Global coal use to be at record high in 2022 driven by India, EU, China: IEA

the International Energy Agency (IEA) said the global coal use is set to rise by 1.2% in 2022, surpassing 8 billion tonnes in a single year for the first time

The global coal demand is set to increase to an all-time high this year (2022) mainly driven by coal power growth in India, the European Union (EU) and to a smaller extent by China, the International Energy Agency (IEA) said on Friday.

IEA released a new report titled ‘Coal 2022: Analysis and Forecast to 2025,’ on Friday. (Representative Image)

In a report titled ‘Coal 2022: Analysis and Forecast to 2025,’ IEA said the global coal use is set to rise by 1.2% in 2022, surpassing 8 billion tonnes in a single year for the first time and eclipsing the previous record set in 2013.

Based on current market trends, the report forecasts that coal consumption will then remain at nearly the same level through 2025 as declines in mature markets (US, EU etc) are offset by continued demand for coal in emerging Asian economies. “This means coal will continue to be the global energy system’s largest single source of carbon dioxide emissions by far,” the report said.

The largest increases in coal burn are forecast for China (+5%), India (+7%) and Southeast Asia (+14%). Meanwhile, coal-fired power generation will continue to contract in the United States (-18%) while a return to a declining trajectory is expected for the European Union (-29%).

Europe, which has been severely impacted by the Russia-Ukraine crisis as its supply of natural gas from Russia has stopped, is on course to increase its coal consumption for the second year in a row. By 2025, however, European coal demand is expected to decline below 2020 levels, IEA has said. Some European countries postponed scheduled closures of coal power plants and activated coal-fired reserve capacity to limit gas usage in the power sector. “In total, we forecast coal power generation to increase by 1.8% to 10,339 TWh, a new all-time high. Overall, we expect coal demand for power generation to rise by 2.4% to 5,472 Mt, with China consuming more than half of the increase,” the report said.

“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, IEA’s director of energy markets and security in a statement on Friday. “Coal demand is stubborn and will likely reach an all-time high this year, pushing up global emissions. 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. Government policies will be key to ensuring a secure and sustainable path forward,” he added.

The world’s three largest coal producers – China, India and Indonesia will all hit production records in 2022. However, the report notes that despite high prices and comfortable margins for coal producers, there is no sign of surging investment in export-driven coal projects. “This reflects caution among investors and mining companies about the medium- and longer-term prospects for coal. Coal demand is forecast to fall in advanced economies in the coming years as renewables increasingly displace it for electricity generation,” the report said.

On projections of coal use increase in India, IEA has said: “despite the slowdown in global growth, the Indian economy is doing exceptionally well, with GDP forecast to expand by 7.3% this year. Coal demand is largely being led higher by a sharp increase in electricity consumption, of which around 73% will be generated by coal-fired power plants in 2022. We expect electricity demand to grow by 7% due to robust economic growth. Demand was also supported by the severe heatwave from March to early May.”

In fact, India’s coal demand is expected to increase through 2025. Global coal demand is set to plateau through 2025, but it will mainly depend on developments in China.

Renewables are likely to be the largest source of global electricity generation by early 2025, surpassing coal, IEA had said on December 6. China, the United States and India are expected to double their renewable capacity expansion in the next five years, accounting for two-thirds of global growth in renewable energy.

In India, new renewable energy installations are set to double by 2027, led by solar PV and mainly driven by competitive auctions implemented to achieve Centre’s target of 500 GW of non-fossil capacity by 2030, the report had said.

“As IEA analysis shows, coal is not going anywhere in India’s energy systems for at least the next decade. While the growth in solar will exceed the growth in coal by a wide margin, coal’s overall dominance will continue. This growth for the next decade, as CEEW ‘s net zero analysis also shows, is not incompatible with India’s net zero target,” said Vaibhav Chaturvedi, economist and fellow at Council for Energy, Environment and Water, a think tank.