Transcripts For CSPAN2 Coal Industry Analysis And Forecasts 20171220

Cspan, where history unfos daily. In 1979 cspan was created as a Public Service by americas cabletelevision companies and is brought to you today by your cable or satellite provider. Up next an official with the International Energy agency on the future of coal. His organization is forecasting decreasing coal usage as use of Renewable Energy continues to increase. From the center for strategic and International Studies, this is about an hour and 15 minutes. Good afternoon my name is jane, and senior fellow with csis National Security program. Its my great honor to welcome peter fraser who is the head of gas coal in Power Markets Division for the International Energy agency based in paris. He is here to launch the call 2017 analysis and forecast of 2022, thats the thats the name of the publication. Cole has been the world dominant fuel for more than a century but its the future use has been under quite a bit of scrutiny today. The power sector, certainly i guess robust deployment of renewables and then combined with cheap gas, particularly north america have been putting quite a bit of pressure on coal Power Generation. So the iea call 2017 is one of the iea these signature publications and its present known as a midterm coal market report. This report provides analysis of recent trends and forecasts to 2022. Supply and trade not only of the global level but at the regional level as well. And peter is you to walk us through on some of the Key Highlights come highlights from his analysis and forecasts, and essentially help us better understand whats happening in the coal markets and also where the markets are headed to in, i guess mid future to 2022. Peter rejoined the International Energy agency december 2016 in current position, the head of gas coal and Power Markets Division. And previously between 19982004 he was a senior electricity policy advisor with the iea. So this is his second tour. In between, peter worked on the Ontario Energy board which is a regulator and the canadian province of ontario. Most recent as Vice President for Consumer Protection and industry performance. From 198998 98 he was Energy Policy advisor at the Ontario Ministry of energy. So its with my great pleasure and peter will speak for maybe 2030 minutes, and then i will ask a couple questions and will have some discussion of here and then certainly open the floor for questions and answers. Please, peter, thank you. Well, good afternoon, everyone. Its a pleasure to be here at the center for strategic and International Studies for the u. S. Launch of the ieas coal report 2017. Our analysis of current state of Global Market at a forecast of the 2022. As to mention our global launch took place earlier today, the first number of launched a major iaea report global reach and india. As india became an associate member of the international agency, Energy Agency earlier this year. I want to thank csis and particularly jane for the work done in organizing this event. As jane mentioned, cole has played a big role in the World Energy System for a long time, and it took until around 1910 for the consumption of coal worldwide to reach about 1 billion tons a year. To get from 1 billion times the 3 billion tons took nearly 90 years, in part because of course the increased role of oil in the 20th century. But to get from 3 billion to 5 billion only took 12 years. We just have come to the far side of a big expansion in coal demand. But since around 2012, 2013 demand was first plateaued and then as ill get into now, demand has been dropping. In fact, last two years, 20142016, marks the largest twoyear drop weve ever seen in coal demand. And unlike the previous occasions where we seen such drops, this occurred during a time of Global Economic growth. It was also the third Consecutive Year that growth in consumption in china occurred. Thats not surprising since china was the source of much of the increase in that going from 3 billion to 5 billion tons a year. Its also worth noting that unlike many other areas, the chinese drop is driven more by consumption outside the power sector. The power sector consumption grew during this time. Its not just china to the United States as well. In the u. S. It is very much a Power Generation story. Its about a switch, away from coal to gas, which is cheaper, and also the growth in renewals which i look into in in a little while. So these two large coal consuming countries have had significant progress, but we also see in europe continued to drop, drop in demand. Now, despite these major coal users reducing their demand, there is growth in some regions. India, a few countries of that region have continued to this growth and those were primarily by Power Generation demand. With this drop in the last two years, actually in 2017, we are seeing a rebound driven by growth in china and india, the u. S. May have a look bit of growth its really pretty flat. This demand rebounds as all supported higher prices throughout the year. So the question is, is what were seeing in 2017 a new trend or is it a blip . Lets find out. Let me start by talking about Power Systems in transformation. Coal provides new 40 of the electricity worldwide, and coalfired generation accounts for twothirds of the global coal consumption. Its important to understand how the Power Generation mix is evolving throughout the world. Let me show you whats happening in four countries. The chart shows coalfired generation in 2012, in 2016 and the changes in power demand and other generation supply. This first chart is the united kingdom. Its probably the case where the quickest transition from coal has occurred. A combination of an actual decline in power demand, an old coal fleet, new environmental regulations, strong renewable growth, and last but not least, i see your to price floor of an pounds per ton over the et as value forced the closure of some coal plants. Cold share in the power makes went from 40 in 2012 2012 dowo less than 10 in 2016. Thats quite a rapid change. Now, let me turn to the United States next, and you will notice here first of all note the rather different scale here, a factor of ten larger in the u. S. , certainly natural gas has hit corporate weve seen a drop drop but its not just a story about natural gas. Since 2012 weve seen a drop of about 275 terawatt hours of coal electricity, to 2016. This is explained both my natural gas, over half of that but also by renewables which is also grown considerably. This, the german case, we have a quite different situation, quite interesting to compare germany and the u. K. Here. Like the u. K. , theres a big growth in renewables, but unlike the u. K. Theres no corresponding shrinking in coal fired generation. A couple of factors to explain that, you can figure out from the chart. One is, of course, a demand increase and secondly, secondly and this is the big difference in the u. K. , Gas Generation actually decreased in germany over the period. The reason for na is relative prices. Unlike the u. K. , they dont have a carbon price floor, where carbon prices are really low. As a consequence, theres been little change despite the introduction of renewables. Finally, let look at china. Now, in china, youve got a combination of factors going on here. The diversification Power Generation from coal, which is by far the dominant source, means a lot more