The demand for coal across the globe is set to increase only marginally in 2022 but enough to push it to an all-time high amid the energy crisis, according to a new IEAreport.
In the Coal 2022, the IEA’s latest annual market report on the sector, the authors said that the increase in its use in Europe is expected to be temporary, with demand falling in advanced economies in the coming years but remaining robust in emerging Asia.
The report said that global black diamond use is set to rise by 1.2% in 2022, surpassing 8 billion tonnes in a single year for the first time and eclipsing the previous record set in 2013. However, the report forecasts that the consumption will then remain flat at that level through 2025 as declines in mature markets are offset by continued robust demand in emerging Asian economies. This means coal will continue to be the global energy system’s largest single source of carbon dioxide emissions by far, an official IEA statement said.
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 – and power generation from renewables has 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 IEA report said.
“The world is close to a peak in fossil fuel use, with the black diamond set to be the first to decline, but we are not there yet,” said IEA’s Director of Energy Markets and SecurityKeisuke Sadamori,. “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 statement said.
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, the organisation said.
Coal demand is forecast to fall in advanced economies in the coming years as renewables increasingly displace it for electricity generation. However, emerging and developing economies in Asia are set to increase coal use to help power their economic growth, even as they add more renewables. Developments in China, the world’s largest coal consumer, will have the biggest impact on its demand in the coming years, but India will also be significant.
The IEA’s special report on Net Zero Transitions, published on 15 November, provides the most comprehensive analysis to date of what it would take to bring down global energy emissions rapidly enough to meet international climate goals while supporting energy security and economic growth, and addressing the social and employment consequences of the changes involved.