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Global Coal Demand Set for Decline by 2026

The International Energy Agency's latest market report forecasts a significant decline in global coal demand by 2026, marking a potential historic turning point. While coal demand is expected to reach an all-time high in 2023, the report underscores the pivotal role of renewable energy expansion in driving this shift and highlights the accelerating shift in coal demand and production to Asia.

After reaching an all-time high in 2023, global coal demand is expected to decline to 2026, anticipates the International Energy Agency (IEA) anticipates a historic decline in global coal demand, according to its annual coal market report. The report projects a 2.3% reduction in global coal demand by 2026 compared to 2023 levels, marking the first time the IEA has forecasted a drop in coal consumption over its forecast period.

CURRENT GROWTH AND REGIONAL VARIANCES

Stark regional differences: Sharp declines (around 20%) in advanced economies, including the European Union and the United States. Strong demand growth (8% in India, 5% in China) in emerging and developing economies due to electricity demand and weak hydropower output.

PROJECTED DECLINE BY 2026

Global coal demand forecasted to fall by 2.3% by 2026, even without stronger clean energy and climate policies.

Renewable energy capacity expansion in the next three years expected to drive this decline.

RENEWABLE EXPANSION IN CHINA

Over half of global renewable capacity expansion set to occur in China.

Chinese coal demand expected to fall in 2024 and plateau through 2026, contingent on clean energy deployment, weather conditions, and economic shifts.

ACCELERATING SHIFT TO ASIA

China, India, and Southeast Asia to account for three-quarters of global consumption in 2023.

Consumption in Southeast Asia expected to exceed that of the United States and the European Union in 2023.

COAL PRODUCTION RECORDS

China, India, and Indonesia, the top three producers, expected to break output records in 2023, contributing to a global production peak.

These three countries now represent over 70% of the world’s production.

GLOBAL TRADE

Expected contraction in coal trade as demand decreases.

Trade to reach a new high in 2023, driven by strong growth in Asia, particularly with Chinese imports reaching 450 million tonnes and Indonesia’s exports close to 500 million tonnes.

Keisuke Sadamori, IEA Director of Energy Markets and Security, notes a potential turning point for this dark diamond , driven by the sustained expansion of clean energy technologies. However, the pace of renewables’ growth in key Asian economies will determine future outcomes, emphasizing the need for greater efforts to meet international climate targets.

The report underscores the structural decline of consumption in advanced economies, driven by renewable expansion amid weak electricity demand growth, while highlighting the continued dominance of China, India, and Southeast Asia in the global coal landscape.

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