renewables, some more nuclear and some more natural gas in the generation mix, but power demand growth has been biggeren that that, than the others combined and 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 in all of them is the growth of renewables and certainly, thats going to be a big factor affecting fossil fuel generation in the years to come. But growth or lack of growth in these countries is not the whole story. The reality in electricity access in developing countries, many developing countries, thats very different from the more developed countries and different even from china. If we combined bangladesh, pakistan, india and the region, the first four across there, and there are more than 2 billion people there, the per capita consumption is rather low, put them together averaging about a thousand kilowatt hours per capita. Thats already rather low compared to what you see in china, which is above the global average, but its lower still when we start to compare to the average of the oecd countries. Which i think i can which is, you can see more than double again. Now, you notice also i did not put the u. S. On the chart because the u. S. Per capita consumption is literally off the chart. So its possible, its possible and even, i think, likely that developing countries will not reach the oecd level even in the future, theyll possibly follow a less energy pathway, but theres no doubt that these countries will increase with Economic Growth. While we remain optimistic about Renewable Energy and natural gas in countries. Goal will supply a significant share of growing electricity needs. Lets now take a look at prices. This chart will plot prices in europe. Europe as the most liquid coal price index. After a long decline in coal prices over more than four years and by early 2016, futures markets had a very bearish outlook on the future of the prices. As you can see, they anticipated the prices to continue to fall. Reality is quite different. Large part of this was supply side reforms in china which pushed prices up and increasing demand in china. After a brief period of decline, prices have been moving up again. And tight supply in china, again, is one of the main reasons, ill talk a little more details of that a little later. So here is part of the explanation and part of the influence in prices going forward. Since nearly half the worlds coal is consumed in china and produced in china, Chinese Government policy on coal is going to be very important to the world coal markets, and the government has in a very transparent way has defined how its going to aim for having a price target for coal. And so, its defined three areas. The green area, which is the i guess their comfort zone as the price moves, as the price for chinese coal moves in that range, theyre fine with it. When it moves into the blue strip above or below, thats an area where they will say they will be monitoring, but will not need action. But when it moves into the red, thats when they feel action is required. Now, if i just plot that over the last couple of years, you can see that you could see the discomfort at that they would have felt in 2015, early 2016. They took a, to limit supply, close a lot of old and inefficient mines, limit the number of working hours of miners, and that did push the prices up a little high, in fact, so prices since that time have been falling back down and theyre now back down or towards the upper end of the range, towards the upper end of the raining and something that well think is an important factor influencing prices in the future. Part of the reason we say that, i plot the northwest europe price index, we can certainly see a pretty good correlation between the two. Let me also now briefly mention coke and coal prices because weve seen a lot of volatility in those prices in and thats new castle. Thats, and thats the australian coking coal. And the reason for that is queensland, the world depends a lot on queensland coking coal. More than half of the exports are coming from queensland. And when you have weather events such as cyclone debbie, it can have a shortterm impact on the coking coal price. You can see prices jumping up or doubling in a very short time. A very short time as a result of weather events, severe rain has also been a factor in one case. As a result, the prices jump up and down. So now lets turn to lets turn to the demandsupply picture. What im going to present to you is a forecast region by region and build it up to the total demand that you see at the top. First of all, china. In china we see a structural and slow decline in coal demand that fluctuate to meet needs. And the weak hydro production means coal increase, but in the coming years we expect coal use to decline, particularly in the nonpower sectors, as gas is substituted for coal and in residential and in small Industrial Boilers. Together with the economic changes that we have in china, lower Energy Intensive growth and progress in energy diversioncation, we have it going down 1 abouter year over the period. So, if i turn now to india, power demand growth will be robust and this is the demand of coal demand growth. This is despite the fact that we forecast over 150 terrawatt hours of solar power growth generation. 2016 to 2022. The gap will have to be filled by coal. In these countries, grow at a stronger rate, averaging 5. 9 per year. Indonesia, vietnam, malaysia and philippines are increasing Power Capacity and investment in coalfired generation is part of that additional capacity. Now the u. S. In the u. S. , we see a decline driven by sluggish power demand, growth in renewables and some growth on the gas side as well. However, the decline will be much slower than weve seen in recent years. The story in europe, this is the european union, coals in continuous decline. Only 6 of the global coal demand and this year will declineover time with more phasing out coal plants and the main question is what extent that decline will actually accelerate. So, with the others, other countries, which i didnt mention here, some of which youll see increases, like the bangladesh and pakistan and others where there will be decreases, canada, for example, but overall, theres a bit of a growth above. 8 of growth there. But what we see, what we see overall is demand being pretty flat after this years increase. In other words, this years growth is a blip. And when you think about it, with the coal demand plateauing in 20122013, what this means is about a decade where coal demand has been roughly the same or roughly stagnant. So let me talk a little more detail about some of the countries. Again, let me start by turning to china. I should note that some other areas in china, the growth is it going to grow. So theres going to be some growth in coalfired Power Generation, not very much. There will be growth in demand for coal conversion, some coal to liquid conversion and some coal to gas conversion, but is it going theyre going to be more than offset by this decline in consumption in the small residential and Industrial Boilers and the change in the economic factors which are leading to less Energy Intensive growth. Now, its also had some interesting geographic implications which is going to affect the International Coal markets more. So, for example, when we look at where those boilers are being switched out, its the majority of those are in the coastal areas. As