Jakarta – The International Energy Agency’s (IEA) latest annual coal market report, ‘Coal 2023’, has forecasted a significant decline in global coal demand by 2026. Meanwhile, China, India, and Indonesia, the world’s top coal producers, will likely break production records in 2023, contributing to a new global production high. These countries now represent over 70% of global coal production.
While global coal trade is expected to contract in the coming years, a surge in demand in Asia is set to drive it to new heights in 2023, the report said. A stark regional contrast is evident, with global demand surpassing 8.5 billion tonnes, reaching a historic peak this year.
Chinese imports are anticipated to exceed 450 million tonnes, setting a new global record, while Indonesian exports are projected to be close to 500 million tonnes.
Advanced economies are expected to see dramatic decreases in coal consumption, with the European Union and the United States projecting around a 20% drop in 2023. Conversely, emerging and developing economies like India and China are witnessing robust growth, driven by increased electricity demands and weaker hydropower output.
Global demand downturn, rising renewables capacity
The IEA report marks the first instance where it anticipates a drop in global coal consumption over its projected period, signalling a potential turning point in global energy trends.
The report projects a 2.3% decrease in global coal demand by 2026 compared to 2023, even without enhanced clean energy and climate policies. This decline is attributed mainly to a significant expansion in renewable energy capacity, particularly in China, which currently dominates over half of the world’s coal demand. Chinese coal demand is expected to decrease from 2024 and stabilise until 2026, heavily influenced by the rate of clean energy deployment, weather patterns, and economic shifts.
This projected decline in coal use – an essential energy source for electricity generation, steelmaking, cement production, and the primary source of human-induced CO2 emissions – could be a historic watershed moment. However, global consumption is still expected to exceed 8 billion tonnes through 2026. A much steeper decline in using unabated coal is necessary to align with the Paris Agreement’s emissions reduction goals.
Keisuke Sadamori, IEA Director of Energy Markets and Security, notes that unlike previous demand dips, which were temporary and caused by extraordinary events. This time appears different, as the decline is more structural, driven by the formidable and sustained expansion of clean energy technologies,” he said. “A turning point for coal is clearly on the horizon,” Sadamori stated, emphasising that the expansion rate of renewables in key Asian economies will be critical and that intensified efforts are needed to meet global climate targets.
The report also highlights a shift in coal demand and production towards Asia. In 2023, China, India, and Southeast Asia are poised to account for three-quarters of global consumption, a significant increase from one-quarter in 1990. Southeast Asia’s consumption is expected to surpass that of the United States and the European Union for the first time in 2023. Only India and Southeast Asia are forecasted to see substantial growth in coal consumption through 2026. (nsh)
