Coal to outweigh oil in five years' time

Growing demand from China, driven by urbanisation and industrialisation, is main contributor to global fuel shift

PUBLISHED : Wednesday, 16 October, 2013, 12:00am
UPDATED : Wednesday, 16 October, 2013, 3:05am


Coal will surpass oil as the world's dominant fuel by 2018, and the mainland will be the dominant contributor to the development, an energy consultancy said.

The prediction highlights the difficulty to rein in reliance on pollution-prone coal, given its relative abundance and economic attractiveness.

"China and India's aggressive power requirements will be responsible for coal's burgeoning role in energy, but the United States, Europe and [the rest of] Asia will still contribute to coal demand," said London-based Wood Mackenzie's president of global markets William Durbin at the sidelines of the World Energy Congress.

Driven by urbanisation and industrialisation, "China's demand for coal will almost single-handedly propel the growth of coal as the dominant global fuel", he added.

In both [scenarios], we fail to mitigate the climate challenge in time

The consultancy projected that global coal demand would rise 25 per cent between 2010 and 2020 to 4.5 billion tonnes of oil equivalent, compared with 4.4 billion tonnes of oil consumed that year. Coal is expected to overtake oil in 2018.

The forecast is based on the assumption that the mainland's coal-fired power generation will satisfy almost half of power demand growth between last year and 2020, which is estimated to average 7 per cent a year.

The continuation of coal's dominance as a fuel source is due to a limited supply of domestic natural gas, high cost of gas imports and instability of renewable power output.

Durbin said coal's price competitiveness meant its demand would remain stable until the end of the decade even in regions other than China and India.

This is even though natural gas and renewable energy make up the bulk of incremental power capacity in Europe, the US and other parts of Asia.

French-based energy major GDF Suez chairman Gerard Mestrallet said an influx of cheap coal from the US caused by rising shale gas output saw European power generators decide to close 50 gigawatts of gas-fired power plants this year as coal-fired power output increased.

In North America, despite the abundance of low-cost natural gas, coal is even cheaper due to a surplus supply and it will keep existing coal-fired power stations in operation.

General Electric chief executive Steve Bolze told the congress that coal-fired plants would still supply about 30 per cent of power output in the US in a decade, although improved technology had reduced greenhouse gas emission from new plants by 13 per cent per unit of output.

The ratio stood at 42 per cent in 2011, according to the US Energy Information Administration.

Growing reliance of coal in the global energy mix partly reflected a failure by world leaders to forge a globally binding commitment to carbon reduction in past years.

Developing nations are worried that adoption of costlier, cleaner fuel and emission control technologies would dent economic expansion.

A lack of commitment by some major developed economies such as the US is also to blame.

In a report on the world's potential energy consumption and supply patterns up to 2050, the World Energy Council modelled a scenario where government intervention led to lower economic growth and emissions and another where the world saw higher growth and emissions under less intervention.

"The hard truth is that in both [scenarios], we seem unable to mitigate the climate challenge in time to the extent our scientists believe is necessary to avoid the risk of dramatic climate effects," the council said.

While technology is available to capture carbon dioxide at power plants and factories and store it underground, the council said it might cost US$40 to US$80 per tonne in 2020 and large-scale commercialisation might not come until 2035.