you can see here, the three, the three areas on the right. Although its significant, also, coal in the other areas, it amounts to over 100 million tons of coal we think will be switched out. Coal which we think will be eliminated, switching principally to gas. Its not the only factor that will affect coastal consumption. A second factor affecting coal consumption, comes from the construction of ultra high voltage lines, which in effect, replaces coastal areas with coal consumption for Power Generation and coal areas in the interior. In addition, of course, these power lines arent just going to take coal power, its not just coal by wire, its also going to be wind and in the south, the lines in the south, hydropower by wire as well. But what it will do is reduce demand in the coastal areas and thats important because thats where the imported coal goes to. It doesnt go into the interior, it goes to the coast. So, we think the impact of these developments on global coal demand, on global trade, will be even more significant. Another country where this is important, where import dependency is a big issue is india. And this slide is to show you how, how Coal Production increase has been reducing import dependencdependency. Now, these show the contributions from investing in renewables and introducing to coal use in india, which weve 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, and these second set are the are the production increases were seeing in india as a result of the as a result of reforms in coal india and other efforts to improve Coal Production. As you can see, these are very significant and we saw coal imports decline in india in 2016 and our outlook, we see further decline in those imports after 2022 from about 101 million tons in 2016 to about 89 million tons in 2022. Now, to do this, coal india will have to perform. We do assume that the changes that are being made will continue to be affected and increasing Domestic Production and assuring that coal is produced and is able to be delivered to power plants and to other users inside india. Let me now turn to the u. S. And the in particular, in particular looking at the coal capacity situation, oops, let me see if i can no, thats all right so the coal capacity situation looking out both the new and the retired capacity together, you see no new capacity additions coming in since 2013. On a net basis, which we can show here, we have this big dropoff in capacity through 2016 into 2017. But 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 weve seen in recent years. We are our reasoning is very much along the lines, gas prices have gone pretty low as low as they can go and the more inefficient parts of the coal sector are what has been retired. The older and less efficient plants in particular are the ones that have closed. Some high cost mines have closed. As a result the coal industry thats left is a more efficient industry and more Competitive Industry than it was a few years ago. As a consequence, we think it will be more resilient to future, future shock. Now, let me just 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 those imports evolved to 202 2 ch2. And the interesting thing here when we look at imports is the biggest coal users, we are forecasting that they will all reduce their imports over the period. However, what we must admit that theres a lot of uncertainty about whether or not this will occur. China and india, are big markets where markets compete. As we see this year in china, 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 17 giga watts restarted by 2022, as well as the uptake of renewables, imports would increase if reactors restart. And theres already a 4. 6 giga watts of coal fired capacity in japan. In career things are more uncertain. There are over 10 giga watts is under commission or construction, but the new government has been making shares in the coal power mix. Weve built up the trade number for 2022. Now, if you look at the power side of the chart and imports. And indonesia will see a big increase in exports. Domestic demand and coal fired power plants in indonesia and difficulties in cost competitiveness of increasing production. So 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 that were actually seeing this year. It is the swing provider and it has enough mining for capacity on the east coast and can react if prices are right. Id like to focus the last part of my presentation on Carbon Capture, utilization and storage or ccs. And thats because Carbon Capture of utilization storage is one of the low carbon authorities that has been making some progress, but not nearly enough. This technology has been proven in four examples of facilities recently commissioned that was mentioned to you. First of all, here in the United States and in illinois, theres a et ethanol facility in the u. S. 1 million tons of co 2 per year. And the plant in texas will be used for enhanced oil recovery. Quest is a canadian oilsands company, and store geological structure nearby. And theres a project in abu dhabi, co 2, around 8 million tons per year in the steel making process used in the enhanced oil recovery. These projects have common characteristics. The theyve installed operating assets which have a Sustainable Business model. They are relatively low Technology Risk and under storage technology. Theres a clear source of revenue to cover the ccu s costs or the lifetime of the asset. With the right approach, it can work, in some cases, is working. But despite, despite these examples, progress on ccus is lagging far behind other low carbon technologies. Theres broad agreement in government and industry that urgent action is needed to support ccus for without it, the climate challenge will be much bigger and Climate Change mitigation much more costly. Thats why we, together with country Industry Leaders are working to give a new momentum to this technology. Indeed, without ccus, coal use will be seriously constrained in the future. The agenda that must volume government and industry and regulate new industries and spur investments. Last month the u. S. Secretary of energy, rick perry, with the aie executive, cochaired a high level summit which brought together more than 20 countries and the ceos of the Worlds Largest Energy Companies that share commitment to ccus, we must build on this commitment and now move forward and act. So finally, to wrap up, wrap up, let me conclude with some main messages. Global coal demand is set to stagnate in 2022. The increase is a blip. Second, the structural, but slow decline in china. China is taking place. With fluctuations up and down determined by market needs, so we may see china go up as we did in 2017 blip, but it can go down again, too, depending on conditions. India, south asia, and Southeast Asia are leading the growth that offsets the declines that were forecasting. The global trade numbers are actually contracting. But uncertainty in this estimate is pretty high given all the uncertainties in the big importers. And finally, coal use in the future will be constrained without Carbon Capture utilization and storage becoming practical and implemented widely. Now, at todays launch in delhi after our presentation there, we had coal about the report and the indian, the secretary commented that coal continued base load energy, but he also was very supportive of the Carbon Capture and utilization, didnt