Global coal demand to return to its all-time high in 2022, says IEA

Global coal demand to return to its all-time high in 2022, says IEA
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KUALA LUMPUR (July 29): The world’s consumption of coal is set to rise in 2022, back to the record level it reached nearly a decade ago.

In its July 2022 Coal Market Update released on Thursday (July 28), the International Energy Agency (IEA) noted that significant uncertainty hangs over the outlook for coal as a result of slowing economic growth and energy market turbulence.

It said based on current economic and market trends, global coal consumption is forecast to rise by 0.7% in 2022 to 8 billion tonnes, assuming the Chinese economy recovers as expected in the second half of the year.

The IEA said this global total would match the annual record set in 2013, and coal demand is likely to increase further next year to a new all-time high.

The report highlighted the significant turmoil in coal markets in recent months, which has important implications for many countries where coal remains a key fuel for electricity generation and a range of industrial processes.

At the same time, the IEA said the world’s continued burning of large amounts of coal is heightening climate concerns, as coal is the largest single source of energy-related CO2 emissions.

The agency said worldwide coal consumption rebounded by about 6% in 2021 as the global economy recovered rapidly from the initial shock of the Covid pandemic.

It said that sharp rise contributed significantly to the largest ever annual increase in global energy-related CO2 emissions in absolute terms, putting them at their highest level in history.

The IEA said global coal demand is being propped up this year by rising natural gas prices, which have intensified gas-to-coal switching in many countries, as well as economic growth in India.

It said those factors are being partly offset by slowing economic growth in China and by the inability of some major coal producers to ramp up production.

The IEA said demand for coal in India has been strong since the start of 2022 and is expected to rise by 7% for the full year as the country’s economy grows and the use of electricity expands.

In China, coal demand is estimated to have declined by 3% in the first half of 2022 as renewed Covid lockdowns in some cities slowed economic growth, but an expected increase in the second half of the year is likely to bring coal consumption for the full year back to the same levels as last year.

China and India together consume double the amount of coal as the rest of the world combined, with China alone accounting for more than half the world’s demand, said the IEA.