Global coal demand to remain flat until 2025 – IEA

Despite the rapid expansion of renewable energy sources, strong growth in electricity demand in key economies indicates that global coal consumption will remain largely stable in 2024-2025. This is stated in the latest report of the International Energy Agency (IEA) – Coal Mid-Year Update.

In 2023, global coal consumption increased by 2.6% year-on-year, reaching a historic high, driven by strong growth in China and India, which are the two largest consumers. Although demand for coal increased in both the power sector and industry, the main driver was its use to fill the gaps created by low hydropower production and rapid growth in electricity demand.

In China, which accounts for more than half of the world’s coal consumption, hydropower generation is now recovering from the extremely low levels of the previous year. This, along with the continued rapid deployment of solar and wind power, is significantly slowing the growth of coal use in 2024. However, a significant drop in this indicator is unlikely, as the country is expected to increase electricity demand by 6.5% this year.

In India, coal demand growth will slow in the second half of 2024 as weather conditions return to seasonal averages.

Demand for coal in Europe continues the downward trend that began in the late 2000s. It was mainly driven by efforts to reduce emissions in the electricity sector. Coal-fired electricity generation in the EU is projected to fall by almost 25% this year.

“Our analysis shows that global demand for coal is likely to remain broadly flat through 2025, based on current policy settings and market trends,” said Keisuke Sadamori, Director of Energy Markets and Security at the IEA.

If it were not for the rapid growth in electricity demand, Sadamori said, global coal consumption would have declined this year. Structural trends indicate that global demand for this fuel will reach a tipping point and will soon begin to decline.

Global coal production is expected to decline slightly in 2024 after growing steadily a year earlier. At the same time, the global coal market is well supplied.

Thanks to more stable natural gas prices than in recent years, coal prices remained limited in January-June. They have returned to levels last seen before the global energy crisis, but remain elevated due to inflationary pressures.

As GMK Center reported earlier, electricity prices in Europe were on the rise in July due to higher demand.