Global coal demand declines while renewables on the rise: IEA

Global coal demand declines while renewables on the rise: IEA

Global coal demand is expected to decline this year but to remain broadly stable over the next five years – a period during which renewables will supply a major portion of increasing power demand, according to the International Energy Agency (IEA).

The drop in coal demand in 2019 results mainly from coal-fired electricity generation, which is set to experience its largest ever decline – of over 250TWh, or more than 2.5%. This drop is led by double-digit falls in US and European demand, according to the IEA’s Coal 2019, which contains analysis and forecasts through to 2024.

The Paris-based agency said it is too soon to say whether the expected global decrease in coal power generation this year will be the start of a lasting trend. Electricity generation from coal will only rise marginally over the next five years, at less than 1% per year – and its share will decline from 38% in 2018 to 35% in 2024. However, this still means coal remains by far the single largest source of power supply worldwide.

The Coal 2019 analysis says public opposition to coal is growing, many countries are mulling stronger climate and environmental policies, and renewables and gas are becoming increasingly competitive.

But the IEA points out that ultimately, global trends will largely depend on China, where half of the world’s coal is produced and consumed.

In Europe and the US, the analysis shows coal power generation is sinking to levels not seen in decades. Growth in wind and solar PV, low natural gas prices and stagnating electricity demand have created a perfect storm for coal in both regions, where plant retirements continue to take place.

The IEA said these trends will continue through to 2024, although the speed of the declines is expected to slow unless coal comes under additional pressure from stronger climate policies or lower-than-expected gas prices.

“Wind and solar PV are growing rapidly in many parts of the world. With investment in new plants drying up, coal power capacity outside Asia is clearly declining and will continue to do so in the coming years,” said Keisuke Sadamori, the IEA’s director of energy markets and security.

“But this is not the end of coal, since demand continues to expand in Asia,” Sadamori added. “The region’s share of global coal power generation has climbed from just over 20% in 1990 to almost 80% in 2019, meaning coal’s fate is increasingly tied to decisions made in Asian capitals.”

The report highlights that countries in South and Southeast Asia – such as India, Indonesia and Vietnam – are relying 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 5GW of coal power capacity since 2017, and another 5GW 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 10GW of capacity in the pipeline.

“In 2019, global coal power generation will experience the biggest drop ever and coal power generation in India will probably decline for the first time in 45 years,” Sadamori said.

“The global picture, however, has not changed much. Coal is disappearing in many advanced economies, but it remains resilient and is even continuing to grow in developing Asia.”