Context: Despite production of coal reaching a record in 2023, global demand is expected to decline by 2026.
Coal Consumption and decline
International Energy Agency report released recently has pointed out that,
- Global demand for coal rising by 1.4%in 2023, surpassing 8.5 billion tons for the first time.
- Demand in the European Union and United States is expected to drop by 20% each, India and China are expected to rise by 8% and 5% respectively, due to increased demand for electricity and diminished generation of hydroelectric power.
IEA expectation of a decline in coal demand is premised on following consideration:
- The current El Nino conditions, usually linked with drier monsoon in Asia, are expected to turn to La Nina which is generally linked to better rainfall from 2024 to 2026.
- This will presumably translate to greater hydroelectric power output.
- A steep upward trend in low-cost solar photovoltaic deployment is expected to aid renewable power generation.
- Nuclear generation is set to see moderate increase, especially in China, India, and the European Union.
- A little over half the world’s coal demand comes from China. With a major expansion of renewable energy expected coal demand in the country is expected to fall in 2024, and plateau in 2026.
- The decline is more structural, driven by the formidable and sustained expansion of clean energy technologies.
- Overall, this will result in a 2.3% fall in global coal demand by 2026.
Global Demand to remain well.
- Coal, the most important energy source for electricity generation, steelmaking, and cement production, is also the largest source of carbon dioxide (CO2) emissions from human activity.
- Despite forecasts of a fall, global consumption is expected to remain well over 8 billion tonnes through 2026, the market report says.
- China, India, and Indonesia — the three largest coal producers globally — are expected to break output records in 2023, pushing global production to a new high in 2023.
- These three countries now account for more than 70% of the world’s coal production.
A turning point for coal is clearly on the horizon — though the pace at which renewables expand in key Asian economies will dictate what happens next, and much greater efforts are needed to meet international climate targets.