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IEA: Global Coal Demand On Track To Match Record

Soaring natural gas prices are giving rise to coal demand around the world, with consumption set to match this year the record-high from 2013, and further jump to a new all-time high next year, the International Energy Agency (IEA) said on Thursday.

The surge in natural gas prices following the Russian invasion of Ukraine has accelerated a gas-to-coal switch and has made coal more competitive in many markets, driving a rise in coal demand and coal prices globally, the agency said.

This year, global coal demand is expected to rise by 0.7% to 8 billion tons if China’s economy recovers as expected in the second half of 2022, according to the IEA’s July 2022 Coal Market Update. This is despite an economic slowdown and still uncertain recovery in China after the COVID-related lockdowns in the second quarter of 2022. If the IEA’s forecast pans out, global coal demand this year will equal the demand from 2013, when coal consumption hit a record high.

Next year, coal demand is expected to rise further, albeit slightly by 0.3%, and hit a new record high, according to the IEA. Uncertainties about this projection have increased over the past few months, the agency noted.

India is a key driver of coal demand growth this year, while China—which alone accounts for more than half the world’s demand—is expected to see growing demand in the second half of 2022. This will likely bring Chinese coal consumption for the full year 2022 to the same levels as last year. China and India together consume double the amount of coal as the rest of the world combined, the IEA says.  

Coal consumption in Europe is also surging due to record gas prices and uncertainties over Russian gas supply. Europe accounts for just 5% of global coal demand, but its consumption this year is expected to rise by 7%, on top of last year’s 14% jump, according to the international agency.

“Several EU countries are extending the life of coal plants scheduled for closure, reopening closed plants or raising caps on their operating hours to reduce gas consumption,” the IEA said today.

For example, Germany will rely more on electricity generation from coal  to conserve gas and fill its gas storage by winter, its Economy Minister Robert Habeck said after Russia first slashed supply to Germany via Nord Stream in the middle of June. Austria plans to convert a reserve gas-fired plant to run on coal, while the Netherlands is set to ease its current restrictions on coal-fired power plants.  

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By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on July 28 2022 said:
    Coal is a very significant energy resource accounting for more than 27% of global primary energy ahead of natural gas.

    The recent surge in global coal demand is basically due to three major reasons. The first is the gas-to-coal shift because of rising gas prices. The second is that it is a very important economic resource for countries with plentiful reserves such as China, Russia, India, the United States, Australia and Germany. The third reason is that economics and energy security always trump climate change dictates.

    Examples abound of countries using more coal. Japan has just paid the highest price for coal ever to secure its energy needs. China is increasing the production and use of coal and Germany and several EU countries are extending the life of coal plants scheduled for closure and reopening closed ones. India, which is the world’s second largest importer of coal after China, has been importing huge volumes of coal this year mostly from Russia.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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