CIAB Market & Policy developments 2005/06 - IEA

1.2 The Role of Coal in World Energy Markets
10. Over the last 30 years or so, world primary energy demand has grown by approximately
2% per year and, despite the rapid growth in use of oil and gas, coal demand has grown
only marginally more slowly, at 1.8% a year on average. In its Reference Scenario 1 , the
International Energy Agency expects total world primary energy use to grow by 1.8% a
year to 2030 and coal use to grow by 2.2% a year, reversing the relative long term
historical trends. Historically, coal has accounted for 24-25% of world energy use: this is
now expected to increase to over 28% in the Reference Scenario. Even in the Alternative
Policy Scenario, which reflects future government policy initiatives to combat the rising
consumption of fossil fuels, coal still supplies over 23% of energy needs in 2030 despite
accounting for two-thirds of the projected primary energy demand reduction from the
Reference Scenario.
11. Indeed, the historical trend of increased coal use has accelerated recently, growing by
over 3% a year on average over the last ten years and by more than 5% on average over
the last five years. Of course, the main source of this growth has been China, which
serves to demonstrate the role that coal will play in developing economies with rapidly
increasing demands for electricity and steel.
12. Given that coal is certain to remain a large and growing contributor to world energy
supplies, carbon capture and storage is an indispensable tool in addressing climate
concerns.
13. The responsible use of coal can enhance a nation’s quality of life, its global
competitiveness, its long-term energy security and its prospects for stable and sustained
rates of economic growth. With appropriate policy and investment signals, coal has the
ability to meet long term increases in demand and to enhance the security of world
energy markets through the development of national coal resources and increased
international trade.
14. Coal is safe and easy to transport and can be readily stored. The world’s coal reserves
are extraordinarily large and widely dispersed. In contrast, political instability in the
world’s largest oil-producing regions and bottlenecks in supply routes raise serious
questions about the long-term reliability of global oil supplies.
15. The increasing recognition that coal needs to remain a part of sustainable energy
systems must be accompanied by a wider appreciation of the need to improve its
environmental performance; and of the need for urgent action in this area. Addressing
climate concerns is the ultimate “public good” and, acting alone, the market place is
unlikely to deliver the desirable outcome. Technology “step changes” of the type required
to sustain the future use of coal, and indeed all fossil fuels, generally require public
support.
16. Discussing the prospects for clean coal technologies (CCTs), and carbon capture and
storage (CCS) in particular, at their November 2007 Plenary meeting, CIAB Members:
• emphasised the need for government support in the early stages of CCT
development and deployment;
• reinforced the need for capital support, and for governments to assist in funding,
particularly against the current backdrop of escalating capital costs;
• supported cap and trade systems at the later stages of the CCT development and
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“World Energy Outlook 2007 – China and India Insights”
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