* China, India to propel coal past oil by end of decade
* Muted impact from carbon policies aimed at curbing coal
* China to drive two-thirds of coal growth this decade
DAEGU, South Korea, Oct 14 Coal, propelled by
rising use in China and India, will surpass oil as the key fuel
for the global economy by 2020 despite government efforts to
reduce carbon emissions, energy consultancy firm Wood Mackenzie
said on Monday.
Global coal consumption is expected to rise by 25 percent by
the end of the decade to 4,500 million tonnes of oil equivalent,
overtaking oil at 4,400 million tonnes, according to Woodmac in
a presentation at the World Energy Congress.
The two Asian powerhouses will need the comparatively
cheaper fuel to power their economies, while demand in the
United States, Europe and the rest of Asia will hold steady.
"China's demand for coal will almost single-handedly propel
the growth of coal as the dominant global fuel," said William
Durbin, president of global markets at Woodmac. "Unlike
alternatives, it is plentiful and affordable."
China - already the top consumer - will drive two-thirds of
the growth in global coal use this decade. Half of China's power
generation capacity to be built between 2012 and 2020 will be
coal-fired, said Woodmac.
China has no alternative to coal, with its domestic gas
output limited and liquefied natural gas (LNG) imports more
costly than coal, Durbin said.
"Renewables cannot provide base load power. This leaves coal
as the primary energy source," he said.
Excess supply and faltering demand growth have depressed
global coal prices. European coal futures have tumbled more than
20 percent this year, while Australian coal prices
have plummeted from the record $130 per tonne hit in 2011 to
around $80 per tonne as demand from China grew slower than
"If you take China and India out of the equation, what is
more surprising is that under current regulations, coal demand
in the rest of the world will remain at current levels," Durbin
High fuel import costs and nuclear issues will support coal
use throughout Northeast Asia, while in North America coal is
still competitive in many locations despite abundant low-cost
"The struggling economy and low coal prices has rendered the
European Union (EU) Emissions Trading Scheme (ETS) ineffective,"
Durbin said. "The carbon price will need to reach 40 euros per
tonne to encourage fuel switching, which is unlikely before
In Southeast Asia, coal will be the biggest winner in the
region's energy mix. Coal will generate nearly half of Southeast
Asia's electricity by 2035, up from less than a third now, the
International Energy Agency said in early October.
This will contribute to a doubling of the region's
energy-related carbon dioxide emissions to 2.3 gigatonnes by
2035, according to the IEA.
(Reporting by Florence Tan, Meeyoung Cho and Jane Chung;
Editing by Tom Hogue)