actually mention storage, he wanted to emphasize that the carbon, co2 had to be used. I think our message is 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. And with that id like to thank you for listening. [applaus [applause] that was fantastic, thank you so much, peter. Very comprehensive. I mean, were looking at all of these sort of a measure markets mover countries, but within the country, there are all of these, you know, the tar market is fast evolving and certainly, theres coal usage, in sectors as well that are impacted by a lot of different concerns you know, whether socioeconomic, or political, in the market oriented, but i wanted to, since were in washington, i wanted to ask you some of the u. S. Focused questions. You did already mention that the increase u. S. Coal export this year is probably more of a blip. But i guess, you know, the and i realize that its very much driven by market fundamentals. For example, recently the u. S. Started exporting coal to ukraine. And it had, and it was looking at, i guess, specific type of coal. I mean, i guess there are always certainly lower hanging par parts, potential markets that u. S. Coal still be appealing, i suppose, or i might be mistaken, but if you can sort of help elaborate on that, that would be great. Sure, id be happy to. First of all, thermal coal market and the metallurgical coal market are different. Even though our forecast for metallurgical coal is flat, 2022 levelses same as 2016. There are certain growth in certain countries, particularly india we see a demand for metallurgical coal. And thats no surprise, theres a there are certain countries need for more metallurgical coal and there are opportunities there. We didnt break it out in the analysis there, but its 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 its an area where we see opportunities. So thats an area where there are possibilities for increased consumption. In many areas, theyre close to russia but ukraine is in a rather different situation when it comes to that. But, because the russian competitiveness has improved quite a bit with the fall in the ruble. So, in other countries, we think, probably the russians are in the best position to take advantage of that. And if im not mistaken, i guess the met coal, not as profitable for u. S. Coal exporters, but to what extent could that ease the pain that a u. S. Coal is experiencing on the Balance Sheet . Well, i thats a hard one. We didnt examine the u. S. Balance sheet so i cant give you an opinion how much it is. As i said, overall, overall met coal is flat so its not like met coal is growing a lot its just particular countries thats an opportunity so you see a new mine opening here and i think thats a clear indication that the market thinks theres something there. Certainly the dependence on queensland for metallurgical coal exports is something that made even customers looking for other sources of supply. And i guess within the u. S. Discussion on the future of coal, we do pay a lot of attention to socioeconomic challenges, namely, you know, coal mining sector, how theyre under quite a bit of pressure. Does your report give some sense of the rate of, i guess, automation, the use of, how, you know, its becoming sort of modernized upstream and how that may impact the labor force issue . We didnt address labor force explicitly. We looked from the cost perspective and weve seen increase in the u. S. And in other countries as well with the recent shakeout in the industry and very low prices they saw until last year. And i also want to cover just two more markets quickly, the and i do certainly want to save some for the audience to ask. But of course, china has been the major importer of global coal supply and you did touch upon how there has been the supply side effort. And these, you know, supply side reform has been focused on improving safety the standards, also, improving efficiency. Whats your assessment of the of the progress that theyre making on some of these targets . Okay, well, thats a good question. Our assessment and we were fortunate this year that we had an official from shenua coal working on this and otherwise would have been difficult for us to obtain. Thanks to our association, we were able to do that thanks to our association with china. On that, what weve seen, we have certainly the information or data that weve got suggests theres been significant improvement in production and policies have been affected. Of course, one of the policies, which was the number of working days, regulation, they found actually it causes overcorrection and the price has spiked, imports came in and so they realized they had to relax that, but i think, again, this is trying to control, trying to control, impose on the market mechanism and finding limits, finding the limits of how much they can impose on this. But i do think theyve seen some Real Progress there. You also touched upon high voleage transmission and how that may impact, i guess, trade flow. And would you mind elaborating a little bit on that . Well, its just that, again, when it comes to china, the scale of this is enormous. And so we are talking hundreds of terawatt hours of power that now can move from western china to eastern china or southeastern china to the coast. And this will make it much easier to have this kind of interregional trade electricity and presumably more efficient. At the same time the coastal years are doing what they can to reduce their coal consumpti consumption, in some cases, emissions from that, on some boiler side. And china is also in the middle of power form. And how with this additional infrastructure bill that should actually hopefully make the power reforms more effective. I guess, one last question for this segment. On india, so, india still has about 3 Million People that do not have modern form of electricity if im not mistaken. Efficient coal, predominantly coal is pretty low, if im not mistaken, low 60s, high 50s. Whats happening there . Well, i think the utilization factor, load factor is really more a function how quickly theyve been building the coal plants, and the government has made specifically efforts to improve the Financial Health of the distribute bugs companies and also at the same time impose a requirement to go and connect everybody. And the two need to go hand in hand. If the companies dont have money, they cant actually connect people. A lot is put on the Distribution Companies to make this happen. But they do they are quite determined and theres a lot were told a lot of progress has been made on this, so we do expect most people in india, who are not yet have access to electricity, to get it through a grid connection. Say that more decentralized option. Great. Now, its your chance to ask him questions. And i guess three basic ground rules, please, one, wait for the microphone to get to you. Identify your name, yourself and your affiliation as well. Thank you. Yeah, my question is, are there any work projects going on at iae looking at china coal investment plants. Thank you. Well, about we certainly look at it all the time in terms of just know ared to understand where its going. We do look at chinese coal power plant investment and try to keep on top of that. We publish every year, World Energy Investment outlook and of course, china is a significant park World Energy Investment. So thats covered there. We also have