According to a new report by the International Energy Agency (IEA), global coal demand is expected rise marginally in 2022 compared to last year but will touch an all-time high this year surpassing 8 billion tonnes (bnt).
Coal demand for the year is closely in line with the IEA’s 2022 forecast published a year ago despite coal markets being shaken by a range of conflicting forces this year. Higher natural gas prices amid the global energy crisis have led to increased reliance on coal for generating power. Europe, which has been heavily impacted by Russia’s sharp reduction in natural gas supplies, is on course to increase its coal consumption for the second year in a row.
Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, said: “Coal demand is stubborn and will 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.”
Coal prices surged this year during March-June amid the global energy crisis caused by soaring natural gas prices and and unfavourable weather in Australia. 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 long-term prospects for coal.
Outlook
Despite coal demand touching all-time highs in 2022, the same is expected to be consistent till 2025 and may then decline amid absence of efforts to shift to cleaner energy. While coal demand in advanced economies may be limited, it will be offset by robust demand in the emerging economies of Asia. However, this implies that coal will continue to remain the largest single source of carbon dioxide emissions in the ongoing decade.
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