Global demand for coal should remain nearly flat between 2017 and 2022, resulting in a decade of stagnation for coal consumption, according to the International Energy Agency's annual coal market report, Coal 2017.
Global coal consumption fell 1.9% to 5357 million tonnes of coal equivalent (Mtce) last year, the second year of decline, because of lower gas prices, a surge in renewables and improvements in energy efficiency, according to Coal 2017. Coal demand is down 4.2% over the last two years, nearly matching the two-year decline in the early 1990s, which remains the biggest recorded drop since the IEA started compiling statistics more than 40 years ago.
Global coal demand is expected to reach 5530 Mtce by 2022, whish is the same as the average of the last five-year period, meaning that coal use will have had a decade-long period of stagnation.
The share of coal in the global energy mix is forecast to decline to 26% in 2022, from 27% in 2016 because of sluggish demand compared to that of other fuels. Although coal-fired power generation increases by 1.2% per year through 2016-22, its share of the power mix falls to just below 36% by 2022, which would be the lowest level since IEA statistics began.
However demand is not evenly spread globally. Demand fell in China, the USA and the European Union in 2016, but increased in India and across many parts of Southeast Asia, and shows no signs of slowing down. For instance, despite the rapid growth in renewables, Indian coal-fired power generation is expected to grow almost 4% a year to 2022.
While India will be increasingly important to global coal markets, China will remain the key driver. The potential for coal demand growth in China is limited, but the country's supply-side reforms will be critical factors for coal prices in the coming years. Meanwhile, the EU, accounting today for just 6% of global demand, is set to become an increasingly marginal player.
The IEA highlights that urgent action is needed to support carbon capture, utilisation and storage (CCUS) technologies, which made important strides last year but still lags far behind other low-carbon technologies. There is a broad agreement among energy leaders from both government and the industry that urgent action is needed to support CCUS, without which the climate challenge will be much more difficult to tackle.
This is why the IEA is committed to pushing the global dialogue forward and why in November it organised a global CCUS summit in Paris. "Without CCUS, coal use will be seriously constrained in the future" said the IEA's director for energy markets and security Keisuke Sadamori.