working on some initiatives to look at flexibility of power plants, because with renewables integration, thats a bigger issue. And thats an initiative that were doing in partnership with the clean ministry and looking at power plant operation, in order to see what the ability of an existing fleet of coal plants to integrate renewables. If you could stand, sir. Yes, thank you for coming. Theres a number of l and g exporting terminals in the pipelines in the u. S. And i want to know how you consider those in your analysis of worldwide coal exports and lng exports. Good question, first of all, we actually produce a separate gas report where we look at the impact on look at the exports. We see the u. S. , for example, exporting 82 billion cubic meters by 2022. Last year was only 5. When we look at it, when we look at gas versus coal and the particular country of it, you look at relative economics. In most of the world, gas is a more expensive way to make electricity, as a result. Its often a policy, its either a policy push or a domestic resource in the case of a place like malaysia which has really driven gas use there. When we look forward, we look at then we look at what the changes in Government Policies are and the power demand and thats how we come up with our estimate. Yes, sir, thank you so much. My name is sergio martinez, i wanted to ask a question about renewables that you mentioned at the beginning and the do you anticipate any change in the coal market given the pressure on Climate Change commitments and sustainability growth, in terms of renewables and how this would come into play . Thank you. Okay. I think the best way to answer your question is to make reference to the World Energy Outlook, a longterm look at the World Energy Markets and we have what we call our main scenario is what we call our new policy scenario. Broadly speaking we see coal demand flat out to 2040, even with the commitments to meet the 2030 national l nationally contributions under the paris agreement. In Many Companies not many, but in some includes an expansion of coal. And actually with other countries committing to get out of coal, at least for power gen, we see overall coal remaining roughly flat. We look at a scenario where theres more aggressive action, our sustainability Growth Scenario and we see others to reduce co2 emissions by 2040. Coal dropping to levels probably havent seen since 1970s. , but that will take strong policy action to change course. Thank you, jonathan, securing americas future energy. Theres vast differences, as you know, in coal quality. And has the report taken that into account and thought about what the economic and environmental tradeoff would be if there is a substitution of north appalachia for german and polish. Good question, im not sure if i can address that specific example, but i can give you an example where weve considered it. Which is where were looking at indian coal imports. Theres an ability that, again, the policy of the government is to decrease imports as much as they can. The same time, theres a lot of coastal, coalfired power plants which are relying on imported coal, because of the quality characteristics that you mention. So when we do the analysis and the supply to the market report, and other analysis we do, we have to take that into account, theres kind of a hard floor to how much you can reduce imports in that case. So, its a with existing plant, you know, there are limitations as to what kind of coal you can use and we try to take that into account. Bob, im ooh a consultant. How are things looking for met coal versus steam coal . And globaling met coal is flat up to 2022. Places like india, some in korea as well, we see some possibilities for increases and offsetting decreases in places like china because the Economic Transformation thats going on there. Steam coal, we actually, after i would say after this years increase is probably out to 2022 as well. The regional differences that i was talking about in the presentation. Its really its really increases in some places and offset by decreases in others. Hi, my name is richard, im a student at George Washington university. You spoke about how coal demand is raising in a lot of the developing world as demand for energy expands. However, you spoke with india which produces coal and a lot of Energy Demand is starting to arise in africa, particularly sub Saharan Africa and wondering if coal is a Reliable Energy source to these Rural Communities and how it can be brought there if it is and what other how could it be done to ensure that its sustainable and beneficial to the communities in the longrun, thank you. Its a complex question and something that we had issued a report a couple months ago, our Energy Access report. A report affiliated with World Energy Outlook and we looked at areas there where grid supply of electricity had not been, you know, people dont have access to electricity and we saw that a combination of policies, in some cases extension like were probably going to see in india, but also, other policies particularly with solar these days, that now actually should make it much more economical to expand access and connect more people to give more people access to electricity. Coal in certain countries in africa, when they have the resource and south africa, you know very well, is a big user of coal, is obviously an option for some of the countries and particularly when its their own resource. I think you see it in the big uses of coal. China, india and the United States. Theres a preference when you have the resource, but the question to go if you want to build a big power plant, what technology do you use, coal places are competitive relative to l and n and that remains an option for some countries, but obviously the attraction is much stronger if they have their domestic resources which can be developed. So, for example, we see in pakistan today, you see a development there because there are coal mines that can be developed as well. As well as imported coal thats going in. Thank you, peter. And i was interested in this issue of the competition between l and g and coal and particularly in Southeast Asia and south asia. I mean, i think, you know, when coal prices were really at their lowest, you had a lot of decisions made by, you know, pakistan, bangladesh, et cetera, to develop coal plants. Very much based on importing indonesian coal which has been very lost cost and proximate to these markets. I get the sense though that countries in the current environment of low l and g prices are also looking at that as an alternative to in the future and i think that im not so sure that the projections of large growth are necessarily going to be born out by the if gas prices continue to be low, not that there wont be, but it will vary from country to country. But, whats your sense of that in terms of the sustainability . And also you mentioned the problems in indonesia because of the in terms of both domestic consumption, as well as the governments nonenforced policy of trying to cap coal exports. Are there other options for these countries if indeed indonesia is not a reliable supplier in the future . Well, there are certainly other coal exporting countries in the region, but thats the first option, if they feel that indonesia is not the reliable supplier because looking at indonesian policy, even, they may turn to australia or other