India is set to overtake China in global coal demand over the next two decades partially offsetting the sluggish offtake by its neighbour. However, both nations are poised to be among the top three economies by 2030 driving global fossil fuel consumption primarily driven by power sector demand.
According to BP's Energy Outlook for 2030 released recently, China's energy demand growth is projected to decelerate to three per cent annually over the forecast period against 6.6 per cent annually during the 1990-2010 period. This is due to a slowing GDP growth and rapid improvement in energy intensity. India, on the other hand, does not follow China's path and there is no surge in energy demand as further industrialisation takes place.
The report said demand growth will slow to 4.5 per cent annually for the forecast period against 5.5 per cent. This dip in demand is attributed to improved energy efficiency, partly offsetting the needs of industrialisation and infrastructure expansion.
Production challenges
India remains on a lower path of energy intensity and by 2030 it will consume only about half the energy that China consumes today, at a similar income per capita level as in China today, the report says.
Currently, India accounts for a third of growth in global coal demand and is projected to increase its share of consumption to 14 per cent from the present 8 per cent by 2030. China, which accounts for two-third of the growth in global coal demand will see a relatively slower increase to 53 per cent from the present 48 per cent due to a slowing GDP growth and rapid improvement in its energy intensity.
Maturing industry
Both China and India face challenges in growing domestic production fast enough to keep up with demand. Their growing import requirements drive further expansion and integration of global coal trade. Coal remains the main commercial fuel for the world's top two most populated nations. However, coal's share in the total fuel mix for India is projected to drop to 50 per cent from 53 per cent mainly due to domestic resource constraints, the report said.
However, in the case of China, the dip in coal share of fuel mix is much sharper at 55 per cent from 70 per cent due to maturing industrial structure. In 2016-17 India's coal requirement is pegged at 788 million tonne while domestic availability is projected to be 550 million tonne.