US EIA sees growth in world coal demand outpacing natural gas

US EIA sees growth in world coal demand outpacing natural gas

Washington (Platts)--20Jun2006

Worldwide demand for coal will outpace growth in natural gas use between
2003 and 2030 as rising gas prices make coal increasingly cost-competitive,
particularly in the electric power sector, the US Energy Information
Administration said Tuesday in its International Energy Outlook for 2006.

While the agency projected that natural gas consumption will increase
2.4% a year from 2003 to 2030, it forecasted that coal demand over the same
period will grow at a slightly higher rate of 2.5%. The projection marks the
first time since EIA began publishing worldwide outlooks for energy use in
1990 that demand for coal is projected to grow faster than demand for gas.

The agency said world coal consumption is projected to increase from
5,440 million short tons in 2003 to 7,792 million st in 2015, an average
annual rate of 3%. The outlook said the rate of growth in coal demand will
slow after 2015 to 2% a year through 2030, when consumption will total 10,561
million tons.

Much of the anticipated growth in coal demand will come in China, where
industrial use is expected to triple from 2003 to 2030 as a result of the
country's abundant coal reserves, limited oil and gas holdings and leading
position in world steel production.

In addition, the IEO projected that world net electricity consumption
will more than double from 14,781 billion kWh in 2003 to 30,116 billion kWh in
2030. Most of the anticipated growth, EIA said, will occur in non-OECD
nations, where growth in power demand is seen rising by 3.9% a year over the
forecast period, compared with 1.5% a year in OECD nations.

The report also predicted that consumption of electricity from nuclear
power worldwide will increase from 2,523 billion kWh in 2003 to 3,299 billion
kWh in 2030. Higher fossil fuel prices and concerns about security of energy
supplies are expected to improve prospects for nuclear power capacity over the
projection period, the agency said.

World nuclear capacity, the report said, will rise from 361 GW in 2003 to
438 GW in 2030, with significant declines in capacity projected only for
Europe, where several countries are expected to phase out the energy source.

Rising fossil fuel prices also will provide a boost for renewable energy,
the report said, adding that consumption of hydroelectricity and other
grid-connected renewable energy sources will increase by 2.4% a
year -- approximately the same rates of growth projected for coal and natural
gas. The IEO also projected that renewable energy's share of the world's total
energy consumption will increase from 8% in 2003 to 9% in 2030.

The outlook projected that worldwide emissions of carbon dioxide will
continue to increase "steadily," rising from 25 billion metric tons in 20053
to 33.7 billion mt in 2015 and 43.7 billion mt in 2030.

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