countries. In terms of the coal versus l and g, certainly, our few, our few, although its not true, if you look today at the market. Lng is going to be fairly inexpensive, theres a lot coming online, much greater than the demand would be, as a result of there will be short time. If you build a facility we think that the surplus, which will result in low prices will shift, the prices will move up over time. Theres also a risk there if you go that out. We certainly counsel diversity sources and with the council of renewables, theres that in the mix and talking about integration issues and how you deal with that, there may be something, the utilities there they might not be comfortable with. We try to engage them on that and Energy Efficiency as well. Lye, im wondering if you track in this report and elsewhere, a shock to the system if theres an immediate forecast and if so, are you most concerned with natural disaster, political instability or inknow he evaluation, that could push the coal up or down. Is that something you are keeping an eye on . Absolutely. International Energy Agency was created to deal with the oil industry and as a result of an oil shock. Its central to the work we do. And what, in the past it was oil and today its much more natural gas i would say than coal, but we look at the indirect impacts of, say, a shock on the gas side. For example, in recent months theres been this diplomatic issue between qatar and its neighbors. Well, qatar supplies about 30 of the worlds l and g. So if something were to happen. That would take qatar out of the market. No reason to suspect that, but its something that we keep an eye on on behalf of our member governments so we ask ourselves. What if that happened. We think about other issues. What are the impact on the other the markets. We look at metallurgical coal and that drove the price spikes and impressed us as id say the relatively fragility of the supply chain in met coal. Were drawing lessons from the past, than say looking ahead in that case. This is a followup question on my first one. Moving forward, you mentioned the new technology, when you look at investment overseas, especially through the initiative, do you see that theyre going to maybe apply similar routes or tracking environmental regulations. How do you think this is going to effect the coal plant, the coal market in general in Southeast Asia area. Well, we do see china involved in coal plant investment, coal plant investment in other countries and also in technology transfer, they have built a lot of coal plants in the last decade or two. So they have a lot of technology. And through one belt or one road or other financial initiatives, they are supporting, they are helping to finance certain types of coal investments. The expectation is expectations certainly in our report is that kind of support will continue. Will continue. A lot of the Tech Technology nor recent china coal plants are very good in terms of efficiency and in terms of emissions control, the conventional emissions control that you could have. I was going to quickly add its more from the multilateral that the world is interested in seeing higher standar standards, you know, for multilateral institutions calling for Higher Standards as opposed to manufacturers voluntarily saying, well, you know, we want to show higher efficiency or higher performance. But i think theres a lot of discussion going on, perhaps between the a lot of Capacity Building is underway, its something that i follow pretty closely, he so so i guess well stay tuned. Any other questions . Thank you very much. Im an independent consultant and the very last point on your slide up there that says coal use will be constrained without ccus and that you are working with the industry and policy makers to build momentum. What kind of momentum . Are you saying for carbon price perhaps . Because ccus will make coal more expensive unless theres something to make it more economic to ccus. Right, this is much more of a Technology Focus to get it implemented to try to find the right frameworks, to make sure it ccus coal more applied. Without the coal out there, coal generation out there, were going to need technologies like this to compliment the other low carbon technologies, to significantly reduce emissions in the future. And if we dont get it, if we if it turns out that we cant find a wide scale application, ccus which is economic compared to other low carbon technologies, that will severely con strain coal. So not specifically a carbon price or that specific instrument, its much more of a technological focus and much more in terms of demonstration and implementation of the technology, rather than the palty framework which might make that more attractive. Let me ask you a couple more questions. You know, weve talked about ccs, ccus a little bit, but havent talked about high efficiency, low emissions technology. Where do you see i mean, what sort of future do you think that particular again rah of that has . Certainly theres a lot of interest among people who are building coal in these high efficiency, low emissions technologies. But a lot of what weve seen, osaka, and other cases like that, which are really quite impressive, but the economics isnt compelling, say, its just going to use a super end of pipe controls. So thats been the issue. The economics havent been compelling to encourage Widespread Adoption of these kinds of technologies and if the feeling is youre still going to have to put on ccus or ccs on top of everything else, that that might drive your economics, might make it completely uneconomic. So, were not certainly not in this report were not predicting much of it to happen. When i think of the u. S. Landscape and that theres very little appetite for, you know, healing, theres little investment going into the thermal, coal fire generation period, so, yeah, as you said, if youre looking, you have to have, i guess, you know, you have to know that your asset will stay running to be able to recuperate all the investment ab its a very challenging picture. I think especially in the oecd economy where and that leads me to sort of a question about india, i mean, india is essential the power demand is growing, coal consumption is growing, but the fleet modernization, you know, i think theres potential for these higher efficiency or perhaps ccus, as you mentioned from the podium, ccus, at the same time were starting to hear through media sources, a little bit of concern about the coal becoming stranded asset. There are a lot of projects that are not completed. I dont know if you, you know, or your staff travels to india often to get sort of more of a microlevel perspective on whats happening. Is it because of the competition from renewables . Is it more financial issue . Whats, yeah, whats behind this picture . Well, there are a lot of things going on. India is a big country and it can be Different Things in different parts of the country, but certainly one of the overall factors is how quickly, how quickly power demand is slow, growth is slow compare to a few years ago. So, youve had coal generating capacity double in india in six years, 2010, 2016. Power demand hasnt really kept up with that growth and now, you have Renewables Coming in on top of that. As a result, its quite easy to see why youd have the consolations and the continued capacity additions in coal are going to be