The International Energy Agency‘s (IEA) latest coal market report reveals global demand for coal is set to level off after reaching a new peak in 2024. The report shows that coal use has rebounded strongly after the pandemic, hitting a record 8.77 billion tonnes in 2024. However, demand is expected to stabilize through 2027 as renewable energy sources, including solar, wind, and nuclear, increasingly contribute to the global electricity supply.
The IEA’s Coal 2024 report highlights the resurgence of coal use, largely driven by recovery from the pandemic’s economic disruptions. In 2024, global demand reached a historic high, but this peak is not expected to continue. Global demand is expected to remain steady until 2027. Clean energy technologies are reshaping the electricity sector, especially in countries like China.
CHINA’S ROLE IN GLOBAL COAL CONSUMPTION
China is a key player in the global coal market, accounting for one-third of the world’s total coal consumption. The country is pushing for clean energy. This includes nuclear plants and an accelerated expansion of solar and wind power. These efforts will help curb the growth of the demand. Electricity use in China continues to rise. This increase is driven by factors like electrification of services and demand for cooling. Nonetheless, the shift toward renewables will limit further increases in its consumption.
Keisuke Sadamori, IEA Director of Energy Markets and Security, noted, “The rapid deployment of clean energy technologies is reshaping the global electricity sector. This sector accounts for two-thirds of the world’s coal use.” However, he also cautioned that weather patterns, especially in China, could lead to fluctuations in coal demand. These fluctuations are due to variability in renewable energy generation.
DECLINING COAL DEMAND IN ADVANCED ECONOMIES
In many advanced economies, coal demand has already peaked and is set to decline further through 2027. Strong policies in the European Union contribute to this decline. The availability of alternative energy sources like natural gas in the U.S. and Canada, also plays a significant role. As renewable energy sources continue to expand, its role in the power sector in these regions will decrease.
RISING DEMAND IN EMERGING ECONOMIES
While demand for the black gold in advanced economies is declining, it continues to rise in some emerging markets. This rise is notable in India, Indonesia, and Vietnam. These countries are driven by rapid economic and population growth. They are seeing rising electricity demand. This demand fuels an increase in its consumption. In these nations, the power sector primarily drives the demand. Industrial use is also increasing.
COAL PRICES AND TRADE DYNAMICS
The prices have remained high, with current prices about 50% higher than the average seen between 2017 and 2019. Global production reached an all-time high in 2024. Yet, growth in production is expected to level off through 2027. This slowdown is due to structural changes in the energy market.
International coal trade is also expected to set a record in 2024, with trade volumes reaching 1.55 billion tonnes. Yet, as renewable energy adoption grows, global trade is expected to decline, especially for thermal coal. Asia remains the epicenter of coal trade. The largest importers are China, India, Japan, South Korea, and Vietnam. Indonesia and Australia are leading as top exporters.
THE FUTURE OF COAL: A BALANCED TRANSITION
The IEA’s report paints a picture of a transitional phase for the coal market. While demand has surged in 2024, the next few years will see a plateau as renewable energy continues to grow. With global coal trade peaking in 2024, structural changes in both consumption patterns and international trade will reshape the coal market. The report also highlights the need for continued innovation and investment in clean energy technologies to meet the rising global electricity demand while reducing reliance on coal.
