The amount of electricity generated globally from coal is surging towards a new annual record in 2021, undermining efforts to reduce greenhouse gas emissions, according to the International Energy Agency.
After record declines in 2019 and 2020, global power generation from coal is expected to surge by 9 percent in 2021 to an all-time high of 10,350 terawatt-hours. The rebound is being driven by this year’s rapid economic recovery which has soared electricity demand much faster than low-carbon supplies can keep up.
According to the IEA’s coal 2021 report, the steep rise in natural gas prices has also increased demand for coal power by making it more cost-competitive. On the whole, coal demand worldwide— including uses beyond power generation, such as cement and steel production— is forecast to grow by 6 percent in 2021.
However, this increase will not take it above the record levels it reached in 2013 and 2014. Yet still, this depends on weather patterns and economic growth, overall coal demand could reach new all-time highs as soon as 2022 and beyond, indicating the need for fast and strong policy action, the report said.
IEA Executive Director Fatih Birol commented: “Coal is the single largest source of global carbon emissions, and this year’s historically high level of coal power generation is a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero.
“Without strong and immediate actions by governments to tackle coal emissions – in a way that is fair, affordable and secure for those affected– we will have little chance, if any at all, of limiting global warming to 1.5 °C.”Fatih Birol, IEA Exec. Director
Electricity Demand Growth to Slow in coming year
China produces more than half of global coal-fired electricity generation, and its coal power is expected to grow by 9 percent in 2021 despite a deceleration at the end of the year. In India, coal power is forecast to grow by 12 percent. This would assume new all-time highs in both countries, though there is roll out of impressive amounts of solar and wind capacity.
While coal power generation is set to increase by almost 20 percent this year in the United States and the European Union, that is not enough to take it above 2019 levels. Coal use in those two markets is expected to go back into decline next year amid slow electricity demand growth and rapid expansion of renewable power.
“The pledges to reach net zero emissions made by many countries, including China and India, should have very strong implications for coal– but these are not yet visible in our near-term forecast, reflecting the major gap between ambitions and action,” said Keisuke Sadamori, Director of Energy Markets and Security at the IEA.
“Asia dominates the global coal market, with China and India accounting for two-thirds of overall demand. These two economies – dependent on coal and with a combined population of almost 3 billion people– hold the key to future coal demand.”Keisuke Sadamori, Director of Energy Markets and Security
In 2020, global coal demand fell by 4.4 percent, the largest decline in decades but much smaller than the annual drop that was initially expected at the height of the lockdowns early in the pandemic, the report shows.
Coal prices have been rising on a roller coaster ride over the past two years. After falling to US$50 per tonne in the second quarter of 2020, coal prices began to rise towards the end of the year. In 2021, prices were lifted further by demand outstripping supply in China– the global coal price setter– as well as by supply disruptions and higher natural gas prices globally.
Ensuring that strong policy actions are tailored to ensure that coal use in power generation is reduced, the rise in greenhouse house gas emissions and for that matter net zero target by 2050 may be derailed.