Global coal demand is set to reach to an all-time high as higher natural gas prices amid the global energy crisis have led to increase reliance on coal for power generation, according to a new International Energy Agency (IEA) report.
The report, Coal 2022, forecasts that the world’s coal consumption will remain at similar levels in the following years in the absence of stronger efforts to accelerate clean energy transition.
Global coal use is expected to be 1.2% higher this year compared to 2021, surpassing 8 billion tons in a single year for the first time and eclipsing the previous record set in 2013.
Higher natural gas prices amid the global energy crisis have led to increased reliance on coal for generating power but slowing economic growth, at the same time, reduced electricity demand and industrial output while power generation from renewables reached a new record, the IEA said.
In China, the world’s largest coal consumer, a heat wave and drought pushed up coal power generation during the summer, despite the slowing demand due to COVID-19 restrictions.
‘The world is close to a peak in fossil fuel use, with coal set to be the first to decline, but we are not there yet,’ said Keisuke Sadamori, the IEA’s Director of Energy Markets and Security.
‘Coal demand is stubborn and will likely reach an all-time high this year, pushing up global emissions. At the same time, there are many signs that today’s crisis is accelerating the deployment of renewables, energy efficiency and heat pumps and this will moderate coal demand in the coming years. Government policies will be key to ensuring a secure and sustainable path forward.’
– Coal still single largest source of CO2 emissions
As the coal demand for power generation set to hit a new record, the international coal market remained tight this year, according to the report.
‘Europe, which has been heavily impacted by Russia’s sharp reductions of natural gas flows, is on course to increase its coal consumption for the second year in a row,’ said in the report.
However, by 2025, European coal demand is expected to decline below 2020 levels.
The demand decline in mature markets are offset by continued robust demand in emerging Asian economies. This means coal will continue to be the global energy system’s biggest single source of CO2 emissions by far, according to the IEA.
The IEA expects China, India and Indonesia, the world’s three largest coal producers, will hit production records this year. However, despite high prices and comfortable margins for coal producers, there is no sign of surging investment in export-driven coal projects.
This reflects caution among investors and mining companies about the medium- and longer-term prospects for coal, according to the report.
Coal demand is forecast to drop in advanced economies in the coming years as renewables increasingly displace it for electricity generation.
However, emerging and developing economies in Asia are set to increase coal consumption to help power their economic growth while adding more renewables.
‘Developments in China, the world’s largest coal consumer, will have the biggest impact on global coal demand in the coming years, but India will also be significant,’ the IEA said in the report.
