In its latest annual report, the IEA forecasts global coal demand will remain essentially stable over the next five years, inching up by just over 1% between 2017 and 2023. The reason for coal’s stagnation remains unchanged from recent years: Developed nations ditching the fossil fuel, while emerging economies turning to it to quickly scale up their electric power generation.
“In a growing number of countries, the elimination of coal-fired generation is a key climate policy goal. In others, coal remains the preferred source of electricity and is seen as abundant and affordable,” state the IEA, a Paris-based agency that advises developed nations on energy policy.
This forecast comes on the heels of a series of reports that the world is falling short of commitments to prevent catastrophic impacts from climate change and running out of time to take action. Burning coal for electric power and industrial purposes like steelmaking has also been a major contributor to global warming.
“Fossil fuels are going to be with us for a long time,” IEA Executive Director Fatih Birol stated in the report.
“That is why the only way to tackle our long-term climate goals and address the urgent health impacts of air pollution, while also ensuring that more people around the world have access to energy, will require an approach that integrates strong policies with innovative technologies.” He added.
In 2023, the IEA sees the world consuming just over 5.4bn tons of coal equivalent. At that level, coal would provide 25% of the world’s energy, down from 27% at the moment. The agency sees cheap, cleaner-burning natural gas and renewable energy sources continuing to eat into coal’s share of the global energy mix.
Falling consumption in China, the world’s biggest market for coal, will be a major headwind for the fuel in the coming years. The nation’s coal consumption is poised to fall by about 0.5% each year through 2023, projected the IEA.
This is due to the policies aimed at improving the nation’s notoriously toxic air quality, as well as China’s ongoing transformation from an energy-hungry industrial behemoth to a services-oriented economy. By 2020, the growth in coal-fired power generation in China is expected to peak.
In the case of India, the country’s appetite is growing by 4% each year through 2023. This is down from an average of more than 6% over the last decade. Nevertheless, India’s appetite for coal will increase by 150mn tons of coal equivalent by 2023.
Coal demand is expected to grow at the fastest clip in Southeast Asia, where countries such as the Philippines and Vietnam are building new coal-fired power plants to support economic development. Growth in the region is expected to rise by 5.7% through 2023, forecasted the IEA.
In the United States and Europe, coal demand is poised to drop by more than 2% each year as developed economies continue to shut down coal plants in favor of natural gas and renewable energy.
Higher demand and tight supplies have been pushing up prices for coal and supporting robust seaborne trade in the fossil fuel. China’s imports have been recovering since 2017, and big importers such as Brazil, South Korea and Malaysia took in record shipments last year.
The IEA expects the coal trade to expand in 2018 but forecasts it will turn lower in the following years.
In 2023, the IEA said, shipments will total 782mn tons of coal equivalent, roughly in line with last year’s levels.