Global energy crisis will push coal demand to record highs this year, IEA says

Demand for the fuel will be driven by developing economies in Asia, the agency says

Emissions from existing coal assets enough to tip the world over 1.5°C limit, IEA says. EPA

Global coal demand is expected to reach an all-time high this year during the energy crisis sparked by Russia’s invasion of Ukraine, according to the International Energy Agency (IEA).

The world’s coal consumption will remain at similar levels in the coming years in the absence of stronger efforts to boost the transition to clean energy, the Paris-based agency said in its Coal 2022 report.

Several countries have resumed or expanded the use of coal for power generation when faced with high natural gas prices and global competition for liquefied natural gas (LNG) shipments.

“The world is close to a peak in fossil fuel use, with coal set to be the first to decline, but we are not there yet,” said Keisuke Sadamori, the IEA’s director of energy markets and security.

“At the same time, there are many signs that today’s crisis is accelerating the deployment of renewables, energy efficiency, and heat pumps and this will moderate coal demand in the coming years.”

Global coal use is on track to rise by 1.2 per cent in 2022, exceeding eight billion tonnes in a single year for the first time and breaking a previous record set nine years ago.

Coal consumption will remain at this level through 2025 as a decline in developed economies is offset by robust demand in Asia, the IEA said.

In China, the world’s largest coal consumer, a heatwave and drought pushed up coal power generation during the summer, even as strict Covid-19 restrictions slowed demand.

Europe, which has been hit hard by Russia’s sharp reductions in the supply of natural gas, is on course to increase its coal consumption for the second year in a row, the report said.

By 2025, the continent’s coal demand is expected to fall below 2020 levels.

“Despite high prices and comfortable margins for coal producers, there is no sign of surging investment in export-driven coal projects,” the IEA said.

“This reflects caution among investors and mining companies about the medium and longer-term prospects for coal.”

Meanwhile, global renewable power capacity growth is on track to nearly double in the next five years, overtaking coal as the largest source of electricity generation, the IEA said in a report this month.

Renewable power capacity is expected to grow by 2,400 gigawatts by 2027, equivalent to the current power capacity of China, the world’s second-largest economy.

Developing economies in Asia are expected to increase coal use to drive economic growth even as they invest more in renewables.

“Developments in China will have the biggest impact on global coal demand in the coming years, but India will also be significant,” the agency said.

The IEA had previously said that emissions from existing coal assets would be enough to tip the world over the 1.5°C limit.

The world must move quickly to reduce carbon dioxide emissions from coal to avoid severe climate change, said the agency in a report last month.

It called for immediate policy action to mobilise financing for clean energy alternatives.