* Developing nations to drive demand for coal, India to be
* Growth in coal use over next 5 years equivalent to US,
* China to use more coal than rest of the world combined
(Adds detail, quote)
By John McGarrity
LONDON, Dec 18 Coal will nearly overtake oil as
the dominant energy source by 2017, and only a drop in world gas
prices could curb the use of the dirtier fossil fuel in the
absence of high carbon prices, the International Energy Agency
The IEA, the energy agency for developed countries, said
earlier this year that without a major shift away from coal,
average global temperatures could rise by 6 degrees Celsius by
2050, leading to devastating climate change.
China will use more coal than the rest of the world put
together, while India will overtake the United States as the
world's second-largest consumer and become the biggest global
importer, the Paris-based IEA forecast in its annual Medium-Term
Coal Market Report, released on Tuesday.
"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.
Use of the highly-polluting fossil fuel has surged in the
past decade, mainly because of stronger demand from China and
India, where cheap coal-fired electricity has helped to drive
breakneck economic growth.
Coal now accounts for 28 percent of total primary energy
consumption, and demand for the fossil fuel rose 4.3 percent in
2011 compared with 2010, the report said, underlining the
world's continued addiction to a fuel source that helped turn
the wheels of the 19th century industrial revolution.
The world will burn around 1.2 billion more tonnes of coal
per year by 2017 than it does today, which equals the current
coal consumption of Russia and the United States combined, the
IEA chief said.
Global coal consumption is likely to reach 4.32 billion
tonnes of oil equivalent (btoe) by 2017, compared with 4.4 btoe
for oil, although the pace of growth is likely to be slower than
over the past decade, the IEA forecast.
Growth in coal use in developing countries will grow 3.9
percent a year on average over the next five years if economies
such as China return to previous patterns of economic growth,
the report said, while coal use in developed nations would only
fall 0.7 percent by 2017.
"Coal remains the backbone of the OECD power system
throughout the outlook period," the report said.
However, U.S. demand for coal is forecast to fall by 3.7
percent a year by 2017 due mainly to greater efficiency in
industry, competition from natural gas and lower steel output.
Asian developed economies will increase their coal use by
only 0.7 percent over the next five years, with increased use of
coal most likely in South Korea, the IEA added.
Western European demand is likely to rise only 0.4 percent
despite abundant supplies of cheap coal from the U.S, as older
coal-fired power plants in countries such as Britain close and
politicians try and engineer stronger carbon prices after the
cost of permits hit a record low earlier this month.
In the outcome that carbon prices in Europe and elsewhere
are low, only strong competition from low-priced gas would be
effective in making meaningful cuts in coal demand, the IEA
"The U.S. experience suggests that a more efficient gas
market, marked by flexible pricing and fueled by indigenous
unconventional resources that are produced sustainability, can
reduce coal use, car emissions and consumers' electricity bills,
without harming energy security," Van der Hoeven said.
"Europe, China and other regions should take note," she
added, referring to a boom in shale gas that has cut gas prices
paid by U.S. utilities by around half of 2008 levels and
prompted a major switch away from coal.
Without building new gas-fired power plants in Europe and
elsewhere until new energy sources can be deployed on a large
scale, "we are engaged in a dash for coal", said Dieter Helm, an
energy economist with Oxford University.
(editing by Jane Baird)