New Delhi, Dec 16: After reaching an all-time high this year, global coal demand is expected to decline to 2026, according to the latest edition of the International Energy Agency’s (IEA) annual coal market report – the first time that the report has predicted a drop in global coal consumption over its forecast period.
Coal 2023 sees global demand for coal rising by 1.4% in 2023, surpassing 8.5 billion tonnes for the first time. The global increase masks stark differences among regions. Consumption is on course to decline sharply in most advanced economies in 2023, including record drops in the European Union and United States of around 20% each. Demand in emerging and developing economies, meanwhile, remains very strong, increasing by 8% in India and by 5% in China in 2023 due to rising demand for electricity and weak hydropower output.
However, the report expects global coal demand to fall by 2.3% by 2026 compared with 2023 levels, even in the absence of governments announcing and implementing stronger clean energy and climate policies. This decline is set to be driven by the major expansion of renewable energy capacity coming online in the three years to 2026.
More than half of this global renewable capacity expansion is set to occur in China, which currently accounts for over half of the world’s demand for coal. As a result, Chinese coal demand is expected to fall in 2024 and plateau through 2026. That said, the outlook for coal in China will be significantly affected in the coming years by the pace of clean energy deployment, weather conditions, and structural shifts in the Chinese economy.