Global coal demand set to remain at record high until 2027 finds IEA

Global coal demand is poised to hit a record 8.77 billion tonnes in 2024, with demand set to stay close to this level through 2027.

This is according to a report released by the International Energy Agency in December last year, Coal 2024, which shows global coal use has rebounded strongly after decreasing significantly during the pandemic.

The growth of global coal production, consumption, trade and use in coal-fired power generation in recent years was primarily caused by high gas prices in the aftermath of Russia’s invasion of Ukraine, states the report.

More specifically, the rise in coal demand in 2024 resulted from increased electricity use in a number of countries, including China. This spike is due to several factors, including the electrification of transport and heating, rising demand for cooling and increasing consumption from emerging sectors such as data centres.

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The electricity sector in China is particularly important to global coal markets shows the report, with one out of every three tonnes of coal consumed worldwide burned at a power plant in the country.

However, the report highlights that China's advancing nuclear sector and expanding renewables capacity should help limit increases in coal consumption through 2027.

The report states that while coal demand has already peaked in most advanced economies and will continue to decline, the pace of decline will depend largely on strong policy enactments and the availability of power sources such as natural gas.

In some emerging economies such as India and Indonesia, coal demand is still rising as the increase in population and economic activity drives electricity use. In emerging economies, growth is mainly driven by coal demand from the power sector, although industrial use is also going up.

The report emphasises several key uncertainties in its analysis, with many competing variables at play. Some of these key variables include how quickly coal use will decline in developed economies as they become more electrified, when coal use will peak in China, and when coal will be replaced in the industrial sector.

Also, weather patterns and weather-related variability in renewable generation could drive fluctuations in coal consumption in the short term.

“The rapid deployment of clean energy technologies is reshaping the global electricity sector, which accounts for two-thirds of the world’s coal use. As a result, our models show global demand for coal plateauing through 2027 even as electricity consumption rises sharply,” said IEA director of Energy Markets and Security, Keisuke Sadamori, in a statement.

“However, weather factors – particularly in China, the world’s largest coal consumer – will have a major impact on short-term trends for coal demand. The speed at which electricity demand grows will also be very important over the medium term.”