Global coal demand is likely to have peaked this year, and could drop by about 2% over the next three years as China brings more renewable energy sources online, the International Energy Agency said Friday.
It’s the first time the Paris-based agency has predicted a drop in appetite for the dirty fuel over a three-year period.
Demand is on track to peak at 8.54 billion metric tons (9.4 billion tons) this year, surpassing the previous record of 8.42 billion metric tons hit in 2022, the IEA said in its annual coal market report.
The agency expects demand to start falling in 2024, and to drop by 2.3% by the end of 2026.
Keisuke Sadamori, the IEA’s director of energy markets and security, said the forecast showed that “a turning point for coal is clearly on the horizon.”
“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,” he said in a press release.
“This time appears different, as the decline is more structural, driven by the formidable and sustained expansion of clean energy technologies.”
More than half of the renewable energy capacity coming online in the next three years will be in China, the IEA said. The country currently accounts for over half of global demand for coal, according to the agency.
A new global climate deal, agreed Wednesday at the COP28 summit, makes an unprecedented call for countries to transition away from fossil fuels, but uses vague language that could allow some governments to take minimal action.
The agreement falls short of requiring the world to “phase out” oil, coal and natural gas — something more than 100 countries and many climate groups had been calling for.
The IEA expects coal demand to have fallen this year in nearly all advanced economies, driven by a record plunge of around 20% in both the European Union and the United States.
However, demand is moving east and is forecast to have risen by about 5% in China this year and by more than 8% in India because of strong growth in electricity needs and low hydropower output.
While overall the world is on track to reduce its appetite for coal over the next three years, a lot hinges on China’s ability to expand its clean energy capacity, the IEA said.
“The availability of hydropower is a key variable in the short term, since coal is used as a substitute when hydro underperforms in China,” the agency wrote in its report, adding that the country would “have the last word.”
Last week, the Chinese government issued an action plan to improve air quality, promising to “vigorously develop new and clean energy” and strictly control coal use.
With the aim of cutting the density of hazardous airborne particles known as PM2.5 by 10% by 2025 compared with 2020 levels, the plan calls for a greater role for non-fossil fuel energy, promoting electric vehicles and moving more freight around the country by rail and waterways rather than by road.
The IEA said global coal consumption would still be well over 8 billion metric tons in 2026, and that the use of “unabated coal” would need to fall “significantly faster” than its current rate of decline to limit global warming to 1.5 degrees Celsius above pre-industrial levels.
Unabated coal refers to the burning of coal without capturing and storing its planet-heating carbon dioxide emissions, an IEA spokesperson told reporters.
Laura He contributed to this article.
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