Good afternoon. Im senior fellow with National Security program. Its my great honor to welcome Peter Frazier who is the head of gas, coal for the International Energy agency. He is here to launch the coal 2017 coal has been the worlds dominant fuel for a century. Certainly the robust deployment of renewables but then combined with the cheap gas and has been putting quite a bit of pressure on the generation. So the coal 2017 is one of the ieas signature publications. Its previously known as a midterm coal Market Report. It provides comprehensive analysis heater is here to walk us through some of the analysis and help us better understand where the markets are headed to in the near to midfuture, i guess through 2022. Previously between 1998 and 2004 he was a senior electricity policy adviser. This is his second tour. In between peter worked at the Ontario Energy board. From 1989 to 98 he was an Energy Policy adviser at the ontario ministry. It is with my great pleasure. He will speak for maybe 20 to 30 minutes. I will have a couple of questions. Ill have some discussion up here and then certainly open the floor for questions and answers. As jane mentioned our global launch took place earlier today. The first time we have launched a major iea report. In india as india became an associate member of the Energy Agency earlier this year. I want to thank csis and particularly jane for the work done in organizing this event. As jane mentioned coal played a big part for a long time. It took until around 1910 for the consumption to reach about 1 billion tons a year. To get from 1 billion tons to 3 billion tons took nearly 90 years to get from 3 billion to 5 billion only took 20 years. We have just come through the far side in coal demand. Since around 2012 and 2013 demand was first plateaued. As ill get into now demand has actually been dropping. The last two years marks the largest twoyear drop we have ever seen in coal demand. Unlike the previous occasions this occurred during a period of Global Economic growth. It was also the third consecutive year. It is also worth noting it is driven by outside the power sector. It is also the growth in renewables as ill get into there a little while. These two large coalconsuming countries have had significant drivers. There is also continued drop in command. Despite these major coal users reducing their demand there is growth in some regions. India, a few countries of the region contributed to this growth. Those are driven by Power Generation demand. With this drop in the last two years, actually in 2017 we are seeing a rebound. It has also supported higher prices throughout the year. The question is what we are seeing a new trend or a blip . Lets find out. Let me start by talking about Power Systems in transportation. The chart shows the changes in other generation supply in the period. This first chart is the United Kingdom. It is probably the case where the quickest transition from coal generation has occurred cht a combination of an actual decline in power demand, an old coal fleet, new environmental regulations, strong reknewabnew growth and an extra price floor over the ets value forced the closure of some coal plans. Its quite a rapid change. We have seen a drop but its not just a story about natural gas. Since 2012 we have seen a dropover coal and electricity to 2016 so you can go back and ten years ago which was close to 50 is now down to 30 of the power mixed today and last year as many of you will know Gas Generation accounted for more of the u. S. Electricity supply. It was the first time that it happened. Next notice it is double the u. K. Notice that we have a quite different situation. It is quite interesting to compare germany and the u. K. There. There is a big growth there renewables. There is no corresponding shrinkage. A couple of factors to explain that is you can figure that out from the chart, one is a demand increase secondly is Gas Generation actually decreased in germany over the period. Unlike the u. K. They dont have a carbon price floor. As a consequence there has been very little change despite the big introduction of renewables. Finally lets look at china. In china you a combination of factors going on here. Diversify case from coal which is by part the dominant source means more nuclear and more natural gas. Power and demand growth has been bigger than the others combined. As a result coal generation itself has also increased during the period. So we see four different countries, four different stories with rather different impacts on coal generation. One of the common things on all of them is the growth of renewabl renewables. It will be a big factor effecting fossil fuel generation in years to come. Lack of growth is not the whole story. Theres a reality in many developing countries thats very different from the more developed countries and different even from china. If we combined bangladesh, pakistan and india across there and there are more than 2 billion people there. The per capita is rather low averaging about a thousand kilowatt hours per capita. That is already rather low compared to what you see in china which is already above the global average. It is lower still when we start to compare to the countries, which i think i can get. You can see its more than double again. Now, you notice also i did not put the u. S. On this chart. It is because the u. S. Per capita consumption is literally off the chart. So its possible and likely developing countries will not reach the level probably in the future. There is no doubt it will increase on economic growth. The future role of natural gas coal will also supply a significant share of the growing electricity needs. After a long decline in coal prices by early 2016 futures markets had an outlook. They anticipated the prices continued to fall. Reality was quite different. A large part of this was reforms in china which increased demand for imported coal in china. Here the part of the influence in prices Going Forward. Since nearly half the worlds