The International Energy Agency (IEA) predicts a significant drop in global coal consumption by 2026, marking a historic turning point in the world’s energy landscape.
The International Energy Agency (IEA) predicts a significant drop in global coal consumption by 2026, marking a historic turning point in the world’s energy landscape. The latest annual coal market report reveals that, after reaching an all-time high in the current year, global coal demand is expected to decline for the first time over the forecast period.
The report projects a 1.4% increase in global coal demand for 2023, exceeding 8.5 billion tonnes. Notably, advanced economies, including the European Union and the United States, are set to experience record drops of around 20% each. In contrast, emerging and developing economies, driven by increased electricity demand and weak hydropower output, are expected to see robust growth, with 8% in India and 5% in China.
However, the IEA anticipates 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. China, responsible for over half of the world’s coal demand, is expected to witness a decline in 2024, with demand leveling off through 2026.
The pace of clean energy deployment, weather conditions, and structural shifts in the Chinese economy will play pivotal roles in shaping the future of coal in China.
The decline in global coal demand, the largest source of carbon dioxide emissions, could signify a turning point in the fight against climate change. Despite this, the report highlights that global consumption is projected to remain above 8 billion tonnes through 2026, emphasizing the urgent need for accelerated efforts to align with the goals of the Paris Agreement.
Keisuke Sadamori, IEA Director of Energy Markets and Security, states, “A turning point for coal is clearly on the horizon – though the pace at which renewables expand in key Asian economies will dictate what happens next, and much greater efforts are needed to meet international climate targets.”
The report also underscores the accelerating shift in coal demand and production to Asia. This year, China, India, and Southeast Asia are expected to account for three-quarters of global consumption, a stark contrast to one-quarter in 1990.
Southeast Asia is anticipated to surpass the United States and the European Union in coal consumption in 2023. India and Southeast Asia are projected as the only regions where coal consumption will see significant growth through 2026.
China, India, and Indonesia, the world’s three largest coal producers, are forecasted to break output records in 2023, contributing to a new global production high. These countries now collectively produce over 70% of the world’s coal.
As global coal trade contracts in the coming years due to declining demand, 2023 is expected to witness a peak driven by strong growth in Asia. China’s imports are set to reach 450 million tonnes, surpassing the previous global record set in 2013, while Indonesia’s exports are projected to hit close to 500 million tonnes – also a global record.
While the IEA report signals a positive shift away from coal, the world must intensify efforts to achieve a steeper decline, aligning with international climate goals. The rise of renewable energy, especially in key Asian economies, holds the key to shaping a more sustainable energy future.