Global Coal Demand Steadies Amid Renewable Surge and Rising Power Needs
Global coal demand is projected to remain stable through 2025, despite the rapid expansion of renewable energy sources such as solar and wind, according to the International Energy Agency's (IEA) recent market report. In 2023, coal consumption reached a historic peak of 8.70 billion tonnes, fueled by significant growth in China and India, the two largest coal consumers worldwide. The IEA's July 2024 Coal Mid-Year Update highlights that the demand for coal in the electricity and industrial sectors was primarily driven by low hydropower output and increasing electricity needs.
The IEA forecasts that global coal demand will see a slight increase of 0.4% in 2024, reaching approximately 8.74 billion tonnes. This marginal rise contrasts with the agency's previous predictions of a decline, which were contingent on a recovery in China's hydropower generation and a slowdown in its electricity demand growth—conditions that have not materialized. Despite the rapid deployment of solar and wind energy, the IEA emphasizes that robust electricity demand in major economies continues to drive coal use.
Regionally, China remains the largest producer and consumer of coal, with its electricity demand rebounding by 7% in 2023 and expected to grow another 6.5% this year. India also saw a substantial increase in coal demand for power generation, driven by extreme heatwaves and economic growth. Conversely, Europe continues to reduce its coal dependency, with coal power generation in the European Union expected to drop significantly. The United States, Japan, and Korea are also on a downward trend in coal use, though the pace varies.
Looking ahead to 2025, the IEA anticipates a reversal in global coal demand, with a projected decline of 0.3% to 8.71 billion tonnes. This decline will be primarily due to China, where coal demand in the power sector is expected to fall by 1.1%, as renewables begin to outpace power demand growth. Ongoing reductions in coal use across the European Union, the United States, Japan, and Korea will contribute to this trend, despite continued growth in India and ASEAN countries. On the supply side, global coal production is expected to decrease slightly in 2024, reflecting moderating production in China and sustained growth in India. Despite declining imports in Europe and Northeast Asia, global trade volumes remain at record highs, with countries like Vietnam emerging as significant coal importers.