coal is consumed in china and produced in china it will be very important to the world coal markets. The government has defined how it is going to aim for having a price target for coal. So its defined with three areas. A green area which is their comfort zone. When it moves into the blue strip above or below thats an area they say they will be monitoring. When it moves into the red thats when they feel action is required. If i just plot that over the last couple of years you can see their discomfort that they would have felt in 2015 and early 2016. They took action to limit supply, close a lot of minds, limit the number of working hours of minors. That did push the prices up a little high in fact. So prices have been falling back down. Part of the reason we say that is because we can certainly see a good correlation between the two. Let me also now briefly mention coking coal prices. So thats new castle. It can have a strong shortterm impact on the coking coal impact. You can see prices jumping up or doubling in a very short time as a result of whether events and severe rain has also been a factor in some case. As a result the prices jump up and down. So now lets turn to the demand supply picture. What i will present to you is a forecast region by region. This year, 2017 a strong power demand growth have meant that coal demand increased. In the coming years we expect coal use to decline, particularly in the nonpower sectors as gas is substituted for coal and residential and small Industrial Boilers. Together with the economic changes that we have in china lower energy and progress and energy diversify case it is not likely to grow substantially. So if i turn now to india power demand growth will be robust. This is the main driver of coal demand growth. This is despite the fact we forecast over 150 hours of wind and solar Power Generation growth from 2016 to 2022. Electricity demand will be more than this. The gap will have to be filled by coal. They grow at a stronger rate. Indonesia, vietnam, miare part that capacity. Now the u. S. In the u. S. We see a decline in growth in renewables. The decline will be much slower than we have seen in recent years. The eu represents only 6 and will decline over time. With more countries committed to phasing out coal plants it is what extent it will actually accelerate. So with the others, other countries which i didnt see here where there will be decreases, canada, for example, but overall theres a bit of growth there. What we see overall is demand being pretty flat after this years increase. In other words this years growth is a blip. If you think about it with the coal demand plateauing, what it means is about a decade where coal demand has been roughly the same or roughly stagnant. They will be more than offset by this decline in consumption in the small residential and Industrial Boilers and of course the changes in the economic factors which are leading to Less Energy Intensive growth. When we look at where colors are being swictched out a majority are in the coastal areas. It is significant and also coal phasing out the other areas. It is switching principally to gas. It comes from the construction of ultrahigh voltage lines which in effect replace coal consumption from Power Generation in coal areas in the interior. In addition these power lines arent just going to be coal. It will be also wind and in the south a line from hydro power as well. So we think it will be more significant. Another country where this is important. Dependency is a big issue. This is to show you how Coal Production increase has been reducing import dependency. The black bars here show the contribution from investing in renewables, in reducing coal use in india which we assumed here comes from imported coal. But theres a second and more important factor, which i think you can see there in the light blue bars. These second sets are the production increases we are seeing in india as a result of reforms in coal and other efforts to improve Coal Production. As you can see these are very significant. We saw coal imports decline in india in 2016. We see further decline in the imports out to 2022 to about 89 million tons in 2022. To do this coal will have to perform. We do assume that the changes are being made will continue to be effected in increasing Domestic Production ensuring that coal is produced and able to be delivered to other users inside india. Let me now turn to the u. S. In particular looking at the coal capacity situation oh, he me see if i can no. Thats all right. This is looking out to the retired capacity together. We see no new coming in since 2013. On a net basis which we can show here, we have a big drop off through 2016 into 2017. We do see the rate of capacity retirements declining in the next few years. So what we anticipate is a much slower decline in coal generation in the United States compared to what we have seen there recent years. Our reasoning is very much along the lines that gas prices have got pretty much as low as they can go. The more inefficient parts are what has been retired. The older and less efficient plants are ones that have closed. As a result the coal industry thats left is more we fieffici than it was a few years ago and we think will be more resilient to future shocks. Oops. Now, let me talk about the trade. As you may have already surmised, we are looking at a change in trade starting with the imports in 2016 and we look at how the imports evolve to 2022. And the interesting thing here when we look at the imports is the biggest coal users, we are forecasting they will all reduce their imports over the period. However, we must admit that theres a lot of uncertainty about whether or not this will occur. Kli china and india are big markets where markets compete. China, depending on the situation, imports could go up in a given year. In the case of japan where the decline in coal imports is due to Nuclear Restarts we have uptake of renewables. Imports would increase if reactors restart. There is already a 4. 