On July 27th, the International Energy Agency (IEA) published its latest coal market trends, stating that global coal consumption in 2022 increased by 3.3% year-on-year, hitting a new record of 8.3 billion tons.
The IEA pointed out that despite the global economic slowdown, demand for coal continues to grow. This growth is primarily due to the fact that coal, in many regions of the world, is more accessible and relatively cheaper compared to natural gas.
Overall, coal-powered electricity generation stood at 10,440 terawatt-hours in 2022, making up 36% of the world's total power generation, the IEA stated.
Looking ahead, the IEA anticipates that global coal consumption this year will remain near last year's record level.
According to the IEA's forecast, the outlook for 2023 is mixed by region. The decline in coal demand in the United States and the European Union during the first half of this year was faster than previously expected, dropping by 24% and 16% respectively. The decrease in coal usage in Europe is mainly attributed to the growth of renewable energy and a partial recovery of nuclear and hydropower from recent downturns. In the U.S., a drop in natural gas prices has also accelerated the market's shift from coal to natural gas.
However, demand in Asia, the largest coal consumption market, rose by more than 5%, more than offsetting declines in other regions. The IEA anticipates that in 2023, East Asia, South Asia, and Southeast Asia will account for three-quarters of the world's coal consumption. In contrast, thirty years ago, Europe and the U.S. accounted for 40% of global coal usage, but now they account for less than 10%.
In terms of coal production, China, India, and Indonesia, the three largest coal-producing countries, all achieved record production levels in 2022. In March 2023, China and India both set new monthly records, while Indonesia exported nearly 50 million tons of coal in that month, marking the largest single-month export volume by any country in history. By comparison, the U.S., once the world's largest coal producer, has seen its production halve since its peak in 2008.
Over the past few decades, due to pollution and carbon emissions from coal combustion, there has been a global effort to reduce reliance on coal and shift to cleaner natural gas and renewable energy.
Keisuke Sadamori, the IEA's director of energy markets and security, noted that coal remains the single largest source of carbon emissions in the energy sector. In Europe and the U.S., the growth of clean energy has led to a structural decline in coal consumption. However, demand in Asia remains high despite many economies significantly increasing renewable energy.
Looking forward, the IEA believes that globally there is a need to "intensify policy efforts and investment" to "drive significant increases in clean energy and energy efficiency, and reduce coal demand in economies where energy demand is growing rapidly."
