The International Energy Agency (IEA) projects that global coal consumption will remain largely stable through 2025, despite the rapid expansion of renewable energy sources such as solar and wind. This forecast is driven by surging electricity demand in major economies, offsetting the impact of increased renewable energy production.
Rising Demand in Key Economies
In 2023, global coal use increased by 2.6% to a record high of 8.70 billion tonnes, propelled by strong growth in China and India, the world’s largest coal consumers. The IEA’s mid-year update predicts a marginal rise in global coal demand by 0.4% in 2024, reaching approximately 8.74 billion tonnes. This rise is primarily attributed to the continued high electricity demand, particularly in China, which saw a 7% increase in electricity consumption in 2023.
Keisuke Sadamori, IEA director of energy markets and security, stated, “The rapid deployment of solar and wind, combined with the recovery of hydropower in China, is putting significant pressure on coal use. But the electricity sector is the main driver of global coal demand, and electricity consumption is growing very strongly in several major economies.”
China, accounting for over half of the global coal consumption, is expected to see another significant increase in electricity demand by 6.5% this year, despite a recovery in the hydropower sector. India, the second-largest coal consumer, also experienced a 10% growth in coal demand for power generation last year. This trend is driven by low hydropower output and extreme heatwaves, which have significantly increased electricity demand.
In contrast, coal demand in Europe continues to decline due to emissions reduction efforts. After a 25% drop in coal power generation in 2023, the European Union is expected to see a similar decrease this year. The United States has also seen a reduction in coal use, although stronger electricity demand and less switching from coal to natural gas may slow this trend in 2024. Meanwhile, Japan and Korea are gradually reducing their coal reliance, albeit at a slower pace than Europe.
Future Outlook and Supply Dynamics
The IEA forecasts a slight decline in global coal demand by 0.3% in 2025, marking a trend reversal after four years of growth. This expected decline is primarily due to a projected decrease in China’s coal demand, which has traditionally driven global coal consumption. The IEA estimates a 1.1% drop in Chinese coal demand in the power sector by 2025, as renewable energy sources are likely to surpass the growth in power demand.
Despite the decline in Europe, the United States, Japan, and Korea, continuous growth in India and ASEAN countries is expected to persist. On the supply side, global coal production is anticipated to decrease slightly in 2024 after steady growth in the previous year. China’s coal production is moderating after two years of substantial growth, while India’s coal production is expected to increase by around 10% in 2024.
The report also highlights that global coal trade volumes are at their highest levels ever, despite reduced imports in Europe and Northeast Asia. Countries like Vietnam are stepping in to fill the gap, becoming significant coal importers. China and India continue to maintain high levels of coal imports, contributing to the robust trade volumes.
The IEA’s forecast indicates that while the rapid expansion of renewable energy sources is exerting pressure on coal use, the growing electricity demand in major economies is expected to keep global coal consumption stable through 2025. However, a gradual decline is anticipated as renewable energy sources increasingly meet global power demand.
Source: Mining.com
