In the latest edition of its annual coal market report, the International Energy Agency (IEA) projects that global coal demand, which reached an all-time high in 2023, is expected to decline by 2.3% by 2026.
The findings signify a groundbreaking shift as they mark the first time the agency has predicted a drop in global coal consumption over its forecast period.
‘’We have seen declines in global coal demand a few times, but they were brief and caused by extraordinary events such as the collapse of the Soviet Union or the COVID-19 crisis,” said Keisuke Sadamori, IEA Director of Energy Markets and Security.
“This time appears different, as the decline is more structural, driven by the formidable and sustained expansion of clean energy technologies,” Sadamori added.
According to the report, the demand for coal in 2023 will have risen by 1.4%, exceeding 8.5 billion tonnes for the first time in history. Notably, this global surge masks significant regional variations, with advanced economies like the European Union and the United States experiencing record drops of approximately 20%.
“In advanced economies, the expansion of renewables amid weak electricity demand growth is set to continue driving the structural decline of coal consumption,” the IEA writes.
On the flip side, the IEA report indicates a significant shift in coal demand and production in Asia. India and China, for instance, are driving demand due to increased electricity needs and weaker hydropower output, experiencing an 8% and 5% rise, respectively.
China, India, and Southeast Asia are expected to contribute three-quarters of global consumption in 2023, a stark contrast to the one-quarter they represented in 1990.
Three of the world’s largest coal producers, China, India, and Indonesia, are forecasted to set production records in 2023, accounting for over 70% of the world’s coal production. Southeast Asia, for the first time, is projected to surpass the United States and the European Union in coal consumption in 2023.
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Despite the current upward trend, however, the IEA anticipates a decline in global coal demand of 2.3% by 2026 (compared to 2023).
This transformation is expected to be propelled by a substantial expansion of renewable energy capacity coming online in the next three years.
Over half of this global renewable capacity expansion is predicted to occur in China, the world’s largest coal consumer, leading to an expected decline in Chinese coal demand starting in 2024. By 2026, China’s coal demand is expected to plateau.
However, as the IEA stresses, coal use would “need to fall significantly faster” to drive down emissions at a rate consistent with the Paris Agreement goal.
“A turning point for coal is clearly on the horizon — though the pace at which renewables expand in key Asian economies will dictate what happens next, and much greater efforts are needed to meet international climate targets,” Sadamori said.
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — Featured Photo Credit: Freepik.