World Energy Outlook 2006

Demand
Global coal use is projected to grow at an average annual rate of 1.8%
between 2004 and 2030 (Table 5.1). Coal’s share in the global energy mix
remains broadly constant at around one-quarter over the projection period.
Coal use rises by 32% by 2015 and 59% by 2030 (expressed in tonnes). The
prospects for coal use have brightened since the last edition of the Outlook
because coal prices are now expected to remain well below those of gas – the
main competitor to coal, especially in power generation – and oil products in
energy terms over the projection period. Coal demand in 2030 is now
expected to be about 19% higher than projected in WEO-2005. The
projected increase in global demand is significantly slower than that seen in
the past five years, when it grew by more than 5% per year – mainly due to
strong growth in China. Demand will remain sensitive to developments in
clean coal technology and government policies on energy diversification,
climate change and local pollution, as well as to relative fuel prices. Although
coal is more carbon-intensive than oil or gas, coal supplies are regarded as
more secure.
Prospects for coal demand differ markedly among regions. Most of the
growth in demand comes from developing Asia, particularly China and
India, where coal resources are abundant. In fact, these two countries account
for over three-quarters of the entire increase in coal use between 2004
and 2030. Strong economic growth has led to a surge in their coal use in the
last few years. In all three OECD regions, coal use grows much more
slowly. The EU Emissions Trading Scheme introduced in 2005, which
involves national caps on greenhouse-gas emissions and EU-wide trading
of emission allowances, could contribute to the decline in coal demand in
the European Union.
Power generation accounts for 81% of the increase in coal demand to 2030.
Coal use in final sectors barely increases in many regions and falls in the
OECD. 1 The power sector’s share of global coal demand rises from 68% in
2004 to 73% in 2030 (Figure 5.1). The importance of power generation in
coal demand varies considerably among regions. Among the WEO regions, it
is highest in OECD North America. Demand from coal-to-liquids plants is
expected to remain marginal over the Outlook period, the assumption being
that costs will remain too high to make the technology economic in most
cases (Box 5.1).
1. Steam and brown coals are used for the production of heat and power. Coking coal is used mainly
in the iron and steel industries.
126 World Energy Outlook 2006 - THE REFERENCE SCENARIO
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