A new report by the International Energy Agency (IEA) marks a shift in global energy trends. For the first time, the IEA’s annual coal market report predicts a decline in global coal consumption over the next few years. This comes after coal demand reached an all-time high in 2023.

The IEA’s Coal 2023 report reveals a contrasting picture of global coal use. While global demand reached a record high of over 8.5 billion tonnes in 2023, trends vary greatly by region. Developed economies like the US and EU saw significant declines (around 20% each), likely due to a shift towards cleaner energy sources. However, emerging economies like India (up 8%) and China (up 5%) experienced strong growth in coal consumption, fueled by rising electricity needs and lower hydropower output.

Despite the lack of stricter clean energy policies, the IEA predicts a global decline in coal demand of 2.3% by 2026 compared to 2023 levels. This projected decrease is attributed to the significant growth in renewable energy capacity expected to be operational within the next three years.

The report emphasizes China’s role in the projected global coal decline. With China currently consuming over half the world’s coal, the expected surge in renewable energy capacity there (over half the global expansion) is predicted to cause a decrease in Chinese coal demand starting in 2024 and lasting through 2026. However, the future of coal in China remains uncertain, influenced by factors like the actual pace of renewable development, weather patterns, and changes within the Chinese economy itself.

A potential turning point is signaled by the IEA, with a predicted global decline in coal demand, the world’s leading source of electricity, steel, and cement, and also the biggest culprit for human-caused CO2 emissions. However, the report cautions that even with this decline, coal consumption is likely to remain above 8 billion tonnes through 2026. To achieve emissions reductions aligned with the Paris Agreement’s goals, a much steeper drop in unabated coal use (coal without emissions capture technology) is necessary.

The IEA’s Director of Energy Markets and Security, Keisuke Sadamori, highlights the potential significance of this decline. While past dips in global coal demand were temporary, this one appears more long-lasting, driven by the continuous growth of clean energy technologies. “A turning point for coal seems likely,” Sadamori says, “but the pace of renewable energy adoption in key Asian economies will determine the future. To truly meet climate goals, even more aggressive action is needed.”

The report identifies a growing dominance of Asia in global coal use. This year, China, India, and Southeast Asia are projected to consume a staggering three-quarters of the world’s coal, compared to just a quarter in 1990. Notably, Southeast Asia’s consumption is expected to surpass that of both the US and the EU for the first time in 2023. While advanced economies are witnessing a structural decline in coal use due to renewable energy expansion and stagnant electricity demand, India and Southeast Asia are the only regions projected to see significant growth in coal consumption through 2026.

The world’s top coal producers, China, India, and Indonesia, are expected to shatter production records in 2023, driving global coal output to an all-time high. Collectively, these three countries now control over 70% of global coal production.

Despite an anticipated decline in global coal demand, trade is expected to peak in 2023 due to surging demand in Asia. China’s coal imports are projected to reach a record-breaking 450 million tonnes this year (exceeding the previous global record by over 100 million tonnes). Similarly, Indonesia’s coal exports are on track to hit a new high of nearly 500 million tonnes in 2023. This surge in Asian trade will likely be followed by a contraction as global coal demand dips in the coming years.

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