Global Coal Demand To Stay At Record-High Levels In 2023

• Global coal demand is set to hit a new record high in 2023, inching up by 0.4% year-on-year to 8.388 billion tons.
• While the United States and Europe are leading declines in coal, China and India are offsetting those declines.
• Clean energy growth has put coal use into a structural decline but energy security concerns will ensure continued demand.

Driven by robust growth in coal consumption in Asia, global coal demand this year will remain at the record-high levels hit in 2022, the International Energy Agency (IEA) said in a new report on Thursday.

Last year, global coal demand increased by 3.3% to 8.3 billion tons—a new record-high, the agency said in its Coal Market Update.

This year, coal demand will inch up by 0.4% year-on-year, to 8.388 billion tons, due to continued growth in industrial coal use which would offset an expected small decline in coal-fired power generation, according to the IEA estimates.

“Whether coal demand in 2023 grows or declines, will depend on weather conditions and on the economies of large coal consuming nations,” the agency noted.

The EU and the United States are leading the declines in coal use in the power sector, but Asia, especially China and India, more than offset these declines.

In China, the top global coal consumer, demand jumped by 5.5% in the first half of 2023 compared to the same period last year, due to very low hydro output so far this year, the IEA said.

So far this year, China has relied heavily on coal to offset a large decrease in hydropower generation. At the same time, China’s coal output has increased from last year, and coal imports have surged, while top officials are meeting with power firms and the state grid operator to stress the importance of keeping power on during the summer when China also hopes to see its economy rebounding from the lower-than-expected growth in the second quarter.

The IEA sees China’s coal demand rising by about 3.5% in 2023, with demand from the power sector up 4.5% and demand from non-power uses growing by 2%. In India, the total increase in coal demand is expected at 5% annually this year.

Clean energy growth has put coal use into structural decline in Europe and the U.S., IEA Director of Energy Markets and Security Keisuke Sadamori said.

“But demand remains stubbornly high in Asia, even as many of those economies have significantly ramped up renewable energy sources,”

Sadamori added.

By Tsvetana Paraskova for Oilprice.com

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