Global coal demand is on track to reach an all-time high this year amid the energy crisis and the resulting spike in natural gas prices, the International Energy Agency (IEA) said on Friday, expecting coal consumption to likely remain flat after 2022 through 2025 if energy transition is not accelerated.
Coal consumption worldwide is forecast to rise by 1.2% in 2022, exceeding 8 billion tons in a single year for the first time ever, and beating the previous coal demand record set in 2013, the IEA said in Coal 2022, its latest annual market report on the sector.
Coal used in electricity generation, the largest consuming sector, is expected to grow by just over 2% in 2022. But coal consumption in industry is expected to drop by over 1%, on the back of falling iron and steel production amid the economic slowdown, the agency said.
The surge in natural gas prices has led this year to a significant gas-to-coal switch, especially in Europe. Both gas and coal power generation increased as the growth of wind and solar were not enough to fully offset lower hydro and nuclear power output in Europe, according to the IEA.
Based on current market trends, the agency expects coal consumption to remain flat at this year’s level through 2025 as declines in developed economies will be offset by robust demand in emerging economies in Asia.
“This means coal will continue to be the global energy system’s largest single source of carbon dioxide emissions by far,” the IEA 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,” Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, said in a statement.
Fossil fuel consumption is expected to peak or plateau within this decade, accelerated by the policy and trade flow shifts following the Russian invasion of Ukraine, the IEA said in a report in October. For the first time ever, a World Energy Outlook scenario from the IEA based on the current government policies and settings has the global demand for every fossil fuel showing a peak or plateau, the agency said in its World Energy Outlook 2022.
The IEA’s Sadamori commented on coal today, “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.”
By Tsvetana Paraskova for Oilprice.com
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