A rebound in global demand for coal is in sight as expectations are that there will be global economic recovery in 2021, albeit, this decline will be short-lived, according to a report by the International Energy Agency.
Between 2018 and 2020, global consumption is estimated to have fallen by 7%, an equivalent of 500 million tonnes. This notwithstanding, there is little sign that coal consumption is set to decline substantially in the coming years, with China leading the recovery alongside India and South East Asia offsetting declines elsewhere. Meanwhile, coal remains the single largest source of global carbon emissions, thus this comes as a threat to global efforts that are being harnessed to bring global emissions to sustainable levels.
Of note is the gradual rise in coal consumption in the United States and European Union for the first time in nearly a decade, due to higher natural gas prices and electricity demand. This situations is set to delay or slow down the structural decline of coal use in these areas as aforementioned.
According to the Electricity Market report 2020 released recently by the IEA, a 1.8% in coal demand in 2019 resulted mainly from the fairly low growth in electricity demand and low natural gas prices. Latest estimates suggest that coal demand will have further plunged by 5% in 2020, if not from the economic fallout from COVID-19.
“The COVID-19 crisis has completely reshaped global coal markets. Before the pandemic, we expected a small rebound in coal demand in 2020, but we have since witnessed the largest drop in coal consumption since the Second World War,” said Keisuke Sadamori, the IEA’s Director of Energy Markets and Security. “The decline would have been even steeper without the economic rebound in China- the world’s largest coal consumer- in second half of the year.”
While these are troubling, there are indications that this rise will not prolong beyond 2025. The report estimates that by 2025, global coal demand will flatten out at around 7.4 billion tonnes. These trends are expected to vary by region over the next five years.
“In Europe and North America, coal continues its decline after a temporary uptick in 2021. Given that the combined coal consumption of the European Union and the United States now represents 10% of global coal use, further declines in those markets will have a limited effect at a global level, the report notes.
“India and some countries in South and Southeast Asia are forecast to increase coal use through 2025 as industrial production expands and new coal-fired capacity is built. By 2025, ASEAN will become the third-largest coal-consuming region, surpassing the United States and European Union.”
The lot has been cast among countries, and the future of coal will largely be decided in Asia. Currently, China and India account for 65% of global demand. With Japan, Korea, Taiwan and Southeast Asia included, that share rises to 75%. China, which currently accounts for half of the world’s coal consumption will be especially influential.
However, Africa’s place in the share of global coal consumption shows no major shifts for coal consumption. Overall countries on the African continent consumed 197 million tonnes of coal in 2019, 12 million tonnes less (-6%) than 2018.
READ MORE: Global Electricity Demand to recover modestly from largest decline in 2021- IEA
