Global coal demand is set to increase by 1.2% in 2022, driven by Asia, to reach an all-time high of more than eight billion tonnes, according to a new report published by the International Energy Agency (IEA) on 16 December.
This increase is underpinned by a range of factors, including higher natural gas prices – which has led to increased reliance on coal for electricity generation – as well as continued strong demand in emerging Asian economies, particularly China, India and Indonesia, which are all set to hit production records in 2022.
However, the report also notes that the increase in coal demand is likely to be moderated in the coming years by the accelerating deployment of renewables, energy efficiency and heat pumps.
In Europe, which has been heavily impacted by Russia’s sharp reductions of natural gas flows, the IEA expects coal consumption to increase for the second year in a row, although demand is forecast to decline below 2020 levels by 2025.
The international coal market remained tight in 2022, notes the report, with coal prices rising to unprecedented levels in March and June, pushed higher by strains caused by the global energy crisis, especially spikes in natural gas prices, as well as adverse weather conditions in Australia, a key international supplier.
Despite high prices and comfortable margins for coal producers, there is no sign of a surge in investment in export-driven coal projects, adds the IEA. This reflects caution among investors and mining companies about the medium and longer-term prospects for the fuel, it suggests.
“This report shows renewables will stop any further big rises in coal power generation in the coming years,” said Dave Jones, head of data insights at think tank Ember, in response to the IEA report. “This is a key tipping point: renewables are working for the climate – and with coal prices still at record highs, this means renewables are working for the bill-payer as well.”