Global coal demand surges to levels not seen since 2013
Global coal demand is expected to hit an all-time high in 2022 as efforts to reduce its use are paused amid the ongoing energy crisis.
According to the International Energy Agency (IEA), demand increased only marginally this year despite the tight restrictions on oil supplies following Russia’s invasion of Ukraine.
The world’s coal consumption is expected to remain at similar levels up to 2025 in the absence of stronger efforts to accelerate the transition to clean energy.
While wealthy countries are continuing to shut down their coal plants at record rates in a bid to cut carbon emissions, China’s ongoing use of the fossil fuel and its expansion of some facilities is expected to keep demand flat rather than seeing any reduction.
An overall rise in usage of 1.2 per cent is expected this year, surpassing 8 billion tonnes in a single year for the first time and eclipsing the previous record set in 2013.
Expected coal demand in 2022 is very close to the IEA forecast published a year ago in 'Coal 2021', even if coal markets have been shaken by a range of conflicting forces since then.
Higher natural gas prices amid the global energy crisis have led to increased reliance on coal for generating power, but slowing economic growth has at the same time reduced electricity demand and industrial output.
Earlier this week, Britain’s electricity grid operator was forced to ask two of its coal-fired power stations to start warming up in preparation for possible disruptions caused by the freezing weather conditions.
Power generation from renewables has also risen to a new record. In China - the world’s largest coal consumer - a heat wave and drought pushed up coal power generation during the summer, even as strict Covid-19 restrictions slowed down demand.
“The world is close to a peak in fossil fuel use, with coal set to be the first to decline, but we are not there yet,” said Keisuke Sadamori, the IEA’s energy markets director.
“Coal demand is stubborn and will likely reach an all-time high this year, pushing up global emissions. At the same time, there are many signs that today’s crisis is accelerating the deployment of renewables, energy efficiency and heat pumps and this will moderate coal demand in the coming years. Government policies will be key to ensuring a secure and sustainable path forward.”
The international coal market remained tight in 2022, with coal demand for power generation set to hit a new record.
Coal prices rose to unprecedented levels in March and then again in June, pushed higher by the strains caused by the global energy crisis, especially the spikes in natural gas prices, as well as adverse weather conditions in Australia, a key international supplier.
Europe, which has been heavily impacted by Russia’s sharp reductions of natural gas flows, is on course to increase its coal consumption for the second year in a row. However, by 2025, European coal demand is expected to decline below 2020 levels.
The world’s three largest coal producers – China, India and Indonesia – will all hit production records in 2022. However, the report notes that despite high prices and comfortable margins for coal producers, there is no sign of surging investment in export-driven coal projects. This reflects caution among investors and mining companies about the medium- and longer-term prospects for coal.
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