Global coal demand set to exceed oil in coming decade: Intl Energy Agency

Coal will overtake oil as the world's biggest energy source within a decade unless policies are changed, the International Energy Agency said on Tuesday. Demand for the polluting fuel in China and India will continue to drive world usage, accounting for almost two-thirds of global coal demand by 2030, the agency said.

The relentless growth, which would imperil attempts to cut global carbon emissions, can only be stemmed if the coal is displaced by cheap gas, as seen with the US shale gas boom, the IEA said.

Electricity prices, which are affected by coal prices, could feel the "disproportionate impact of a few decisions taken in China and India", it warned.

Maria van der Hoeven, the IEA's executive director, said: "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."

The report, which predicts trends in the coal market to 2017, suggests coal demand will reach the energy equivalent of 4.32billion tonnes of oil by that year — narrowly below 4.4billion tonnes of demand for oil itself.

Global coal consumption, which is measured in in tonnes of coal equivalent — the industry standard to reflect energy content rather than physical weight - will reach 6.2billion tonnes in 2017, up from 5.3bn in 2011. China's share will rise to more than half of that, while India will become the world's second-largest coal user.

"With coal counting for more than 40pc of electricity generation globally it is clear that Chinese and Indian coal market decisions will have an impact on our electricity bills," the IEA said.

With climate change policy low down international priorities, "neither climate policy nor a macroeconomic slowdown stops the relentless increase of coal - but cheap natural gas can", it said.

Highlighting the massive impact of the boom in shale gas in the US, the IEA said that coal demand would increase "in every region of the world except in the United States, where coal is being pushed out by natural gas". But while cheap coal is currently fuelling demand in Europe, this trend is "close to peaking" due to environmental policies and by 2017 European coal demand will return to levels only slightly above those in 2011, the IEA said.