IEA warns coal on track to be world's chief energy source

Coal will nearly overtake oil as the dominant energy source by 2017, and only a drop in world gas prices could curb the use of the dirtier fossil fuel in the absence of high carbon prices, the International Energy Agency said.

China will use more coal than the rest of the world put together, while India will overtake the United States as the world's second-largest consumer and become the biggest global importer, the IEA forecast in its annual Medium-Term Coal Market Report , released on Tuesday.

"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,' IEA Executive Director Maria van der Hoeven said in a statement.

The IEA, the energy agency for developed countries, said earlier this year that without a major shift away from coal, average global temperatures could rise by 6 degrees Celsius by 2050, leading to devastating climate change. nL5E8GO6B5

The world will burn around 1.2 billion more tonnes of coal per year by 2017 than it does today, which equals the current coal consumption of Russia and the United States combined, the IEA chief said.

Global coal consumption is likely to reach 4.32 billion tonnes of oil equivalent (btoe) by 2017, compared with 4.4 btoe for oil, although the pace of growth is likely to be slower than over the past decade, the IEA forecast.

The report said that as long as carbon prices are low, only strong competition from low-priced gas would be effective in cutting coal demand.

"The US experience suggests that a more efficient gas market, marked by flexible pricing and fueled by indigenous unconventional resources that are produced sustainably, can reduce coal use, car emissions and consumers' electricity bills, without harming energy security," Ms Van der Hoeven said.

"Europe, China and other regions should take note," she said, referring to a boom in shale gas that has cut gas prices paid by US utilities by around half of 2008 levels and prompted a major switch away from coal.

In Britain the Government last week gave the green light to gas "fracking” to release trapped shale gas, just days after David Cameron said the controversial technique could help bring down household energy bills .

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