Policymakers will have to balance the global demand for coal with climate change mitigation.

Policymakers will have to balance the global demand for coal with climate change mitigation. Photo: Heath Wade

IT'S a disconnection most policymakers seem loath to confront: global demand for fossil fuels, especially coal, is forecast to grow strongly and yet carbon emissions will have to peak soon if dangerous climate change is to be avoided.

The release of the International Energy Agency's World Energy Outlook this week provided the latest update to this stark discrepancy.

The IEA, a body representing mostly energy importing nations, noted demand for coal rose 5.6 per cent in 2011 and is now 55 per cent higher than 10 years ago.

In fact, coal met 45 per cent of the growth in global energy demand between 2001 and 2011, roughly triple the contribution from renewable energy sources such as wind and solar.

And there's more growth ahead for coal. On the IEA's mid-range ''New Policies Scenario'', annual demand for thermal and metallurgical coal will rise 14 per cent from 2010's 5.1 billion tonnes to 5.83 billion tonnes by 2020, and nudge above 6 billion tonnes by 2035.

Australia, the world's fourth biggest coal producer, is betting big on that expansion. Committed projects to expand coal capacity total $9.8 billion for ports and $16.7 billion for mines, according to government figures.

Dig deeper into the 690-page IEA tome, though, and you strike the carbon contradiction.

Planned and current investments in infrastructure to mine and burn fossil fuels will by 2017 lock the planet in to an emissions trajectory that will see carbon dioxide levels exceed the 450 parts per million level, the IEA says.

That level gives the planet just a 50-50 chance of keeping temperature increases to 2 degrees above pre-industrial levels. (The current level is 391 ppm and rising about 2 ppm per year.)

Technology hope

And here's the rub if you accept the scientific advice and the IEA forecasts: "No more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2 degree Celsius goal, unless carbon capture and storage (CCS) technology is widely deployed."

That faith in CCS - the sequestration of carbon dioxide into the ground - is also central to the federal government's own energy white paper released last week.

By 2035, brown coal output all but ceases, while by 2050, black coal production without CCS is virtually eliminated, according to its projections.

Industry analysts were reluctant to comment on the prospect of coal assets being stranded. Not surprisingly, the coal industry's lobby group says Australia has no interest in leaving its reserves untapped.

"Australian coal represents only about 6 per cent of the world's coal production," Jai McDermott, general manager for public affairs at the Australian Coal Association, said. "This is why Australia leaving its coal in the ground would do nothing to abate global greenhouse emissions.

"The most effective thing we can do to address the climate change challenge is to drive technological solutions, like carbon capture and storage, so that the realities of world energy demand and climate change can be reconciled."

The opposition's energy spokesman, Ian Macfarlane, said CCS may be 20 years away but the country had no choice but to pursue it. Moreover, the world would continue to need fossil fuels because for every 1000 megawatts of renewable energy added, nations needed to add 600MW in back-up, he said.

Short of an international agreement to reduce greenhouse gases, Australia had no interest in going it alone. "I don't think it will happen in the next decade," he said, referring to the prospects of such a pact.

Resources Minister Martin Ferguson was not available for comment.

Greens senator Christine Milne said it was "absolutely essential that we move away from coal and move to 100 per cent renewable energy as soon as possible". The market would provide that momentum, she said.

"It's been obvious for some time now that China and India, our biggest target customers for export coal, are moving away from coal, both projecting that industrial scale solar will outcompete it by the end of this decade," she said. "Coal is a dead end for the economy and the environment, and it's time the old parties woke up to that.''

The IEA's Executive Director Maria van der Hoeven will visit Australia next week, giving a keynote presentation to the Australian Institute of Energy's annual conference in Sydney on Monday.