Global Coal Consumption to Remain Stable in 2024-2025 Despite Renewable Energy Growth
Despite many nations transitioning away from fossil fuels, global coal consumption is expected to remain largely stable in 2024-2025 due to strong growth in electricity demand in key economies like China and India. This is stated in the latest report of the International Energy Agency (IEA) – Coal Mid-Year Update.
Strong Growth in China and India Drives Consumption
In 2023, global coal consumption increased by 2.6% year-on-year, reaching a historic high, driven by strong growth in China and India, which are the two largest consumers. Although demand for coal increased in both the power sector and industry, the main driver was its use to fill the gaps created by low hydropower production and rapid growth in electricity demand.
China's Role in Coal Consumption
In China, which accounts for more than half of the world’s coal consumption, hydropower generation is now recovering from the extremely low levels of the previous year. This, along with the continued rapid deployment of solar and wind power, is significantly slowing the growth of coal use in 2024. However, a significant drop in this indicator is unlikely, as the country is expected to increase electricity demand by 6.5% this year.
India's Coal Demand
In India, coal demand growth will slow in the second half of 2024 as weather conditions return to seasonal averages.
Europe's Downward Trend Continues
Demand for coal in Europe continues the downward trend that began in the late 2000s. It was mainly driven by efforts to reduce emissions in the electricity sector. Coal-fired electricity generation in the EU is projected to fall by almost 25% this year.
A Tipping Point in Demand
“Our analysis shows that global demand for coal is likely to remain broadly flat through 2025, based on current policy settings and market trends,” said Keisuke Sadamori, Director of Energy Markets and Security at the IEA.
If it were not for the rapid growth in electricity demand, Sadamori said, global coal consumption would have declined this year. Structural trends indicate that global demand for this fuel will reach a tipping point and will soon begin to decline.
Global Coal Production and Prices
Thanks to more stable natural gas prices than in recent years, coal prices remained limited in January-June. They have returned to levels last seen before the global energy crisis, but remain elevated due to inflationary pressures.
As GMK Center reported earlier, electricity prices in Europe were on the rise in July due to higher demand.
Conclusion
While renewable energy sources are expanding rapidly, the continued growth in electricity demand, especially in China and India, is expected to keep global coal consumption stable in the near future. However, the IEA suggests that a tipping point in global demand is approaching, and a decline in coal consumption is likely to occur in the coming years.