much slower in the next six years compared to the last six. Could you put a number on how many new plants are being built with Super Critical generators . Actually, particularly in asia. The answer is no, i dont have the number handy, i would say most, but and i also wanted to, i guess, talk a little more about, i guess, mid stream transportation. We did talk a little about the chinese situation regarding the ultra super ultra high voltage transmissions lines. Is that a potential challenge in india not a challenge per se, is that something that india will be looking at closely as they try to introduce more renewables and then try to get the electricity to the center . Well, thats an interesting question. Im not sure what studies have been done on that. Interesting i saw it on map today, where the resources are and they tend to be on the western part of india and the coal tends to be on the east. So, the where it stays dynamics are different in china and coal is relatively remote from high population areas, so the opportunity of coal by wire or renewables by wire is greater. So, certainly, thats another technology that the indians could look at. A question . Im going to ask another one. In probably a follow the debate about coal in the u. S. And in terms of the issue of the market implications and whether, you know, market sdieb should be adapted to value the capacity payments or other aspects, the base load and fuel security issues, are you seeing that in other countries, too . I know we had discussions with germany when they were debating whether to put in capacity payments for generators and is that something that you think makes sense to spur in terms. Iaes advice and consultations about Market Designs . Well, certainly first of all, a couple of years ago, almost two years ago now, we published a book called repowering markets and we looked at designs in different markets and of course in the u. S. , in pjm, there is capacity markets. So, its not just the Current Issue and not just here in the u. S. , an example in australia. We originally looked at renewables questions as a question how do we integrate the renewables into the system. So, thats an addition question. But, the question that quickly follows is, in most Market Designs, well, you add extra generation into the system, the system responds by lowering the price, and then those, those some of those generate access, in other words, theres a subtraction problem. If they have certainly characteristics that youre losing compared to the new generation thats coming in. So, in the case of australia, which has a relatively long, relatively narrow Transmission System serving as National Energy market, they were finding in some places at the end of those, on the ends, South Australia that was hard to keep the system reliable, as gas plants in that area were closing. And so, as a consequence, the government proposed about a couple of months ago now, a new requirement on the part of retailers to say, in the case of australia, we think we need to have inertia, which is the big rotating masses, masses associated with it. And inertia helps you if a big plant goes off line or another upset, like losing a major transmission line, it helps to cover automatically and it is like the word describes, something thats there. And if you have nothing, but wind and solar, you dont have it, you dont have that anymore. So, they were going to put in a new rule that everybody who is acquiring power like retailers for their customers will have to have, buy inertia from generators so that helps to keep them h. Technical questions but very much appreciated your insights, also thoughtful sort of observation of whats happening in the power market. Certainly here as well as in other key markets and also in general. The role that the government has been playing with and also how theyre still a lot of scopes or cooperation with the private sector. So thank you so much. I do hope you will be back next year and share your additional insights in the next 12 months. It will be, sort of supply and demand dynamics may default. Again, thank you so much. [applause] [inaudible conversations] [inaudible conversations] we are live this morning and u. S. Capitol to hear from House Minority leader nancy pelosi and other House Democrats about the Childrens Health Insurance Program provide Health Insurance to millions of children. It hasnt has been fully fundee september. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] once again we are live in the u. S. Capital to hear from House Minority leader nancy pelosi. She will be joined with other democrats from the house to talk about the Childrens Health Insurance Program, provide Health Insurance to millions of children, children and it has not been fully funded since this past september. We expect her momentarily live here on cspan2. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] i want to mention a few folks by name who deserve a big thank you for the incredible work they did to get us to this terrific point that we are at tonight. I want to start with leader mcconnell. His vision and leadership made this possible, and im grateful for that. I want to mention chairman hatch who also help to guide the finance committee which has the jurisdiction over our tax code. Chairman enzi, the chairman of the Budget Committee without a a proper budget resolution this moment would not have been possible. Chairman murkowski who has bought for so long to open up this little tiny postage stamp, and an incredibly remote part of alaska to Prudent Energy development and finally tonight we are going to pass the legislation to do that. Senator cornyn, our with who is also a member of the finance committee and played a really important role. Senator thune and portman and scott with whom i work really, really closely for a very extended period of time to try to find the consensus that i think we have reached among republican senators, to mention senator corker. I had many long and ultimately very hurtful conversation with senator corker who just approach this in a very thoughtful and responsible way, and im grateful for him. I i would imagine some of the staff that work incredibly hard on this. Mark warren who handles tax policy for senator thune, and zach who works for senator portman, shea hawkins who handles this brief or senator scott. Andrew syracuse who works for senator cornyn, and barred manzi who handles this responsibility for senator enzi halted terrific work. Big special thanks to some of the guys on my staff that did an amazing job. Randy harnden joined my team just earlier this year, and did an absolutely extraordinary job. Fortunately, he has an incredible wealth of knowledge about tax policy and he was able to put that to work for pennsylvanians and for americans in a tremendously constructive way. My legislative director who also helped to guide this process, and dan was my chief of staff and you did some great order backing. I should point out the Senate Finance Committee Staff that works just incredible hours and did a great job, j, mark, jenna. And the rest of the Senate Finance Committee Staff, also brendan done in the Leaders Office who played a really important role. Speaker ryan and chairman brady in the other Chamber Plate and indispensable role in getting us here. As did tom bartholdi who leads the joint committee on taxation, quantifying every wrinkle along