IEA: Global Coal Demand to Plateau Amid Renewable Growth
IEA forecasts flat global coal demand through 2025, balancing renewable expansion with rising electricity needs in major economies. China and India remain key factors in coal consumption trends.
The International Energy Agency (IEA) has released an update on the coal market, projecting that global coal demand will likely remain stable through 2025. This forecast comes despite the rapid expansion of solar and wind energy, as higher electricity demand in some major economies offsets the growth in renewable sources.
In 2023, global coal use reached an all-time high, increasing by 2.6%. This surge was primarily driven by strong growth in China and India, the world's two largest coal consumers. The demand for coal rose in both the electricity and industrial sectors, with its use particularly crucial in filling the gap created by low hydropower output and rapidly rising electricity demand.
Keisuke Sadamori, IEA's director of energy markets and security, stated:
He further explained that while the continued rapid deployment of solar and wind, combined with the recovery of hydropower in China, is exerting significant pressure on coal use, the electricity sector remains the main driver of global coal demand.
In China, despite the ongoing expansion of renewable energy sources, coal consumption is unlikely to decline due to a projected 6.5% increase in electricity demand this year. India is expected to see a slowdown in coal demand growth in the second half of 2024 as weather conditions normalize and hydropower output improves.
The European Union has witnessed a significant reduction in coal power generation, with a drop of over 25% in 2023 and a forecast for a similar decrease this year. In the United States, while coal use has been contracting in recent years, stronger electricity demand and reduced switching from coal to natural gas may slow this trend in 2024.
It's worth noting that coal remains the largest source of electricity generation worldwide, with China accounting for more than 50% of global consumption. However, the rapid growth of solar and wind power, which are the fastest-growing sources of electricity globally, is challenging coal's dominance.
The IEA's forecast aligns with global efforts to combat climate change, as outlined in the Paris Agreement, which aims to limit global warming to well below 2°C, preferably 1.5°C, compared to pre-industrial levels. Many countries have set ambitious targets for reducing greenhouse gas emissions and transitioning to cleaner energy sources.
As the world navigates the complex transition from fossil fuels to renewable energy, the concept of a "just transition" becomes increasingly important, addressing the social and economic impacts of this shift on communities and workers in the coal industry.
