The growth in global coal demand is expected to stall over the next five years, according to a new report from the International Energy Agency, which predicts that appetite for the fuel will wane and other energy sources will gain ground.
The predictions are part of the International Energy Agency’s (IEA) latest report, the latest Medium-Term Coal Market Report, which predicts the share of coal in the power generation mix will fall to 36% by 2021, down from 41% in 2014, thanks in part to lower demand in China and the United States, combined with the increasing growth and popularity of renewables and a strong focus on energy efficiency.
More immediately, coal demand in 2016 is expected to come in under 2013 levels. Coal consumption decreased in 2015 for the first time in this century, and it looks as if this decline is only going to continue thanks to massive declines in China and the United States, and not enough growth in countries like India, Indonesia, Russia, and Vietnam. Specifically, coal use declined in the major Chinese sectors of electricity, steel, and cement, and coal generation also declined, driven by a lackluster 0.5% electricity demand growth and the country’s diversification policy, which led to hydro, nuclear, wind, solar, and natural gas power generation growth. In the United States, coal power generation dropped as a result of lower natural gas prices and coal plant retirements, leading to coal consumption dropping by 15%, the largest ever annual decline.
China remains the pivot point for what we expect coal to do after 2021. The country accounts for half of global coal demand, and almost half of coal production, and as such influences global coal prices and overall demand.
“Because of the implications for air quality and carbon emissions, coal has come under fire in recent years, but it is too early to say that this is the end for coal,” said Keisuke Sadamori, the director of the IEA’s energy markets and security directorate, who launched the report in Beijing, China.
“Coal demand is moving to Asia, where emerging economies with growing populations are seeking affordable and secure energy sources to power their economies. This is the contradiction of coal — while it can provide essential new power generation, it can also lock-in large amounts of carbon emissions for decades to come.”
The report also highlights the acceleration of coal’s move to the East, as well as the resultant geographical divide this shift has created. Decline of coal in Europe and America is continuing apace, and new policies and technological developments may even accelerate the decline. Meanwhile, the report expects to see solid consumption continuing in North Asia, and strong growth in South and Southeast Asia, where coal-based electricity is one of the preferred options to increase national power generation in growing economies with current electricity shortages.