are you tracking environmental regulations and how you think this affect the core market in general and Southeast Asia area . We do see china involved in coal plant investments in technology transfer, they have built a lot of coal plants in the last decade or two. And to one financial another expectation and a report is that support will continue. The technology for recent chinese coal plants are pretty good in terms of efficiency and emissions control. It is much more from these multilateral weather will world is seen in Higher Standards as opposed to factors involuntarily saying we want to see higher efficiency or higher performance. I think there is discussion going on a lot of Capacity Building is underway. It is something i also follow closely. I guess will stay tuned. Any other questions . My name is audrey, im an independent consultant. The last point in your slide that says coal use will be constrained without cc u. S. And you are working with industry policymakers to build momentum, what kind of momentum . A safer carbon price . Because cc u. S. Will make coal more expensive unless theres something to make it more economic. Yes. This is more of a Technology Focus to get it implemented and try to find the right frameworks to make sure can be widely applied. Our argument has been that with all the coal out there were going to need technologies like this to complement the other low Carbon Technologies to sniff significantly reduce emissions in the future. If it turns out we cannot find the widescale application which is economic compared to other, then that will severely constrain coal. Not specifically a carbon price, more of a technological focus. Much more in terms of demonstration and implementation rather than the policy framewo framework. I have talked about cc u. S. A little bit but not about highefficiency emission technology. The future do you think that particular genre of technology is going to have going forward. Certainly there is a lot of interest when people who are building coal is highefficiency technologies. A lot of what we see theres a few cases which are really quite impressive, but the economics is not compelling going to using either end of pipe controls. So that has been the issue, the economics have not been compelling for widespread adoption. If the feeling is that youre still going to have to put this on top of everything else, that might drive your economics and make it completely uneconomic. So certainly not in this report were not predicting it to happen. And if the u. S. Landscape there is very little appetite theres very little investment going in to the coal fire generation. So you have to have a guess you have to know that your asset will stay running to recuperate the investment. I think its looking at the economy swear this is been stagnant. That leads me to a question about india. Certainly the power demand is going and coal consumption is growing. But the fleet modernization, think there is potential for these highefficiency at the same time, were starting to hear a little concerned about about the coal becoming a stranded asset. A lot of projects that are not completed. I do if your staff travels to india to get the microlevel perspective on whats happening. Is it because of the competition with renewables . Whats behind the picture . There many things going on. India is a big country. One factor is how quickly power demand has slow compared to a few years ago. Youve had coal generating capacity double in india in the past six years. Power and demand has not kept up with them and now you have Renewables Coming in. It is quite easy to see why you would have cancellations and things will be mix slower over the next six years compared to the last. Can you put a number on how many new plants are being used . I do not have the number handy. I want to talk about the net stream transportation . Protective little bit about the chinese about the highvoltage is that a potential challenge in india or something that india will be looking at closely as they try to introduce more renewables . Thats an interesting question. Im not sure what studies have been done. I saw a map of the resources are. They tend to be in the western part in the call tends to be on the east. So dynamic is a little different in china where coal is remote from high population areas. Certainly its another technology to look at. To probably follow the debate about the u. S. In terms of the issue of the market implications rather market design should be adapted to value capacity payments you see in that another countries too . I know we had discussions with germany when they are debating whether to put in place capacity payments for generators, is that something you think makes sense to pursue in terms of the advice about the Market Designs . A couple years ago we published a book called repowering markets in here in the u. S. There is capacity market. So the Current Issue and not just here in the u. S. , give the example of australia, we originally looked at the renewables question. So thats in addition question. But the question that follows in most Market Designs the system responds by lowering the price and other resources subtraction problem. If they have certain reliability characteristics ear losing in the case of australia which has a relatively long and narrow Transmission System serving its National Energy market, theyre finding in some places it was hard to keep the system reliable as gas plants for closing. As a consequence, the government proposed a couple months ago a new requirement on the part of retailers to say we think we need to have a new show which is the big rotating masses. It helps you if they have a big plant offline helps recover the system automatically. If you have nothing but wind and solar, you dont have that anymore. So if they would put in a new rule everybody will have to buy inertia from generators. That helps keep these big generators in the marketplace. Thats one way of trying to ensure reliability. Thats an area of current interest i will spend more time looking at it next year. There many technical questions they appreciate your insights and observations of whats happening here and in other key markets and in general, and also how there is still cooperation with the private sector. Thank you so much. I do hope you be back make sure and share your additional insights. Will this supply and demand that will develop some thank you so much. 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