Despite all the claims and counter claims about global warming, carbon taxes, and new sources of ‘green’ energy, one thing continues to standout when you look at the global energy scene: Australia is sitting pretty.
And another standout is that coal is the coming fuel over the next 25 years.
Now, this isn’t just me saying this, but the highly respected International Energy Agency which last week predicted that coal use will overtake oil as the largest fuel in the global energy mix by 2035.
As the world’s major coal exporter, Australia will benefit, as will we from the expected and widely forecast golden age for natural gas (which includes so-called unconventional gas).
And, if nuclear energy recovers from the hit taken from the Fukushima crisis in Japan, then we also stand to benefit with our massive reserves, especially at Olympic Dam in South Australia.
And if nuclear energy doesn’t expand as forecast by the IEA in its central forecast, then more coal and natural gas will be required, which again will benefit Australia.
The forecast was made in the IEA’s 2011 World Energy Outlook.
The IEA says its central New Policies Scenario, which assumes that recent government commitments are implemented in a cautious manner, "primary energy demand increases by one-third between 2010 and 2035, with 90% of the growth in non-OECD economies."
The points of this scenario are:
"China consolidates its position as the world’s largest energy consumer: it consumes nearly 70% more energy than the United States by 2035, even though, by then, per capita demand in China is still less than half the level in the United States.
"The share of fossil fuels in global primary energy consumption falls from around 81% today to 75% in 2035.
"Renewables increase from 13% of the mix today to 18% in 2035; the growth in renewables is underpinned by subsidies that rise from $64 billion in 2010 to $250 billion in 2035, support that in some cases cannot be taken for granted in this age of fiscal austerity. By contrast, subsidies for fossil fuels amounted to $409 billion in 2010."
The IEA says coal has met almost half of the increase in global energy demand over the last decade.
"Whether this trend alters and how quickly is among the most important questions for the future of the global energy economy," the Agency said.
"Maintaining current policies would see coal use rise by a further 65 percent by 2035, overtaking oil as the largest fuel in the global energy mix," the outlook report said.
"The main market for traded coal continues to shift from the Atlantic to the Pacific, but the scale and direction of international trade flows are highly uncertain, particularly after 2020. It would take only a relatively small shift in domestic demand or supply for China to become a net-exporter of international trade flows is highly uncertain, particularly after 2020," the outlook said.
The outlook also expects India’s coal use to double, so that India displaces the United States as the world’s second-largest coal consumer and becomes the largest coal importer in the 2020s.
Now these developments are a big deal for Australia, despite what The Greens and other groups might argue.
Indian companies are investing heavily in the Australian coal industry directly and through joint ventures and contractural arrangements.
The IEA says coal has met almost half of the increase in global energy demand over the last decade.
It points out that a rising use of new fuels would cut coal consumption to where it rises over the next 10 years then levels of around 25% above consumption levels in 2009.
The Agency says China’s consumption of coal is almost half of global demand and its Five-Year Plan for 2011 to 2015, which aims to reduce the energy and carbon intensity of the economy, will be a determining factor for world coal markets.
"China’s emergence as a net coal importer in 2009 led to rising prices and new investment in exporting countries, including Australia, Indonesia, Russia and Mongolia.’
Widespread deployment of more efficient coal-fired power plants and carbon capture and storage (CCS) technology could boost the long-term prospects for coal, but there are still considerable hurdles.
"If the average efficiency of all coal-fired power plants were to be five percentage points higher than projected in 2035, "such an accelerated move away from the least efficient combustion technologies would lower CO2 emissions from the power sector by 8% and reduce local air pollution."
"Opting for more efficient technology for new coal power plants would require relatively small additional investments, but improving efficiency levels at existing plants would come at a much higher cost."
It says that if Carbon Capture and Storage "is not widely deployed in the 2020s, an extraordinary burden would rest on other low-carbon technologies to deliver lower emissions in line with global climate objectives."
Looking at oil, the IEA says short-term pressures on oil markets may be eased by slower economic growth and by the expected return of Libyan oil to the market.
"But trends on both the oil demand and supply sides maintain pressure on prices.
"We assume that the average IEA crude oil import price remains high, approaching $120/barrel (in year-2010 dollars) in 2035 (over $210/barrel in nominal ter
