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How to Fix the 21st Century's Dirty Engine of Growth

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Thanks to abundant supplies and insatiable demand for power from emerging markets, coal -- the fuel of the Industrial Age -- has met nearly half of the rise in global energy demand during the first decade of the 21st century. Amid mounting concerns about the impact of carbon dioxide emissions on Earth's climate, the massive growth in coal use represents a troubling paradox. Whether the rise of CO2 emissions from coal continues will depend on the strength of policy measures that favor the deployment of more efficient coal-burning technologies and lower-emissions energy sources like renewables and natural gas.

The IEA's latest Medium-Term Coal Market Report, released this week, projects coal's growth to continue over the next five years. Despite the growing focus on climate policy and sustainability, the world will burn around 1.2 billion more tons of coal per year by 2017 compared to today -- equivalent to the current coal consumption of Russia and the United States combined. Coal's share of the global energy mix continues to grow each year, and if no changes are made to current policies, coal will catch up with oil within a decade as the world's top energy source. China will account for 70 percent of the growth in coal demand over the next five years, while India will make up 22 percent.

To the degree that affordable coal has allowed hundreds of millions of people in emerging economies to enjoy the conveniences that the industrialized world began taking for granted long ago, its proliferation is a blessing. Yet for a society increasingly concerned about the amount of carbon it is sending into the atmosphere, the surge in coal burning is not good news. Despite industry's effort to promote "clean" coal, the black matter remains the dirtiest of all fossil fuels. The average coal-based power plant emits a ton of CO2 per MWh generated, about twice the level of a power plant using combined-cycle gas turbines.

Because of the rapid and continuing expansion of coal-fired generation in emerging economies, particularly in China and India, determined policy action will be needed to reverse the trend of the last decade. Well-designed government policies can reduce emissions from coal use essentially in one of four ways, provided they bring forth the necessary investments.

First, final energy can be consumed in a more efficient manner, which requires less primary energy, including coal.

Second, existing technologies that use coal more efficiently can be deployed, particularly in the power sector, which accounts for two-thirds of global coal use. A single, large coal plant, if built with the best-available technology, can reduce emissions by the annual equivalent of taking a million cars off the road compared to the subcritical coal-plant technology still prevalent in most countries.

Third, new technologies, such as underground coal gasification and especially carbon capture and storage, can -- if given substantial financial support -- reduce emissions substantially from coal use in power plants and industrial facilities.

But the biggest hope for reducing emissions from coal may come from policies that encourage its replacement by lower-emission energy sources. A meaningful carbon price can do this, but so can cheap natural gas -- as recent U.S. experience suggests. The boom in unconventional natural gas has prompted U.S. power generators to switch from coal to gas en masse.

The U.S. experience suggests that a more efficient gas market, marked by flexible pricing and fueled by indigenous unconventional resources that are produced sustainably, can reduce coal use, CO2 emissions and consumers' electricity bills, without harming energy security. China, Europe and other regions should take note.

Maria van der Hoeven is executive director of the International Energy Agency.