Global coal use projected to stay stable through 2025

IEA report

The IEA has reported that despite the rapid growth of renewables, coal continues to play a crucial role in meeting the surging electricity demand across key economies. According to the latest IEA report, global coal consumption is expected to remain largely stable in 2024 and 2025. This comes as the increase in electricity needs in major countries offsets the impacts of expanding solar and wind capacities and a gradual recovery in hydropower.

Cnsumption

In 2023, global coal use rose by 2.6% to hit an all-time high, driven by strong demand from China and India, the world’s largest coal consumers. The rise in coal use was primarily to fill the gap left by low hydropower output and rapidly increasing electricity demand.

🔹 China: Although hydropower generation is recovering and solar and wind deployments are accelerating, the 6.5% projected increase in electricity demand for 2024 means coal consumption is unlikely to decline.

🔹 India: Coal demand surged in the first half of 2024 due to low hydropower output and extreme heatwaves but is expected to decelerate as weather conditions normalize.

🔹 Europe & the US: In contrast, Europe continues its downward trend in coal use due to emissions reduction efforts, and coal power generation in the EU is forecast to drop significantly. The US also sees a decline, though stronger electricity demand and reduced switching to natural gas could slow this trend.

🔹 Japan & Korea: Are gradually reducing their reliance on coal, albeit at a slower pace compared to Europe.

Projection

Keisuke Sadamori, IEA Director of Energy Markets and Security, notes that while global coal demand remains flat through 2025, rapid growth in electricity demand prevents a decline in coal use. He stated: “Our analysis shows that global coal demand is likely to remain broadly flat through 2025, based on today’s policy settings and market trends”. However, structural trends indicate that global coal demand is nearing a turning point and may soon begin to decline.

On the supply side, global coal production is expected to decrease slightly in 2024 after previous growth. In China, production is moderating, while India is boosting production by an anticipated 10% in 2024. Meanwhile, advanced economies continue to see a decline in coal production.

Trade volumes are at record levels, with countries like Vietnam emerging as significant coal importers. Despite challenges like Russian sanctions and disruptions in exporting countries, the global coal market remains well-supplied. Coal prices, while stable, remain elevated due to inflationary pressures.