Driving forces
Whereas coal demand grew in each the electrical energy and industrial sectors, the primary driver, in accordance with the IEA, was the usage of coal to fill the hole created by low hydropower output and quickly rising electrical energy demand.
This development is anticipated to proceed this yr, with world coal demand forecast to rise marginally by 0.4% to roughly 8.74 billion tonnes, the IEA report says.
In its final publication, the Company beforehand predicted a lower in demand in 2024, with a reasonable decline thereafter. Nonetheless, this forecast, it says, required two circumstances: a restoration of hydropower era in China after years of low rainfall, and a slowdown in Chinese language electrical energy demand development; the latter of which didn’t materialize.
“The continued fast deployment of photo voltaic and wind, mixed with the restoration of hydropower in China, is placing important strain on coal use. However the electrical energy sector is the primary driver of worldwide coal demand, and electrical energy consumption is rising very strongly in a number of main economies,” said Keisuke Sadamori, IEA director of power markets and safety.
“With out such fast development in electrical energy demand, we’d be seeing a decline in world coal use this yr. And the structural tendencies at work imply that world coal demand is ready to achieve a turning level and begin declining quickly.”
Regional demand
China, the world’s largest producer and client of coal accounting for greater than half of the worldwide consumption, noticed its electrical energy demand rebound in 2023, rising by 7%. One other main annual enhance in China’s electrical energy demand is anticipated this yr (6.5%), the IEA forecasts, regardless of a restoration within the hydropower sector mixed with fast deployment of photo voltaic and wind.
India, the second-largest supply of worldwide coal consumption, noticed double-digit development (10%) in coal demand for energy era final yr. In contrast to in lots of different elements of the world, in India, development in renewable power sources is unable to maintain tempo with the expansion in energy demand. Within the first half of the yr, India’s coal consumption rose sharply because of low hydropower output and a large enhance in electrical energy demand because of excessive heatwaves and powerful financial development.
In Europe, coal demand is continuous on the downward development that started within the late 2000s, largely because of emissions discount efforts in energy era. After having fallen by greater than 25% in 2023, coal energy era within the European Union is forecast to drop by nearly as a lot once more this yr, the IEA says.
Coal use has additionally been contracting considerably in america in recent times, however stronger electrical energy demand and fewer switching from coal to pure fuel threaten to sluggish this development in 2024, it provides.
In the meantime, Japan and Korea are persevering with to scale back their reliance on coal, though at a slower tempo than Europe.
Demand reversal
In 2025, the IEA estimates world coal demand to enter a development reversal after 4 years of development, reducing barely by 0.3% to a complete of 8.71 billion tonnes.
A key motive is that China, which has historically pushed coal demand development, is prone to present its first decline in coal demand since 2016. It’s estimated that Chinese language coal demand within the energy sector will decline by 1.1% in 2025, since renewables are prone to outgrow energy demand.
This, mixed with ongoing declines within the European Union, United States, Japan, Korea, and different elements of the world, is anticipated to outweigh steady development in India and ASEAN, it says.
Provide forecast
On the provision facet, world coal manufacturing is anticipated to lower barely in 2024 after regular development the yr earlier than, the IEA says.
In 2024, coal manufacturing in China is moderating after two years of staggering development. In India, the push to spice up coal manufacturing continues, with a provide enhance of round 10% anticipated in 2024. In superior economies, coal manufacturing is in decline, broadly reflecting demand.
The report additionally finds that commerce volumes are on the highest ranges ever seen regardless of the collapse of imports in Europe and the decline in imports in Northeast Asia (Japan, Korea and Chinese language Taipei) since 2017.
Nonetheless, different international locations are stepping in to take up accessible provide, it provides. In 2024, Vietnam is ready to grow to be the fifth largest coal importer, surpassing Chinese language Taipei. Imports to China and India stay at all-time highs.