Coal demand to grow by 600,000 tonnes a day over the next five years, says IEA

Global demand and prices for coal will continue to expand aggressively over the next five years despite public calls for reducing reliance on the high-carbon fuel as a primary energy source, said the International Energy Agency (IEA) in its first ever report about the commodity. 

The Paris-based watchdog said in its “Medium-Term Coal Market Report 2011” that China will remain a major price driver in the medium term as both a huge producer and consumer of coal. This because China’s share of global production is almost four times that of Saudi Arabia’s share of oil output, while the Chinese domestic market is more than three times the size of annual coal trade worldwide, said the IEA.

The report underlines that coal is already the single-largest source of electricity generation globally and that “policy makers must be aware of this when designing strategies to enhance energy security while tackling climate change.”

The IEA report, which asked whether the volatility seen in recent years has made trading coal like a visit to a casino, also concluded that participants need to use risk management techniques.