Global coal demand is expected to remain stable through 2025, despite the rapid growth of renewable energy sources. The International Energy Agency (IEA) attributes this stability to surging electricity demand in key economies.
“Our analysis shows that global coal demand is likely to remain broadly flat through 2025,” said Keisuke Sadamori, IEA Director of Energy Markets and Security. “Electricity consumption is growing strongly in several major economies.”
Coal consumption rose by 2.6% in 2023, reaching an all-time high. The primary drivers were strong growth in China and India. In China, electricity generation from hydropower has been recovering in 2024, reducing coal use growth. However, another significant increase in China’s electricity demand, forecasted at 6.5% in 2024, makes a decline in coal consumption unlikely.
Sadamori noted that the recovery of hydropower, combined with the rapid deployment of solar and wind, is putting significant pressure on coal use in China. In India, coal demand growth is expected to decelerate in the second half of 2024 as weather conditions normalize.
Europe continues its downward trend in coal use, largely due to emissions reduction efforts. After falling by more than 25% in 2023, coal power generation in the European Union is forecasted to drop significantly again this year.
In the United States, stronger electricity demand and less switching from coal to natural gas threaten to slow the decline in coal use in 2024. Japan and Korea are also reducing their reliance on coal but at a slower pace than Europe.
On the supply side, global coal production is expected to decrease slightly in 2024 after steady growth the previous year. China’s coal production is moderating after two years of staggering growth. In India, a push to boost coal production is expected to increase supply by around 10% in 2024.
Despite declining imports in Europe and Northeast Asia, global coal trade volumes are at their highest levels ever. Vietnam is set to become the fifth largest coal importer, surpassing Chinese Taipei. Imports to China and India remain at all-time highs.
The IEA report states that the global coal market is well supplied despite tighter sanctions on Russian producers and disruptions in some exporting countries. With more stable natural gas prices, coal prices have returned to pre-crisis levels but remain elevated due to inflationary pressures.
Sadamori emphasized that, without the rapid growth in electricity demand, global coal use would likely be declining this year. “The structural trends at work mean that global coal demand is set to reach a turning point and start declining soon.”
The report underscores the complex dynamics of the global energy market, where rising electricity needs offset the impacts of renewable energy growth. As economies continue to expand and demand for electricity increases, coal remains a critical part of the energy mix.