the way in the final product as well as his team. Should mention also the president provided constructive leadership alone the way and we worked extensively with treasury secretary mnuchin and the director of the National Economic council, gary cohn from the white house. So, mr. President , this took a long time to come together and it involves an enormous amount of work, but i am so proud of what we have brought to this look and what i believe is going to pass later this evening. The process started over a year ago when members of the finance committee began to tackle what seems like a very daunting challenge. The most ambitious tax reform in 31 years. Could we really overhaul the entire tax code and achieved to really, really important accomplishments, and do it with a very narrow majority we have . Knowing that our democratic friends did not want to participate in this process, and try to get this all the way across the goal line. I am thrilled to be of good report i think weve those two big things. Number one, we were determined from the beginning that we would not even attempt to bring a bill to the floor and less about the tax burden on the families that we represent. Individuals, families, middle income and low income families, that was the one. And number two we wanted to fundamentally restructure the business side of our tax code so that American Workers and businesses can compete and win in a Global Economy against anybody. Ive got to kelly we did those things and i think thats why this is going to pass tonight. First, on the individual side, this is absolutely a direct tax cut for the vast overwhelming majority of low and middle income taxpayers. They will simply a less in federal taxes. Thats the reality. By the way most high income taxpayers want some savings as well. I dont apologize for that. Im in favor of lowering the tax burden on everyone. While not every last individual will have a tax cut vast majority of people will do we do it to a variety of mechanisms, i wont go through all of them but a couple of the mechanisms i think people understand and appreciate is one, we double the standard deduction. That means that a couple filing jointly as most married couples do, the first 24,000 of income they earned doesnt get taxed at all, zero, nothing. They dont owe a a dime to the federal government on the first 24,000 that they earn. That one step alone results in a tax reduction for many, many millions of americans. But in addition we lower marginal tax rates so that the income people start earning above 24,000 gets taxed at lower rates under our build that under current law. And what also dramatically increase the Child Tax Credit so families with children get this additional benefit on top of the winter just mentioned are. The net effect is every single income category pace less in taxes. Thats according to the joint tax, thats the joint tax nonpartisan review of our bill. And low income earners receive the largest percentage benefit of all. Now, for people who are listening to this debate, whether in the chamber or watching cspan, i can understand that they could be a little frustrated because they hear our democratic colleagues say this is this is a terribler the middle class. Some of you said its a tax increase, a day for me and say this is absolutely a tax cut for the middle class. Who are they to believe . Understand that frustration. That may suggest theres a simple way to cut through all this. Theres two actually. Number one, look at what happened on the singapore during the debate on this. The same argument was taking place when a democratic senator offered an amendment to take our tax policy for low and middle income families and individuals, and make it permanent. Now, if this this is a bad dear the middle class, presumably the Democratic Senators would vote no. But they did not. They voted yes. It was quite an extraordinary complement to our work that they offered an amendment to take what we did, which is not yet permanent, we were not able to do that. Well come back and revisit that and i hope we will make it permanent but he took over did and said this is so good we should make it permanent right now. So i appreciate the compliment. I appreciate the validation of the tax cut that this is for low income and middle income families. And i want to work to make sure it is permanent. We should be able to do that. The second way that we know where the truth lies in this debate, in late january or early february, check your paycheck. Take a look. Withholding will go down because youre going to a less money to uncle sam. Youre going to get a takehome pay raise. Its as simple as that. So the mystery with a gun when people take a look at the check and discover yes, look at that. I actually got that pay raise that those republican guys said were going to get. Im looking forward to when that happens, and at that point i think this debate will ship to other topics, my guest. I want to touch on the tax reform on the business side, mr. President , because that is what i think is really likely to drive the Economic Growth and the opportunities that i want to see creative for the people i represent. Comes in a context, the context is the weakest economic recovery in history of the republic after a very severe recession in 2008. We never really had the blending recovery that we have always had in the past. Its not huge mystery why. Our democratic friends had complete control of the elected government by the did all the things they wanted to do. They had the ability and they did. Cute repeated tax increases with no reforms. A virtual takeover of health care, an avalanche of new regulations and a massive spending binge. They did all those things, and unsurprisingly, we got a weak economy, not a strong economy. One of the specific problems that we have had that has plagued us ever since that recession is a collapse in the growth of the Capital Stock which caused a collapse in the growth of productivity, and without productivity it is not at all surprising that workers are not getting raises. A path to higher wages for workers is allowing workers to become more productive, to be more productive they need better tools and better tools are acquired through investment. So that was lacking, mr. President , and that is at the heart of what were fixing. Our reform goes right to this challenge of lowering the cost of deploying capital. What i mean is investing in the very kind of equipment that makes workers more productive and allows them to earn higher wages. I simple example, mr. President , you go to a construction site and theres two guys working. What is and is working a backhoe and others working a shovel. They are both digging a hole. They are both moving dirt. Which one do you think is getting paid more lax i got operating the tobacco is always making more money because he is able to be so much more productive than any human can be with just his hair hands at a shovel. When we make it more affordable for business to go out and buy new tractors, new equipment, new machinery, that gives them the chance to put those more valuable tools enhance other workers. Somewhat also have to build those things. Someone has the job at caterpillar of making that tractor. Someone has the job of making that vehicle. Someone has the job good morning. On the chair of the democratic womens working group, and we will be joined by leader pel