Global coal demand set to remain at record levels in 2023

[Kris]

Global coal consumption climbed to a new all-time high in 2022 and will
stay near that record level this year as strong growth in Asia for both
power generation and industrial applications outpaces declines in the
United States and Europe, according to the IEA’s latest market update.

Coal consumption in 2022 rose by 3.3% to 8.3 billion tonnes, setting a new
record, according to the IEA’s mid-year Coal Market Update, which was
published today. In 2023 and 2024, small declines in coal-fired power
generation are likely to be offset by rises in industrial use of coal, the
report predicts, although there are wide variations between geographic
regions.

China, India and Southeast Asian countries together are expected to
account for 3 out of every 4 tonnes of coal consumed worldwide in 2023. In
the European Union, growth in coal demand was minimal in 2022 as a
temporary spike in coal-fired power generation was almost offset by lower
use in industry. European coal use is expected to fall sharply this year
as renewables expand, and as nuclear and hydropower partially recover from
their recent slumps. In the United States, the move away from coal is also
being accentuated by lower natural gas prices.

After three turbulent years marked by the Covid-19 shock in 2020, the
strong post-pandemic rebound in 2021 and the turmoil caused by Russia’s
invasion of Ukraine in 2022, coal markets have so far returned to more
predictable and stable patterns in 2023. Global coal demand is estimated
to have grown by about 1.5% in the first half of 2023 to a total of about
4.7 billion tonnes, lifted by an increase of 1% in power generation and 2%
in non-power industrial uses.

By region, coal demand fell faster than previously expected in the first
half of this year in the United States and the European Union – by 24% and
16%, respectively. However, demand from the two largest consumers, China
and India, grew by over 5% during the first half, more than offsetting
declines elsewhere.

“Coal is the largest single source of carbon emissions from the energy
sector, and in Europe and the United States, the growth of clean energy
has put coal use into structural decline,” said IEA Director of Energy
Markets and Security Keisuke Sadamori. “But demand remains stubbornly high
in Asia, even as many of those economies have significantly ramped up
renewable energy sources. We need greater policy efforts and investments –
backed by stronger international cooperation – to drive a massive surge in
clean energy and energy efficiency to reduce coal demand in economies
where energy needs are growing fast.”

The shift of coal demand to Asia continues. In 2021, China and India
already accounted for two-thirds of global consumption, meaning together
they used twice as much coal as the rest of the world combined. In 2023,
their share will be close to 70%. By contrast, the United States and the
European Union – which together accounted for 40% three decades ago and
over 35% at the beginning of this century – represent less than 10% today.

The same split is observed on the production side. The three largest coal
producers – China, India and Indonesia – all produced record amounts in
2022. In March 2023, both China and India set new monthly records, with
China surpassing 400 million tonnes for the second time ever and India
surpassing 100 million tonnes for the first time. Also in March, Indonesia
exported almost 50 million tonnes, a volume never shipped by any country
before. By contrast, the United States, once the world’s largest coal
producer, has more than halved production since its peak in 2008.

After the extreme volatility and high prices of last year, coal prices
fell in the first half of 2023 to the same levels as those seen in summer
2021, driven by ample supply and lower natural gas prices. Thermal coal
returned to being priced below coking coal, and the big premium for
Australian coal narrowed following the easing of disruptive La Niña
weather that had hampered production. Russian coal has found new outlets
after being barred in Europe, but often at considerable discounts.

Cheaper coal has made imports more attractive for some price-sensitive
buyers. Chinese imports have almost doubled in the first half of this
year, and global coal trade in 2023 is set to grow by more than 7%,
outpacing overall demand growth, to approach the record levels seen in
2019. Seaborne coal trade in 2023 may well surpass the record of 1.3
billion tonnes set in 2019.

Continued strong growth in Asian economies offsets declines in Europe and
North America, highlighting need for stronger policies and investments to
accelerate growth of clean energy

https://www.iea.org/news/global-coal-demand-set-to-remain-at-record-
levels-in-2023