India is expected to see the largest increase in coal use in the coming years, driven by consumption from the power sector and industry
Despite rapid deployment of renewable energy technologies, global coal has rebounded after a slight slump during the Covid-19 pandemic, and is expected to reach a record high of 8.7 billion tonnes in 2024, according to a new report by the International Energy Agency (IEA).
As per the report, coal demand is set to stay at near-record levels through 2027 as renewable energy sources play a greater role in generating power and coal consumption levels off in China.
High gas prices in the aftermath of the Russia-Ukraine war has contributed to the rebound in coal, even though demand had slightly declined during lockdowns imposed during Covid-19, stated the report. As such, global consumption of coal has doubled in the past three decades, it noted.
Global coal consumption rose by 7.7 per cent in 2021, 4.7 per cent in 2022 and 2.4 per cent in 2023. This indicated that demand for coal has been declining in the past few years, a trend that is evident even in 2024 when coal demand is expected to grow by 1 per cent.
According to IEA, power sector has been the main driver of coal demand growth, with electricity generation from coal set to reach an all-time high of 10,700 terawatt-hours (TWh) in 2024.
As far as India is concerned, IEA has predicted a 5 per cent growth in coal demand in the country to 1.3 billlion tonnes -- a level that only China has reached previously. Whereas China, the world’s biggest coal consumer, is set to record a growth of 1 per cent in coal demand in 2024, reaching a record level of 4.9 billion tonnes.
“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,” said Keisuke Sadamori, IEA director of energy markets and security, in a press release.
Growth in coal demand in a few emerging and developing economies, such as India, Indonesia and Vietnam, is expected to offset the consistent slowdown that is being reported in advanced economies, says the IEA. The additional energy demand associated with economic growth in these emerging and developing countries is expected to be met by relying on a variety of sources, including coal.
Despite advancements in renewable electricity generation, India is expected to see the largest increase in coal use in the coming years, driven by consumption from the power sector and industry, added the report. China, which consumes 30 per cent more coal than the rest of the world put together, will nevertheless continue to dominate global trends, it added.
“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 Sadamori of IEA.
The report suggested that the pace of decline in these countries will depend on the enactment of strong policies, such as the ones implemented in the European Union and and the availability of alternative power sources such as cheap natural gas in the United States and Canada.
India is expected to add 22.4 gigawatt (GW) of solar energy capacity and 3.6 GW of wind energy capacity in 2024, according to a JMK Research & Analytics report. The report projected 4GW of this to come from rooftop solar installations.
As of September 2024, India’s cumulative renewable energy capacity has reached 201.46 GW, with solar energy accounting for 45 per cent of the total capacity, followed by wind and large hydro's 23 per cent contribution each.
The country is targeting substantial growth in both solar and wind sectors to meet its target of achieving 500 GW of installed capacity from non-fossil fuel sources by 2030.
While the international trade of coal is projected to reach a new high of 1.55 billion tonnes in 2024, global trade volumes are set to shrink in the following years, with the biggest decline in thermal coal, said the IEA.
With all of the largest importers and exporters, Asia remains the trade centre of coal. India, China, Japan, Korea and Vietnam are among the largest import countries, while Indonesia and Australia are among the major exporters.
The report has highlighted how China is expected to dominate global trends when it comes to coal demand. The electricity sector in China is crucial to the global coal markets, with one out of every three tonnes of coal consumed worldwide burned at a power plant in the country.
In 2024, China continued to diversify its power sector by advancing the construction of nuclear plants and accelerating its huge expansion of solar photovoltaic and wind capacity. This could potentially limit increases in coal consumption through 2027, but there are other factors such as weather-related variability that could impact overall demand and consumption, notes the IEA.