6 gig watts under construction in japan. In korea things are more uncertain. The new government has been making those to reduce the share. You see how we build up the trade number for 2022. On the right side is how it looks on the export side. Among the export indonesia will be seeing a large decrease in exports. The reason for that is increasing domestic demand is because more power plants in indonesia and difficulties in cost competitiveness. We expect they will significantly reduce their exports. The u. S. On the other hand, we have a very small increase, certainly not nearly the scale we are seeing this year. It is the swing provider. It has enough mining capacity on the east coast and can react if prices are right. I would like to focus the last part of the presentation on Carbon Capture and utilization. That is because Carbon Capture utilization is one of those that has been making some progress but not nearly enough. This technology has been proven. So i want to mention to you it is a corn ethanol facility where the co 2 is stored in plant. Quest is a canadian project which can capture up to 1 million tons of co 2. These projects have common characteristics. Installed on exists operating assets. They were relatively low of technology ris risks. They exist because of coalition of public and private stake holders. There is also a clear source of revenue to cover the cost or the lifetime. With the right approach it can work and in some ace cases is working. Despite these examples from gue progress is lagging behind. Urgent action is needed to support it. Without it the challenge will be much bigger and more costly. Thats why we at the iea together with countries and Industry Leaders are working to give a new momentum. Coal use would be seriously con trained in the future. The iea is committed to pushing it forward. They drop new regulations and disper investments. They cochaired a highlevel summit which brought together ceos of the high energy companies. We must build on this commitment and now move forward and act. So finally to wrap up let me conclude with some main messages. Global coal demand is set to stagnate through 2022. The 2017 increase, its a blip. Second, the structural but slow decline that china is taking place with fluxuations up and down determined by market needs. We may see china go up but it can go down again too depending on conditions. India shlgs sou india, south asia and Southeast Asia are leading the growth that offsets the declines that were forecasted. Fourth, the global trade numbers are actually contracting. Uncertainty in this estimate is pretty high given all of the uncertainties in the big importers. And finally, coal use in the future will be constrained without Carbon Capture, unitely sooigs and storage becoming implemented widely. Now, at todays launch after our presentation we had comments from the secretary of coal about the report, and the secretary commented that coal will continue to supply base load energy. He was also very supportive of the idea of carbon cab i think our messages are getting through and i think our outreach to new countries in our Association Members is really paying dividends and were having an influence on the coal on the coal policies in the world today. With that id like to thank you for listening. [ applause ] that was fantastic. Thank you so much, peter. Very comprehensive. I mean, we are looking at all these sort of major market mover countries, but within the country, you know, there are all these you know, the power market is fast evolving and certainly there is coal usage in the nonpower sector as well that are impacted by a lot of different concerns, you know, whether socioeconomic or political, market oriented. But i wanted to since you are in washington i wanted to ask you some of the u. S. Focused questions. You did already mention that the increased u. S. Coal export this year is probably more of a blip, but, i guess, you know and i realize that its very much, you know, driven by market fundamentals, but, for example, recently the u. S. Started exporting coal to ukraine and it had you know, it was looking at, i guess, specific type of coal. I mean, i guess there are always certain lower hanging parts, potential markets that u. S. Coal still could be appealing, i suppose. I might be mistaken, but if you could sort of help elaborate on that that would be great. Sure. I would be happy to. First of all, thermo coal market and metallurgical coal market are different. Even though our forecasts for metallurgical coal are quite flight, 20, 22 levels globally since 2016. There are several growth in countries particularly india where we see specific growth in metallurgical coal demand. There is there are in certain countries a need for more metallurgical coal. As a result i think there are some opportunities there. Overall overall we actually do we didnt break it out break it out in the analysis there, but in the actual report which i should show you looks like this, that we actually look at ukraine and i guess eurasian countries together and it is one of the other areas where we see some opportunities. So that is an area where there are also some possibilities for increased consumption. In many areas, of course, that are rather close to russia, but ukraine is in a rather different situation when it comes to that. Because the russian competitiveness has improved quite a bit with the fall in ruble. So in other countries we think probably the russians are in the best position to take advantage of that. If im not mace taken i guess the met coal export is more profitable for u. S. Coal exporters than i guess the thermo coal side. To what extent could that ease the pain that the u. S. Coal industry is experiencing in the Balance Sheets . Well, snaes a hard thats a hard one. We didnt examine u. S. Balance streets so i cant give you an opinion as to how much it is. As i said, overall met coal is flat. Its not like met coal is growing away, its just there are particular countries where thats an oppo