Coal to Approach Oil as Top Energy Source by 2017, IEA Says

Photographer: Chris Ratcliffe/Bloomberg

Piles of coal at the Thoresby colliery operated by U.K. Coal Plc., in Mansfield, U.K. Demand for coal rose 4.3 percent last year, with China accounting for 67 percent of the increase to replace Japan as the largest importer of the fuel. Close

Piles of coal at the Thoresby colliery operated by U.K. Coal Plc., in Mansfield, U.K.... Read More

Close
Open
Photographer: Chris Ratcliffe/Bloomberg

Piles of coal at the Thoresby colliery operated by U.K. Coal Plc., in Mansfield, U.K. Demand for coal rose 4.3 percent last year, with China accounting for 67 percent of the increase to replace Japan as the largest importer of the fuel.

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

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

Demand for coal rose 4.3 percent last year, with China accounting for 67 percent 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 van der 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 Organization for Economic Cooperation and Development are expected to drive growth with an annual increase of 3.9 percent. Within the OECD, coal use will drop by 0.7 percent a year as U.S. demand falls 2.5 percent a year to 600 million metric tons in 2017, the IEA said. Total world consumption that year will be 6.17 billion tons, 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 1 billion, electricity shortages and a projected increase in energy consumption, the IEA said. The country’s demand is expected to rise 6.3 percent a year to 643 million tons 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 U.S., 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,” according to the report.

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

Globally, between 150 million tons and 600 million tons per year of mine expansion capacity that may be added “are more than enough to meet coal demand in a secure way over the outlook period,” according to the report.

To contact the reporter on this story: Marek Strzelecki in Warsaw at mstrzelecki1@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.