Coal Consumption Set to Jump In 2021

Coal consumption is set for a rebound of 2.6 percent next year as the world’s heavy industry emerges from the pandemic crisis, the International Energy Agency said in its latest report on the fossil fuel.

The forecast is, of course, based on the assumption that the global economy will begin to recover next year, which is far from certain. China’s and India’s recovery, however, has a higher degree of certainty—both countries are already on the mend.

The IEA acknowledged this in its report, noting the rebound in coal consumption will be led by the two powerhouses plus Southeast Asia. Interestingly enough, coal consumption may also rise in places such as Europe and the United States because of the expected increase in electricity demand coupled with higher natural gas prices, according to the IEA.

This would be the first time in a decade that coal consumption in these two regions has risen, and it would highlight the divide between ambitions and reality when it comes to the cost competitiveness of solar and wind power generation.

In further coal news, the IEA said that consumption had fallen by as much as 7 percent between 2018 and 2020, the most since records began in 1971. This year alone, thanks to the pandemic, global coal consumption fell by an estimated 5 percent, which was the steepest annual drop since the Second World War but lower than the IEA had projected earlier this year.

Going forward, the authority said it expects coal consumption to plateau at around 7.4 billion tons by 2025. In Europe and the U.S. coal use will continue to decline steadily, but this will not have a particularly strong effect on global consumption as these two markets’ combined consumption represents barely a tenth of the world’s total. Coal use in South and Southeast Asia, on the other hand, is set for a further increase in the coming years.

By Irina Slav for Oilprice.com

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