Coal to overtake oil as main source of energy by 2020

Speaking at the World Energy Congress, Wood Mackenzie’s President of Global Markets, Mr William Durbin said that global government policies to reduce carbon emissions will not prevent a hydrocarbon world as coal will surpass oil as the dominant fuel later this decade. Demand for coal will be primarily driven by China and India’s spiralling energy requirements. The US, Europe and Asia will also continue to contribute to coal demand. Mr Durbin stated that “China’s economic growth will continue to be driven by urbanisation and industrialisation as the government seeks to improve housing as well as create economic opportunities. At the same time, the pursuit of increased national wealth is needed to support a shift to growth based on consumption. Coal will be used to fuel the growth because, unlike alternatives, it is plentiful and affordable. Consequently, China’s demand for coal will almost single-handedly propel the growth of coal as the dominant global fuel.”

According to Wood McKenzie global demand for oil in the year 2000 was 3,500 million tonnes of oil equivalent (Mtoe) compared to coal at 2,300Mtoe. By 2010, coal demand grew to almost 3,600Mtoe, just behind oil demand of 4,000Mtoe. By 2020 it is expected that global coal consumption will reach 4,500Mtoe, overtaking oil which is expected to reach 4,400Mtoe. This is a 25% growth in coal consumption from 2010 to 2020 with two-thirds of this growth being driven by Chinese coal-fired power generation. China’s power requirements will increase from 5,000 Terawatts per hour (TWh) in 2012 to 8,600TWh in 2020. Coal fired power generation accounts for 46% of that growth. Mr Durbin explained the rationale underlying China’s preference towards coal. “Firstly, there is limited availability of natural gas supplies due to the rapid pace of domestic demand growth and little progress in developing unconventional gas. Secondly, LNG and pipeline imports are two to three times more costly than domestic and imported coal. And thirdly, renewables cannot provide base load power. This leaves coal as the primary energy source.”