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Saturday, May 25, 2024

Global Coal Demand Hits Record High in 2023

Global coal demand is projected to reach a record high in 2023, driven by surges in India and China, despite significant declines in the European Union and the United States, according to the latest IEA report.

The latest International Energy Agency (IEA) annual coal market report indicates that global coal demand is set to reach an all-time high in 2023, surpassing 8.5 billion tonnes. However, the report highlights significant regional variations, with the European Union and the United States experiencing record drops of around 20% each.

In contrast, emerging economies like India and China are expected to drive an 8% and 5% increase in demand, respectively, due to a rising need for electricity and weak hydropower output. The IEA’s forecast marks the first time the annual report predicts a subsequent decline in global coal consumption.

Anticipated Decline in Global Coal Demand by 2026

Despite the short-term surge, the IEA’s Coal 2023 report foresees a 2.3% decline in global coal demand by 2026 compared to 2023 levels. This shift is attributed to the substantial expansion of renewable energy capacity over the next three years, with over half of this growth expected in China.

The report emphasizes that the outlook for coal in China will be influenced by clean energy deployment, weather conditions, and structural changes in the country’s economy. The decline in global coal demand, if realized, could signify a historic turning point driven by the sustained expansion of clean energy technologies.

The IEA report underscores the accelerating shift in coal demand and production toward Asia. China, India, and Southeast Asia are projected to account for three-quarters of global consumption in 2023, a significant increase from one-quarter in 1990.

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The consumption in Southeast Asia is expected to surpass both the United States and the European Union in 2023. Despite the decline in advanced economies, the expansion of renewables is set to drive a structural decline in coal consumption. However, the report emphasizes that global coal consumption is forecasted to remain above 8 billion tonnes through 2026.

While global coal trade is expected to contract with declining demand, the IEA anticipates a new high in 2023, driven by robust growth in Asia. China’s imports are projected to reach 450 million tonnes, surpassing the previous global record set in 2013, while Indonesia’s exports in 2023 will also set a new global record, nearing 500 million tonnes.

The IEA’s projections align with the recent commitments made by 198 parties at the COP28 climate summit in Dubai, aiming to transition away from fossil fuels, achieve net-zero emissions by 2050, and triple renewable energy capacity by 2030.