Global coal demand is projected to remain steady in 2024 and 2025, according to the International Energy Agency’s (IEA) latest update on coal market trends. Surging electricity demand in major economies offsets the impacts of recovering hydropower and rapid growth in solar and wind energy.
The IEA’s Coal Mid-Year Update revealed that global coal use rose by 2.6% in 2023, reaching a record high driven by significant growth in China and India. The increased demand in the electricity and industrial sectors was primarily due to coal filling the gap created by low hydropower output and rising electricity needs.
China, which consumes more than half of the world’s coal, has seen a recovery in hydropower generation in 2024, slowing the growth in coal use. However, with a forecasted 6.5% increase in electricity demand, a decline in China’s coal consumption remains unlikely. In India, coal demand growth is expected to slow in the second half of 2024 as weather conditions normalise. India’s coal consumption surged in the first half of the year due to low hydropower output, extreme heat waves, and strong economic growth.
In Europe, coal demand continues to decline due to emissions reduction efforts in power generation. The European Union’s coal power generation, which fell by over 25% in 2023, is expected to drop significantly again this year. Similarly, coal use in the US has been contracting, though stronger electricity demand and less switching from coal to natural gas may slow this trend in 2024. Japan and Korea are also reducing their coal reliance, albeit at a slower pace than Europe.
“Global coal demand is likely to remain broadly flat through 2025, based on today’s policy settings and market trends,” stated Keisuke Sadamori, IEA Director of Energy Markets and Security. “The rapid deployment of solar and wind, coupled with the recovery of hydropower in China, is pressuring coal use. However, strong electricity consumption in several major economies is keeping coal demand steady.”
On the supply side, global coal production is expected to decrease slightly in 2024 after previous growth. China’s coal production is moderating, while India continues to boost coal output, anticipating a 10% increase in 2024. Coal production in advanced economies is declining in line with demand.
Despite reduced imports in Europe and Northeast Asia, global coal trade volumes are at record levels, with countries like Vietnam stepping up imports. In 2024, Vietnam is set to become the fifth largest coal importer, surpassing Chinese Taipei. Imports to China and India remain at all-time highs.
