The demand for coal will increase in every region of the world through 2017 except in the United States, where low-cost natural gas will continue providing tough competition, the Paris-based International Energy Agency said this morning.
The IEA's "Medium-Term Coal Market Report" predicts that coal will come close to overtaking oil as the world's top energy source within the next five years. Analysts said countries, mostly in the developing world, will burn about 1.2 billion more metric tons of coal per year by 2017 than they are today.
In the United States, however, coal demand is expected to fall from 697 million metric tons of coal equivalent (mtce) to 600 mtce, and production will be down from 771 mtce to 697 mtce by 2017, the IEA projected.
"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," IEA Executive Director Maria van der Hoeven said in a statement.
Ironically, Europe, which has been a leader in promoting renewable energy sources, is seeing an increase in coal use. EIA said an abundance of supply from the United States coupled with the relatively low cost of burning carbon and higher natural gas prices there are making coal a more competitive energy choice.
Higher European coal dependence will not continue in most countries, but demand in Turkey will help offset any declines in demand, IEA said, resulting in a net increase in coal use between now and 2017.
"While a gas-to-coal switch in Europe is a rather short-term phenomenon according to projections," the report said, "the coal-to-gas switch in the United States is a sustained trend."
The report added that in the United States, "the decline in coal consumption is projected to continue as a consequence of the relative price of both gas and coal, and the retirement of coal-fired power plants due to environmental regulation."
The predictions conform with numerous other forecasts of coal use and production.
Earlier this month, the U.S. Energy Information Administration said coal production and use would pick up slightly after 2016 (E&ENews PM, Dec. 5). Still, its share of the domestic power generation would drop from 42 percent in 2010 to 35 percent in 2040.
Without charging high prices for burning coal, the IEA's van der Hoeven suggested gas as an antidote for reducing global CO2 emissions.
"The U.S. experience suggests that a more efficient gas market, marked by flexible pricing and fueled by indigenous unconventional resources that are produced sustainably, can reduce coal use, CO2 emissions and consumers' electricity bills, without harming energy security," said van der Hoeven. "Europe, China and other regions should take note."
China has not only been aggressive at increasing coal use but also has become a leader in carbon capture and sequestration efforts. In the United States this morning, Southern Co. said it won a court battle in Harrison County, Miss., Chancery Court over its Kemper County CCS plant.
Yesterday Judge Jim Parsons denied a Sierra Club challenge to the plant's license. Southern said the project was almost 75 percent complete and it hopes to make it operational in 2014, a prediction that environmentalists have criticized.
Despite the apparent progress, IEA's van der Hoeven said, "CCS technologies are not taking off as once expected, which means CO2 emissions will keep growing substantially."
She added, "Without progress in CCS, and if other countries cannot replicate the U.S. experience and reduce coal demand, coal faces the risk of a potential climate policy backlash."
U.S. export plans uncertain
China, now the world's largest coal producer and consumer, will lead the world's growth over the next five years along with India. Even though India, like China, has significant coal reserves of its own, industry problems and rapidly rising demand for power will make it the largest seaborne coal importer and second largest consumer.
U.S. coal producers, wanting to offset drops in domestic demand, are looking to become Asia's top coal supplier. However, the report says that by 2017, Australia will be the world's top coal exporter, retaking the mantle from Indonesia, the current export leader.
The IEA report said companies were looking to increase mine capacity and build almost 300 million metric tons of export capacity to meet global demand. Included are several controversial proposals in the U.S. Pacific Northwest.
Last week, groups for and against the terminal plans reported that several thousand people showed up at regulatory scoping meetings connected to the Cherry Point, Wash., Gateway Pacific Terminal.
However, IEA suggested that, in the short term, U.S. export capacity would remain in terminals along the Eastern Seaboard and Gulf Coast.
West Coast exports, the report said, played a "very minor role" in the American coal landscape. It added that "current low prices, uncertainty on the economic growth, especially when related to China, will delay and stop some investments."
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