About Us

IEA tips 'king coal' in bleak view of world's energy future

Nov 7, 2007 - Thompson Financial News

The International Energy Agency has painted a bleak picture of the next two decades, with the world's dependence on fossil fuels set to rocket at a time of global alarm about climate change.

The IEA, an advisor to 26 countries, issued its World Energy Outlook 2007 report, identifying the long-term trends that will shape energy policy up to 2030.

Coal will make a comeback, the Middle East and Russia will grow in influence as oil suppliers, and emerging giants China and India will account for most of the increase in energy demand.

"The trends in energy demand, imports, coal use and greenhouse gas emissions to 2030 in this year's World Energy Outlook are even worse than projected in WEO 2006," the agency warned.

It gave little hope to those looking for a technological breakthrough, which many believe is necessary for a meaningful reduction in world greenhouse gas emissions.

Instead, it predicted that coal, one of the oldest and dirtiest sources of energy, would be king in emerging countries China and India in 2030.

"In line with its spectacular growth over the past few years, coal sees the biggest increase in demand in absolute terms, jumping by 73 pct between 2005 and 2030," the agency said.

"China and India, which already account for 45 pct of world coal use, drive over four-fifths of the increase (in its use) to 2030."

Coal-fired power stations have been "the primary cause of the surge in global emissions in the last few years," the IEA said, and new power stations in China and India are likely to be mostly coal-fired.

Because of this, the IEA urged governments to focus on developing clean coal technologies, in particular carbon capture and sequestration (CCS), which entails capturing carbon and storing it underground.

According to its calculations, if governments do not take further action the world's temperature could rise by six degrees Centigrade beyond 2030, Fatih Birol, head of research at the IEA, told Agence France-Presse.

The conclusions of the IEA are also of vital importance for international relations.

The grip of Middle Eastern producers and Russia on world oil resources will tighten, although the IEA did say that there was sufficient oil to satisfy demand so long as planned investments in new capacity are made.

The 12-member Organisation of Petroleum Exporting Countries, which is dominated by Saudi Arabia, is projected to provide 52 pct of world supply in 2030, up from 42 pct presently.

"The greater the increase in call on oil and gas from these regions, the more likely it will be that they will seek to extract a higher rent from their exports and to impose higher prices in the longer term," the IEA said.

This is bad news for consuming countries with oil prices already at nearly 100 dollars per barrel.

tf.TFN-Europe_newsdesk@thomson.com by Adam Plowright afp/ejp/ajb


Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.