China, India to drive coal demand surge by 2030 - IEA

A miner smokes after his shift at a coal mine on the outskirts of Changzhi, north China's Shanxi province November 7, 2007. China and India will lead a 73 percent leap in world coal demand to 2030 to 4,994 million tonnes of oil equivalent from 2,892 in 2005, as it gains appeal due to costly oil and gas, the IEA said on Wednesday.

LONDON (Reuters) - China and India will lead a 73 percent leap in world coal demand to 2030 to 4,994 million tonnes of oil equivalent (mtoe) from 2,892 in 2005, as it gains appeal due to costly oil and gas, the International Energy Agency (IEA) said on Wednesday.

"Higher oil and gas prices are making coal more competitive as a fuel for baseload local generation," the IEA said in its World Energy Outlook.

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

Demand for hard coal will grow in 2005-2030 to 7,173 million tonnes of coal equivalent (Mtce), the report said,

Coal use will grow only very slowly in the Organization for Economic Co-operation and Development countries, the report said. The IEA is the energy advisory body to the OECD.

Global inter-regional trade in hard coal is projected to grow 3 percent a year, more than doubling from 721 million tonnes in 2005 to 1.523 mt/yr by 2030. Most of this is steam coal, the report said.

In all regions, the outlook for coal use depends largely on relative fuel prices, government policies on fuel diversification, climate change and air pollution, and developments in clean coal technology in power generation, the IEA said.

Greater use of more efficient generation technology will cut the amount of coal needed to generate a kilowatt hour of electricity but is expected to boost the attraction of coal over other fuels, thereby leading to higher demand.

"Both China and India will remain heavily dependent on coal, mostly produced indigenously, to energise their economies," the IEA said.

Coal's share of China's energy demand will remain constant but in India coal's share of the energy mix increases, the report said.

China, which became a net coal importer this year for the first time, will import more for power generation. Chinese net coal imports are set to reach 133 million tonnes by 2030 -- 3 percent of global demand -- the IEA said.

India will see a marked increase in steam and coking coal imports, the IEA said. Total coal imports are set to rise to 54 million tonnes by 2015 and to 151 million tonnes by 2030 from 39 million tonnes in 2005.

India will have to rely on imported coking coal for steel production and for increased steam coal imports for power generation because domestic coal production will continue to lag demand, the report said.

Port capacity has grown to meet rising imports and domestic shipments, from 8 Mt in 1996/97 to around 70 Mt in 2007. Future imports are unlikely to be constrained by a lack of port capacity, the IEA said.