Global coal demand is expected to decline in 2019 but remain broadly stable over the next five years, supported by robust growth in major Asian markets, according to the International Energy Agency’s latest market analysis and forecast on Tuesday.
According to IEA's Coal 2019 report, the weakness in coal demand this year results mainly from coal-fired electricity generation, which is set to experience its largest ever decline – over 250 terawatt hours (TWh), or more than 2.5%.
"This drop is led by double-digit falls in the United States and Europe, according to Coal 2019, which was released today and contains forecasts through 2024," the IEA stated.
The IEA forecasts that renewable sources will supply a major portion of the increase in global electricity demand over the next five years.
"Electricity generation from coal will rise only marginally over that period, at less than 1% per year – and its share will decline from 38% in 2018 to 35% in 2024. This means coal remains by far the single largest source of power supply worldwide," the IEA said.
- Global trends will depend largely on China
China is where half of the world’s coal is produced and consumed. However, in Europe and the United States, coal power generation is sinking to levels not seen in decades.
"Growth in solar PV and wind, low natural gas prices and stagnating electricity demand have created a perfect storm for coal in both regions, where coal plants retirements continue to take place," the IEA said.
According to the IEA, these trends will continue through 2024, although the agency said the speed of the declines is expected to slow unless coal comes under additional pressure from stronger climate policies or lower-than-expected natural gas prices.
The report highlights that countries in South and Southeast Asia – Pakistan, India, Bangladesh, Indonesia and Vietnam – continue to rely on coal to fuel their economic growth.
"Natural gas and oil have traditionally been the main sources of power generation in Pakistan, but the country has commissioned 5 gigawatts (GW) of coal power capacity since 2017, and another 5 GW is set to come online in the next few years. In Bangladesh, where natural gas has long generated the bulk of electricity supply, coal will gain share in the coming years, with 10 GW of capacity in the pipeline," the IEA underlined.
The IEA forecast for global coal demand in this year’s report is very similar to those in previous years, but the Coal 2019 report warns that potential threats to the sector are increasing.
The agency stressed that public opposition to coal is building as many countries are mulling stronger climate and environmental policies, while renewables and natural gas are becoming more and more competitive.
By Gulsen Cagatay