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Booming coal demand overwhelming green energy efforts: IEA

A coal-fired power plant is seen at an industrial park in Wuhai, in China's northern Inner Mongolia region.


Rising demand for coal-fired power in Asia is driving a global boom for the much-maligned fossil fuel, raising concerns about the world's ability to reduce emissions that cause climate change.

Even as North Americans have begun to reduce their coal consumption, global demand for coal-fired electricity jumped by 45 per cent between 2000 and 2010, and is expected to climb another 17 per cent by 2017, the International Energy Agency said in a report released Wednesday.

Coal producers in the United States and Canada are clearly benefiting from the trend, boosting Asian exports to offset lower domestic sales, with the resulting boom at West Coast export facilities such as Vancouver's Westshore Terminals.

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China alone added 55 gigawatts of coal-fired electricity capacity in 2011 and the country now represents 46 per cent of global coal demand, with significant new capacity planned.

The Paris-based IEA, which advises the developed world on energy policy, warned that the growing use of coal to generate electricity in rapidly growing emerging markets is undermining efforts to rein in greenhouse gas emissions and keep global temperatures from rising more than 2 degrees Celsius.

"In a truly low-carbon future, coal cannot be the dominant energy source," the agency said in its progress report on energy and climate change.

Overall, the IEA said progress has been "alarmingly slow" in the commercialization and widespread adoption of technologies that can save energy and reduce CO2 emissions. And the underlying "carbon intensity" of the world's energy supply – or the amount of carbon dioxide per joule of energy consumed – has remained flat since 1990.

The report came as global energy ministers, including outgoing U.S. Energy Secretary Stephen Chu, met in India to discuss progress on the clean energy agenda. Canada's Natural Resources Minister Joe Oliver did not attend the meeting, but sent senior bureaucrats in his place.

There were some bright spots in any otherwise gloomy IEA report on the pace of transition to a low-carbon energy system.

The U.S. and Canada are moving away from coal-fired power, and have set ambitious fuel efficiency standards in transportation.

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Investment in renewable energy has been strong, hitting a record level in 2011 and just slightly off that pace last year. But growth in renewable is starting from such a low base that it is being overwhelmed by rising demand for fossil fuels.

Given that countries will continue to turn to the abundant, low-cost coal, it is critical that governments spur the development of carbon capture and storage (CCS) technology, which can divert CO2 from existing plants and sequester it under ground, the IEA said.

But there, too, progress has slowed, with a number of high-profile proposed projects being cancelled, including some in Canada.

"It is essentially creeping forward," IEA analyst Markus Wrake said in a telephone interview.

Nine large-scale CCS projects are under way around the world, including Royal Dutch Shell PLC's Quest project at its Scotford upgrader in Alberta and SaskPower's retrofit of its Boundary Dam coal unit near Estevan.

But Mr. Wrake said governments need to provide far more support to commercialize and deploy CCS technology if it is going to play a major role in reducing CO2 emissions as coal use rises.

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The technology is expensive, and without incentives like subsidies and carbon pricing, industry alone will not make the necessary investments.

"In many ways, support for CCS is a proxy for government commitment to climate change policies more generally," Mr. Wrake said.

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