Net Zero Failure: IEA – International Energy Agency: ‘Global coal demand to reach a new all-time high in 2024’ – ‘Global consumption of coal has doubled in past 3 decades’ – China, India & Indonesia are largest producers: – China ‘accounts for half of global coal production’

Global coal demand is expected to grow by 1% in 2024 to an all-time high of 8.77 billion tonnes (Bt). This represents a considerable slowdown in growth from previous years: global coal consumption rose by 7.7% in 2021 as it rebounded from the Covid shock the year before, by 4.7% in 2022 and by 2.4% in 2023. Although industrial consumption also increased over that period, the 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.

At the regional level, coal demand in China is expected to grow by 1% in 2024 to reach 4.9 Bt, another record. India is poised to see demand growth of over 5% to 1.3 Bt, a level that only China has reached previously. In the European Union and the United States, coal demand continues to fall, but at a significantly slower pace. It is on track to decline by 12% and 5% respectively this year, compared with 23% and 17% in 2023.

After having grown by more than 1.2 billion tonnes since 2020, global coal demand is set to plateau in the next three years, reaching around 8.87 billion tonnes by 2027. Given the slow progress of deploying carbon capture, utilisation and storage (CCUS) technologies in the sector, carbon dioxide emissions from coal are not expected to decline in that period, based on today’s policy settings and market trends. While coal demand in advanced economies continues to shrink, this decline is expected to be offset by growth in a few emerging and developing economies, such as India, Indonesia and Viet Nam, where the additional energy demand associated with economic growth is set to be met with a variety of sources, including coal. Despite increasing 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. Still, as has been the case for 25 years, China, which consumes 30% more coal than the rest of the world put together, will continue to define global trends.

A third of all the coal consumed worldwide is burned in power plants in China, making the country’s electricity sector the main driver of global coal markets. In 2024, China has maintained its focus on diversifying its power sources, continuing to build out nuclear plants and accelerating its massive expansion of solar PV and wind capacity. The country’s hydro sector also experienced a rebound after several years of underperformance. However, electricity demand in China is increasing strongly, growing at a faster rate on average than GDP since 2021. Two major drivers are underpinning power demand growth in China: the electrification of services previously provided by other fuels, such as mobility and industrial heat, and emerging industries such as data centres and AI.

In this report’s forecast, the year-to-year changes in global coal demand through 2027 are relatively small, coming in at less than 50 million tonnes (Mt). In India, the country poised to see the largest increase in coal demand, it rises by just over 100 Mt through 2027. In the European Union, coal demand declines by 68 Mt in the same period. In China, analysis of potential variation in coal demand based on weather conditions and their impact on renewable generation indicates demand could be about 140 Mt higher or lower than the base case during the forecast period. This underscores that weather variations are increasingly defining short-term trends, even as structural changes take place at both the regional and global level. Given China’s dominant role in world coal markets, weather variations there can be particularly impactful – both at the country level and the global level.

Coal demand in most advanced economies peaked a few years ago and is falling, although the trajectory can vary depending on the region or country. In Europe and North America, where coal use has dropped over the past decade, the rate of decline is now slowing. Demand for power from the electricity sector could further slow declines in these regions in the years ahead. Even so, by 2025, the coal consumed in the European Union and the United States combined will be less than half the amount used in India. The closure of the last coal power plant in the United Kingdom in September 2024 was an important symbolic moment for a country where coal had powered the industrial revolution.

In 2024, global coal production is expected to reach an all-time high, surpassing 9 Bt for the first time. The three largest producers – China, India and Indonesia – reached new records for output. China, which accounts for half of global production, is set to see output grow by 1% in 2024, despite declines in the first half of this year amid a safety campaign in Shanxi, the largest producing province. In India, the government is incentivising production from public companies, mainly Coal India, as well as captive and commercial producers. As a result, output is set to rise by over 7%. Indonesian producers, which benefited from strong domestic coal demand and sustained demand from international markets, are expected to surpass 800 Mt for the first time.

Looking ahead, production in China is set to ease, given abundant stocks and a lack of substantial demand growth. By contrast, production in India is expected to continue to grow, spurred by robust coal demand and government policies to reduce imports. In Indonesia, despite continued strong domestic demand, production is poised to shrink due to weaker international markets for thermal coal. Overall, we expect annual global coal production of close to 9 Bt through 2027. Australia is set to become the fourth largest producer by 2027, surpassing the United States and Russia. Producers in Russia are struggling amid international sanctions, low profitability and infrastructure bottlenecks.

International trade of coal by volume is expected to reach a new all-time high in 2024, at 1.55 Bt. All categories are on course to set new records in terms of both growth and overall volume, namely seaborne thermal coal, total thermal coal, seaborne metallurgical coal and total metallurgical coal. In China, despite abundant stocks and lukewarm demand, imports are expected to surpass 500 Mt in 2024. In India, strong demand has kept imports at similar levels as in 2023, despite the country’s production push. Viet Nam has surpassed Chinese Taipei as the world’s fifth largest importer. Looking ahead, in light of these trends, our models show trade volumes shrinking, with trade in thermal coal seeing the biggest decline. That said, Chinese imports have repeatedly come in higher than expected in recent years.

More than two years after the European Union banned Russian coal imports and Russian producers shifted exports eastwards, the reshuffle of trade flows continues. It is difficult to know the effect of the extension of US sanctions to some Russian producers, which are also grappling with rail bottlenecks to eastern markets, higher rail tariffs, export duties, and new import duties in some countries such as China. Other factors reshaping trade flows include a resumption of Australian exports into China and security risks to some shipping routes. On top of that, the market’s centre of gravity continues to shift increasingly to Asia amid the collapse of demand in Europe. Indonesia has proven again to be the most flexible exporter. After rising above 500 Mt in 2023, Indonesian exports are expected to surpass 550 Mt in 2024. Mongolia has become the second largest metallurgical coal exporter after Australia, although its role in global trade is limited, since all of its exports go to China.

The pandemic and associated drop in demand for coal sent prices plunging in 2020, but they subsequently rebounded to record highs – first in October 2021, and then again after Russia’s invasion of Ukraine in 2022. Prices have receded since then, but they are still 50% higher than the average during the 2017-19 period. As of November 2024, the price of imported thermal coal in Europe was around USD 120 per tonne, compared with an average of USD 80 per tonne in 2017-19. For Australian thermal coal, the price today is around USD 140 per tonne, versus USD 90 on average at the end of the last decade.

Coal exporters are making solid profits overall. Russian producers are the main exception. After earning substantial profits in 2022, and to a lesser extent in 2023, many producers have tipped into losses because of increased rail tariffs and other duties, which come on top of the discount at which they must sell their coal due to Western sanctions.

A change in the ownership of export-oriented mines competing in international markets is observable in the last few years. On one hand, some companies which want to reduce their carbon footprint or improve their Environmental, Social and Governance (ESG) credentials are selling coal assets in order to focus on other commodities. On the other hand, a number of companies which have generated significant cash due to large profits since 2021 are doubling down on coal. A recent major move was the acquisition of Elk Valley Resources by Glencore, the largest thermal coal exporter, which also became a major metallurgical coal exporter after the acquisition.

IEA: China, India & Indonesia are the largest coal producers &
China ‘accounts for half of global coal production’

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