Global Coal Demand Envisioned to Persist at Record Levels Throughout 2023

Robust economic growth in Asia is counterbalancing the decrease in coal consumption in Europe and North America, highlighting the urgency for enhanced investments and policies to facilitate the expansion of cleaner energy sources.

The IEA recently disclosed that global coal usage reached an unprecedented peak in 2022, and projections for 2023 indicate a similar record level. This trend is primarily propelled by substantial growth in Asia, encompassing power generation and industrial applications, while coal usage in the United States and Europe diminishes.

Specifically, coal consumption surged by 3.3% to reach 8.3 billion tons in 2022, as evidenced by the IEA's mid-year Coal Market Update. Although slight decreases in coal-fired power generation are expected for 2023 and 2024, these declines are likely to be offset by increased industrial coal usage, varying across different geographical regions.

Combined consumption from China, India, and Southeast Asian nations is predicted to account for 75% of global coal demand in 2023. In contrast, the European Union experienced limited growth in coal demand in 2022 due to a temporary rise in coal-fired power generation, offset by decreased industrial usage. Nevertheless, European coal demand is projected to decline significantly this year, driven by the expansion of renewable energy and the recovery of nuclear and hydropower sectors. Concurrently, the United States is gradually reducing its reliance on coal, supported by lower natural gas prices.

After a period of turmoil, including the COVID-19 impact in 2020, robust recovery post-pandemic in 2021, and geopolitical tensions related to Russia's actions in Ukraine in 2022, coal markets have stabilized in 2023. Preliminary estimates suggest a 1.5% expansion in global coal demand during the first half of the year, reaching approximately 4.7 billion tons. This growth was driven by a 1% increase in power generation and a 2% rise in non-power industrial consumption.

Keisuke Sadamori, IEA's Director of Energy Markets and Security, stressed the significance of coal's impact on energy sector carbon emissions. He highlighted the ongoing substantial coal demand in Asia and called for stronger policy initiatives, investments, and international cooperation to expedite the adoption of clean energy and energy efficiency.

Asia's escalating demand for coal is evident, with China and India contributing significantly to global consumption. Their combined coal usage is anticipated to reach nearly 70% in 2023. In contrast, the United States and the European Union, which represented a larger share in the past, now constitute less than 10% of global consumption.

Similar trends emerge in coal production, with China, India, and Indonesia achieving record production levels in 2022. China and India achieved new monthly production records in March 2023, while Indonesia experienced an unprecedented volume of coal exports. In contrast, coal production in the United States has dropped by over half since its peak in 2008.

Despite the previous year's volatility and price fluctuations, coal prices in the first half of 2023 have decreased to levels observed in 2021 due to ample supply and lower natural gas prices. Global coal trade is projected to grow by over 7% in 2023, surpassing overall demand growth and approaching the record levels of 2019.

In conclusion, Asia's robust economic growth is offsetting declining coal consumption in Europe and North America. This highlights the necessity for targeted investments and policies to facilitate the transition to cleaner energy sources. Given the continued high global coal consumption, focused efforts are vital to reducing demand while promoting cleaner energy alternatives.