Coal consumption is at an all-time high but demand is expected to shrink through to 2026, according to the International Energy Agency (IEA).
The IEA said on Friday that demand for coal “dropped sharply” during the Covid-19 pandemic, then rebounded, and is now at its “highest level ever”.
The energy association predicts global demand for coal will rise by 1.4% in 2023, surpassing 8.5 billion tonnes for the first time.
Global consumption is forecast to remain well over 8 billion tonnes through 2026, according to the IEA’s latest report.
Coal demand increased by 8% in India and by 5% in China in 2023 “due to rising demand for electricity and weak hydropower output”, the IEA said.
Consumption in many advanced economies fell in 2023, including record drops in the European Union and United States of about 20% each, it added.
Despite rising coal usage in some emerging nations, the IEA now predicts that overall global coal demand will shrink by 2.3% by 2026, compared to this year’s figures, even without tighter policies.
This is the first time that the IEA’s coal report has predicted a drop in global coal consumption over its forecast period.
‘’This time appears different, as the decline is more structural, driven by the formidable and sustained expansion of clean energy technologies,” said Keisuke Sadamori, IEA Director of Energy Markets and Security.
“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."
That shift is expected to be driven by “the major expansion of renewable energy capacity coming online in the three years to 2026”, especially in China.
China, India, and Southeast Asian nations are expected to account for three-quarters of global consumption in 2023, up from only about one-quarter in 1990, the IEA said.
More than half of global renewable energy development is happening in China, which also accounts for half of global coal demand.
This shift towards renewables is expected to drive a decline in China’s coal demand in 2024 and for it to plateau through to 2026, the IEA said.
The revelations in its latest annual coal report come as world leaders failed to agree this month on a deal to completely phase out fossil fuels at this year’s United Nations climate negotiations.
Instead, they agreed to tighten the language around fossil fuels to stipulate that countries will ‘transition’ away from them.
The IEA predicts that under existing policy frameworks, coal demand will peak this decade.
It nonetheless warned that “stronger action is needed” to meet policy and climate targets globally.
“The International Energy Agency’s latest projections see coal demand peaking within this decade under today’s policy settings, primarily as a result of the structural decline in coal use in developed economies and a weaker economic outlook for China, which has also pledged to reach a peak in CO2 emissions before 2030,” the IEA said.