The chief economist at the International Energy Agency said Monday that Europe is the second largest coal consumer after China , proof that the continent's current carbon policy is not working.

"Currently, in the entire world, the second largest coal consumption is taking place in Europe following China ," Fatih Birol told Dow Jones Newswires on the sidelines of a conference. "This shows how ineffective current carbon prices are."

"Our analysis shows we need carbon prices at 50 euros [$67] in order to have an impact," Mr. Birol said. "I hope the European Parliament and other institutions in Europe find a way to make the markets see carbon prices higher than this, which would provide a real signal for consumers and producers to shift away from fossil fuel consumption in Europe ."

The IEA has said producers have been switching to coal from natural gas in recent years due to cheaper U.S. coal exports to Europe and decreasing prices. The IEA report said that, in the first six months of 2012, coal consumption for power generation was up 65% in the Spain and 35% in the U.K., year-on-year.

A committee of the European Parliament will hold a vote Tuesday on the future of the Emissions Trading System, which has lost effectiveness because of low prices.
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