Growing demand for clean energy in Asia is offsetting declines in Europe and North America, necessitating stronger policies and investment to promote clean energy. The latest report from the International Energy Agency (IEA) reveals that the global consumption coal consumption reached a record high in 2022 and is expected to remain high this year, mainly due to strong growth in Asia for power generation and industrial applications, outpacing declines in North America and Europe.
Coal 2022-2024: global and regional trends
In 2022, coal consumption rose by 3.3% to 8.3 billion tonnes, setting a new record according to the IEA’s recently published mid-year coal market report. For the years 2023 and 2024, slight decreases in coal-fired power generation should be offset by increases in industrial coal use, but there are significant differences between geographical regions.
By 2023, China, India and South-East Asia should account for three-quarters of global coal consumption. In contrast, coal demand in the European Union was minimal in 2022, with a slight temporary rise in coal-fired power generation almost offset by a fall in industrial use. Coal use in Europe is expected to fall sharply this year, with the expansion of renewables and a partial recovery in nuclear and hydro power after their recent declines. In the United States, the reduction in the use of coal has also been accentuated by lower natural gas prices.
Back to stability: analysis of global coal demand in 2023 and its implications for global energy policies
After three tumultuous years marked by the shock of the Covid-19 pandemic in 2020, the strong post-pandemic rebound in 2021 and the turmoil caused by Russia’s invasion of Ukraine in 2022, coal markets regained some stability in 2023. Global coal demand rose by around 1.5% in the first half of 2023, to a total of around 4.7 billion tonnes, driven by a 1% increase in power generation and a 2% increase in industrial uses excluding power generation. However, demand fell faster than expected in the United States and the European Union, by 24% and 16% respectively, while China and India recorded increases of over 5%, offsetting declines elsewhere.
Keisuke Sadamori, Director of Markets and Energy Security at the IEA, pointed out that coal remains the largest source of carbon emissions in the energy sector, while clean energies have put coal into structural decline in Europe and the USA. However, persistent demand in Asia, despite the rise of renewable energies in these economies, calls for increased policy and investment efforts backed by enhanced international cooperation, to reduce coal demand in these fast-growing economies.
Asian dominance in coal consumption and production in 2023
The upward trend in coal demand in Asia continues, with China and India already accounting for two-thirds of global consumption in 2021, and their share approaching 70% in 2023. Conversely, the United States and the European Union, which accounted for over 40% three decades ago and over 35% at the turn of the century, together account for less than 10% of global coal consumption today.
On the production side, China, India and Indonesia have all reached record levels by 2022, while the USA has cut coal production by more than half since its peak in 2008. Coal prices experienced extreme volatility last year, but fell in the first half of 2023 to summer 2021 levels due to abundant supply and falling natural gas prices.
Towards a sustainable future: reducing dependence on coal and promoting clean energy worldwide
The situation highlights the urgent need to reduce dependence on coal, particularly in the booming Asian economies. To meet the challenge of climate change, stronger policies and investments in renewable energies and energy efficiency, backed by solid international cooperation, are essential. The transition to clean energy not only benefits the environment, but also the economy, by creating jobs and fostering technological innovation.
Developed countries must also support developing countries in their transition to clean energy through climate financing mechanisms and technology partnerships. The IEA plays a crucial role in providing valuable information and analysis on energy market trends, to inform policies aimed at accelerating the transition to clean energy and combating climate change. Concerted and coordinated action is essential to create a sustainable and resilient future for generations to come.
