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Updated May 2022

 

Summary

Demand for subbituminous coal is expected to decrease in Alberta sooner than required as coal-fired power plants are converted or retired.

International demand for metallurgical and thermal coals are expected to remain stable, especially from Asian markets and other developing regions over the forecast.

Subbituminous Coal

Demand for Alberta's subbituminous coal is expected to decline sooner than required due to retirements and conversions of coal-fired power plants, such as Heartland Generation Ltd. (formerly Canadian Utilities Limited, a subsidiary of ATCO), Capital Power, and TransAlta.

Retirement of Coal-Fired Power

The projected retirement and conversion of Alberta's remaining coal-fired power plants by the end of 2023 is expected to significantly affect production from the remaining subbituminous coal mines as nearly all subbitumous coal is used for intraprovincial power generation.

Federal regulations once required coal-fired power plants to either retire after reaching 50 years of service, meet emissions performance standards equivalent to high-efficiency natural gas generation, or incorporate carbon capture and storage systems. These regulations were updated in December 2018 in the Regulations Amending the Reduction of Carbon Dioxide Emissions from Coal-fired Generation of Electricity Regulations.

Some of the major changes include redefining useful life, refining performance standards, and exemptions for units with carbon capture and sequestration.

The amendments to the useful life require that assets be retired as follows:

  • For units commissioned before 1975, the earlier of December 31, 2019, or December 31 in the calendar year 50 years after the commissioning date.
  • For units commissioned after 1974, the earlier of December 31, 2029, or December 31 in the calendar year 50 years after the commissioning date.

The outlook for subbituminous coal production has declined due to an accelerated phaseout of coal among electricity generators. TransAlta phased out its coal-fired power generation in Alberta in 2021, resulting in the closure of the Highvale mine. Capital Power is targeting the end of 2023 to complete the transition of its Genesee site to 100 per cent natural gas, likely prompting the closure of the Genesee coal mine.

Metallurgical Bituminous Coal

Unlike recent years, there were no metallurgical coal exports from Alberta in 2021. Since the Cardinal River mine closed in 2020, Grande Cache is the only producing metallurgical coal mine in Alberta, and it only restarted operations late in the fourth quarter of 2021.

International spot prices for coal rose significantly throughout 2021 as demand picked up in China and neighbouring countries. It is expected that metallurgical coal exports will resume in 2022 as the Grande Cache mine continues operations.

Thermal Bituminous Coal

Asia continues to be the largest source of demand for Alberta's thermal bituminous coal for use in power generation. Despite international demand, increases in exports beyond 2022 will depend on whether new projects in Alberta proceed.

Exports

Alberta's thermal bituminous coal export deliveries decreased by 17 per cent from 2020 due to lower production at Coal Valley mine.

Most exports of thermal coal were delivered to three countries:

  • Chile increased its demand by 0.2 Mt in 2021 to 1.2 Mt.
  • Japan increased its demand by 0.6 Mt in 2021 to 2.0 Mt.
  • Korea decreased its demand by 1.0 Mt in 2021 to 0.7 Mt.

Despite declining coal demand in Canada, the U. S., and most of Europe, coal remains a dominant fuel source for power generation in Asia. Demand in Asia is projected to increase over the forecast period as significant capacity, either planned or under construction, for coal-fired power generation, supplying affordable and reliable energy to the continent's growing economies. This includes countries such as India, Indonesia, South Korea, Thailand, and Vietnam. China is the world's largest producer and consumer of coal, but southeastern Asian economies are increasingly driving current and projected coal demand.

Most of the Asian demand for thermal bituminous coal is expected to be met by other international suppliers, which will compete with Alberta's potential for growth in these markets.

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