Coal may overtake oil as worlds top energy source, says IEA

Written by Press Trust of India | Paris | Updated: Dec 19 2012, 07:19am hrs
Coal is set to surpass oil as the world's top fuel within a decade, driven by growth in emerging market giants China and India, with even Europe finding it hard to cut use despite pollution concerns, according to a report published on Tuesday.

"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," said Maria van der Hoeven, head of the International Energy Agency.

Economic growth is expected to push up further coal's share of the global energy mix, "and if no changes are made to current policies, coal will catch oil within a decade," she said in a statement.

The latest IEA projections see coal consumption nearly catching oil consumption in four years time, rising to 4.32 billion tonnes of oil equivalent in 2017 against 4.4 billion tonnes for oil.

That has consequences for climate change as coal produces far more carbon emissions responsible for global warming than other fuels. But the IEA report on coal found that even countries which have committed themselves to reducing carbon emissions are finding it difficult to resist the renewed allure of coal.

A number of European countries have seen their use of coal for electricity consumption jump at the beginning of this year, including by 65 percent in Spain, 35 percent in Britain and 8 percent in Germany. The shale gas boom in the US has led to a slump in coal prices there and subsequently on the market in Europe, where natural gas remains expensive.

This gave a price advantage to coal beginning last year, with the low price of polluting in Europe's emission trading scheme also a contributing factor.

"...low coal prices, supported by a low (emissions) price resulted in a significant gas-to-coal switch in Europe," said the report.

European countries have been slow to exploit shale gas deposits, concerned about possible environmental damage, but the IEA pointed out that the US experience shows that tapping it can bring benefits from lower coal use as well as lower electricity costs.

"Europe, China and other regions should take note," said van der Hoeven. Moreover, the IEA report doesn't foresee within the next five years the widespread take-up of technology to capture and store underground carbon emissions from burning coal.

Van der Hoeven warned that unless there is technological progress or a replication of the US experience "...coal faces the risk of a potential climate policy backlash."

The IEA, the energy advisory arm of the Organisation for Economic Cooperation and Development of 34 industrialised nations, sees non-OECD developing countries as driving the increase in coal consumption due to population growth and rising electricity consumption as their economies grow and modernise. In its baseline scenario, the IEA sees rapid increases in power generation making India the second-largest coal consumer in 2017.