Decline in Global Coal Demand by 2026: IEA Report

Context: In a recently released report, the International Energy Agency (IEA) has said that the global coal demand is expected to decline by 2026. 

Key Highlights of IEA Report on Global Coal Demand

• Reasons for Decline: Due to structural changes like shift towards renewables and plateauing demand from China, the largest coal-using country. 
• Delay in Decline: However, till 2026, the demand for coal will be rising. The global demand for coal will be rising by 1.4% in 2023. 
  • India is expected to remain the “driving force” for the fuel until 2026. 
• Regional Inequality: Demand in the European Union and United States is expected to drop 20% each and demand is expected to rise 8% in India and 5% in China in 2023. 

Factors Influencing Decline in Global Coal Demand 

• Rise in Renewable: A steep upward trend in low-cost solar photovoltaic deployment is expected to aid renewable power generation.
  • Nuclear generation is also set to see moderate increases, especially in China, India, and the European Union. 
• Change in Climate: Expected La Nina conditions in 2024-26 is expected to translate to greater hydropower output. 
• Progress in COP: Reducing use of ‘unabated’ coal, or coal-burning without technologies to capture carbon, is among the explicit agreements of latest COP28. 
• Prior Declines: Temporary declines due to Collapse of the Soviet Union or Covid-19 have taken place in the past; this time decline is more structural, driven by  clean technologies and international obligations. 

Global Coal Use

• Demand: The global demand for coal rising by 1.4% in 2023, surpassing 8.5 billion tonnes for the first time. Currently, a little over half the world’s coal demand comes from China. 
• Production: China, India, and Indonesia – the three largest coal producers globally – are expected to break output records in 2023, pushing global production to a new high in 2023. 

Predicted Future of Coal Use

• With a major expansion of renewable energy, a 2.3% fall in global coal demand by 2026 is expected. 
• Decline in Developed Economies: Demand in the European Union and United States is expected to drop 20% each,
• Increase in Developing Economies: It is expected to rise 8% in India and 5% in China in 2023 due to demand for electricity and diminished electrical generation from hydropower.

Must Read: World Energy Outlook 2023

Source: IEA ; The Hindu