The International Energy Agency’s latest update on global coal market trends forecasts that coal demand will stabilize in 2024 and 2025.
This stability comes despite a gradual recovery in hydropower and significant growth in solar and wind energy, as increased electricity demand in key economies counterbalances these factors.
According to the IEA’s Coal Mid-Year Update, global coal usage surged by 2.6% in 2023, reaching record levels.
This increase was primarily fueled by robust growth in China and India, the world’s top coal consumers. The rise in coal demand spanned both the electricity and industrial sectors, driven particularly by the need to compensate for reduced hydropower output and escalating electricity consumption.
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“Our analysis shows that global coal demand is likely to remain broadly flat through 2025, based on today’s policy settings and market trends,” said Keisuke Sadamori, IEA Director of Energy Markets and Security.
“The continued 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.”
“Without such rapid growth in electricity demand, we would be seeing a decline in global coal use this year. And the structural trends at work mean that global coal demand is set to reach a turning point and start declining soon,” Sadamori added.
In China, where more than half of global coal consumption occurs, hydropower generation has rebounded in 2024 from unusually low levels last year. This recovery, combined with the continued rapid expansion of solar and wind energy, is significantly slowing the growth of coal usage.
However, with a projected 6.5% increase in electricity demand for 2024, a decline in China’s coal consumption is unlikely.
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In India, the growth in coal demand is expected to taper off in the latter half of 2024 as weather conditions return to normal seasonal patterns.
In the first half of the year, India experienced a sharp rise in coal consumption due to reduced hydropower output and high electricity demand driven by severe heatwaves and robust economic expansion.