Coal Demand Growth to Slow in Next Five Years on China, IEA Says

Global coal demand growth will slow through 2018 as China, the world’s biggest consumer, seeks to cut its dependency on the power plant fuel, according to the International Energy Agency.

Global coal use will rise by 2.3 percent a year to 6.35 billion metric tons of coal equivalent in the five years to 2018, below 2.6 percent growth predicted last year for the period through 2017, the Paris-based agency said today in its Medium-Term Coal Market Report. Coal demand growth of 2.3 percent last year outpaced that of other fossil fuels, strengthening its position as the second-largest energy source behind oil, it said.

Countries including China and India outside the 34-nation Organization for Economic Cooperation and Development, which account for more than three-quarters of global coal use, are expected to drive the growth, with annual increases in consumption of 3.1 percent, down from 3.9 percent forecast last year through 2017, the IEA said.

“Gross Domestic Product growth and electricity demand in China are projected to decouple due to intensified energy-efficient measures and structural change towards less power intensive sectors,” the IEA said. “Remarkably, the projected decrease in electricity intensity of GDP leads to a reduction of coal consumption equal to the aggregated annual German and British coal consumption.”

China’s coal use will rise 2.6 percent a year to 3.28 billion tons in 2018 while India will see annual growth of 4.9 percent to 657 million tons, according to the report.

Europe, U.S.

OECD coal use is projected to be little changed with European demand declining 1 percent a year to 417 million tons in 2018 as sluggish power use, energy efficiency and renewable output hamper new investments, the IEA said.

U.S. coal demand is expected to fall 0.1 percent a year to 606 million tons in 2018 as older plants are retired and after President Barrack Obama announced stricter environmental standards and further measures to curb emissions, the agency said.

Coal in its current form is “unsustainable,” even assuming that more efficient heat and power plants will be built, as it will contribute to pushing global temperatures above the agreed target of a long-term increase of by 2 degrees Celsius (3.6 degrees Fahrenheit), Maria van der Hoeven, executive director of the IEA, said in a foreword to 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

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