Coal to approach oil as top energy source by 2017: IEA

Global coal demand will rise 2.6 per cent annually in the next six years and challenge oil as the top energy source, according to the International Energy Agency (IEA).

Coal consumption will climb to 4.32 billion tonnes of oil equivalent by 2017, compared with about 4.4 billion for oil, the Paris-based agency said on Tuesday in its first Medium-Term Coal Market Report. Usage will rise in all regions except the US, where cheap natural gas has damped demand, the IEA said.

Demand for coal rose 4.3 per cent last year, with China accounting for 67 per cent of the increase to replace Japan, as the largest importer of the fuel, according to the report. Coal is the most polluting fossil fuel and without limits by climate change policies, demand and emissions of carbon dioxide will continue to rise, the IEA said.

“Thanks to abundant supplies and insatiable demand for power from emerging markets, coal met nearly half of the rise in global energy demand during the first decade of the 21st Century,” IEA Executive Director Maria vander Hoeven said. “Coal's share of the global energy mix continues to grow each year, and if no changes are made to current policies, coal will catch oil within a decade.”

Countries outside the 34-nation Organisation for Economic Cooperation and Development are expected to drive growth with an annual increase of 3.9 per cent. Within the OECD, coal use will drop by 0.7 per cent a year as US demand falls 2.5 per cent a year to 600 million tonnes in 2017, the IEA said. Total world consumption that year will be 6.17 billion tonnes, up from 5.28 billion last year.

European surge
Global demand continues to be driven by Asian economies. India will increase its influence in coal markets thanks to large reserves, a population of more than 100 crore, electricity shortages and a projected increase in energy consumption, the IEA said. The country’s demand is expected to rise 6.3 per cent a year to 643 million tonnes in 2017, the agency said.

A surge in European coal use thanks to low carbon emissions prices, high natural gas prices and coal supply from the US, is temporary and will decline from 2015, the IEA said. “Increasing renewables, coal-plant retirement and more balanced gas and coal prices will decrease coal consumption in Europe,” the report said.

Australia will become the world's largest coal exporter by 2017, shipping 356 million tonnes of coal equivalent, thanks to its share in share of global infrastructure and mine expansion investments, the IEA projects.