Demand for coal is predicted to decline beginning in 2026, according to the most recent coal market report — Coal 2023 Analysis and forecast to 2026 — from the International Energy Agency (IEA).

It is the first time the report has projected a drop, a press release from the IEA said.

“Today, coal remains the largest energy source for electricity generation, steelmaking and cement production – maintaining a central role in the world economy. At the same time, coal is the largest source of man-made carbon dioxide (CO2) emissions, and curbing consumption is essential to meeting international climate targets,” the report said. “A historic turning point could arrive soon. The International Energy Agency’s latest projections see coal demand peaking within this decade under today’s policy settings, primarily as a result of the structural decline in coal use in developed economies and a weaker economic outlook for China, which has also pledged to reach a peak in CO2 emissions before 2030.”

The report projects coal demand globally will increase by 1.4 percent this year, for the first time surpassing 9.37 billion tons, the press release said. The increase hides large differences between regions; most advanced economies are set to see a decline in consumption this year, including record reductions in the United States and the European Union of approximately 20 percent each. At the same time, developing and emerging economies will see continued strong demand for coal, with a five percent increase in China and an eight percent increase in India because of weak contributions from hydropower and an increasing electricity demand.

The report predicts coal demand to fall globally by 2.3 percent by 2026, as compared to 2023 levels, even if governments do not announce and implement more strict climate and clean energy policies. The decline in reliance on coal will be driven by renewable energy capacity expansion up to 2026.

“We have seen declines in global coal demand a few times, but they were brief and caused by extraordinary events such as the collapse of the Soviet Union or the Covid-19 crisis. This time appears different, as the decline is more structural, driven by the formidable and sustained expansion of clean energy technologies,” said Keisuke Sadamori, IEA’s director of energy markets and security.

More than half of the expansion of renewable energy will happen in China, which also accounts for more than half the global demand for coal. Because of this change, coal demand in the country is predicted to decrease next year and reach a plateau through 2026. China’s coal forecast will be affected greatly by the deployment rate of clean energy, structural shifts in the economy and weather conditions in the coming years.

“The report finds that the shift in coal demand and production to Asia is accelerating. This year, China, India and Southeast Asia are set to account for three-quarters of global consumption, up from only about one-quarter in 1990. Consumption in Southeast Asia is expected to exceed for the first time that of the United States and that of the European Union in 2023,” the press release said. 

It is projected that the three biggest coal producers in the world — Indonesia, China and India — will break production records this year, moving global output to a record high. The three nations are responsible for upwards of 70 percent of the world’s coal production.

“Through 2026, India and Southeast Asia are the only regions where coal consumption is poised to grow significantly. In advanced economies, the expansion of renewables amid weak electricity demand growth is set to continue driving the structural decline of coal consumption,” according to the press release.

The report said global consumption is predicted to continue to be well over 8.82 billion tons through 2026. In order to decrease emissions at a rate in keeping with Paris Agreement goals, relentless coal use would need to fall much more quickly.

“A turning point for coal is clearly on the horizon – though the pace at which renewables expand in key Asian economies will dictate what happens next, and much greater efforts are needed to meet international climate targets,” Sadamori said.

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