In its Medium-Term Coal Market Report it predicts global coal consumption by 2017 will be 4.32 billion tonnes of oil equivalent, versus about 4.4Btoe for oil.
The IEA expects coal demand will increase in every region of the world, except the US where coal is being pushed out by natural gas.
IEA executive director Maria van der Hoeven said coal had met nearly half of the rise in global energy demand during the first decade of the 21st century.
“This report sees that trend continuing,” she said.
“In fact the world will burn about 1.2 billion more tonnes of coal per year by 2017 compared to today – equivalent to the current coal consumption of Russia and the US combined.
“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.”
Not surprisingly, the IEA finds that China and India lead the growth in coal consumption over the next five years.
The report says China will surpass the rest of the world in coal demand during the outlook period, while India will become the largest seaborne coal importer and second-largest consumer – surpassing the US.
It also notes that, in the absence of a high carbon price, only fierce competition from low-priced gas can effectively reduce coal use.
“The US experience suggests that a more efficient gas market, marked by flexible pricing and fuelled by indigenous unconventional resources that are produced sustainably, can reduce coal use, CO2 emissions and consumers’ electricity bills without harming energy security,” van der Hoeven said.
“Europe, China and other regions should take note.”
She noted the report’s forecasts were based on a troubling assumption – that carbon capture and sequestration would not be available during the outlook period.
“CCS technologies are not taking off as once expected, which means CO2 emissions will keep growing substantially,” van der Hoeven said.
“Without progress in CCS and if other countries cannot replicate the US experience and reduce coal demand, coal faces the risk of a potential climate policy backlash.”
As US coal demand declines, more US coal is going to Europe where low CO2 prices and high gas prices are increasing coal’s competitiveness in the power generation system.
However, the IEA says this trend is close to peaking.
It projects that by 2017 coal demand in Europe will drop to levels slightly above those in 2011 due to increasing renewable generation and the decommissioning of old coal plants.
The report offers a Chinese slowdown case too.
The scenario shows that even if Chinese gross domestic product growth were to slow to a 4.6% average over the period, coal demand would still increase both globally and in China.
It shows coal demand is not likely to stop growing even with more bearish economic perspectives.
