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Coal faces challenge from gas in energy mix

World Coal,

According to ExxonMobil, natural gas will overtake coal as a global energy source in the middle of the next decade to become the world’s second most-used fuel.

In its annual forecasts of the energy outlook for the next three decades, Exxon predicts that gas will fall second only to oil on an energy-equivalent basis by around 2025.

By 2040, the company expects natural gas consumption to rise 65%, but for coal to remain at a similar level as today – rising and then falling again during the next two decades.

However, Exxon appears far more negative regarding coal’s future outlook than other forecasters. The International Energy Agency (IEA), for example, predicts that coal use will continue to rise through to 2035, remaining ahead of natural gas throughout that period.

In response to ExxonMobil’s report, Greg Hammond, partner at global law firm Eversheds, issued a statement challenging Exxon’s assertions.

“There seems to be little doubt that for environmental (and therefore also political) reasons, gas will be preferred over coal in the coming years where possible. However, if the current economic climate continues, price will be the key driver in the energy mix. While gas may be cheap and widely available in the US due to the shale gas revolution, it still remains to be seen whether unconventional gas can achieve the same level of success in other regions, such as Europe,” Hammond argued.

“Indeed, while Europe works to appraise the potential of its shale deposits, the abundance of shale gas in the US is driving down the global price of coal. As a result, its now viewed as a comparatively cheap source of fuel for European power stations. There are therefore strong global price drivers at play impacting the energy mix and we can expect there to be stark variations in the pattern of regional fuel consumption for some time to come,” Hammond said. 

Edited from various sources by Sam Dodson

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