Growth in global coal demand will stall over the next five years as the appetite for the fuel wanes and other energy sources gain ground, according to the latest coal forecast from the International Energy Agency (IEA).
In a new report, the IEA says the share of coal in the power generation mix will drop to 36% by 2021, down from 41% in 2014. The change will be driven by lower demand from China and the U.S., along with fast growth of renewables and strong focus on energy efficiency.
The report notes the continuation of a major geographic shift in the global coal market toward Asia. In 2000, about half of coal demand was in Europe and North America, while Asia accounted for less than half. By 2015, Asia accounted for almost three-quarters of coal demand, while coal consumption in Europe and North America had declined sharply below one quarter. This shift will accelerate in the next years, according to the IEA.
In the U.S., coal consumption dropped by 15% in 2015, precipitated by competition from cheap natural gas, cheaper renewable power and regulations to reduce air pollutants that led to coal plant retirements. The report says this was the largest annual decline ever, reaching levels not seen in more than three decades. Another substantial decline is expected in 2016. Looking ahead, the IEA forecasts a 1.6% per-year decline, much slower than the 6.2% decline over the past five years, as higher gas prices result in less coal-to-gas switching.
Because it is relatively affordable and widely available, coal remains the world’s No. 1 fuel for generating electricity, producing steel and making cement. However, the report points out that coal is also responsible for 45% of all energy-related carbon emissions and is a significant contributor to other types of pollution.
“Because of the implications for air quality and carbon emissions, coal has come under fire in recent years, but it is too early to say that this is the end for coal,” states Keisuke Sadamori, the director of the IEA’s energy markets and security directorate.
“Coal demand is moving to Asia, where emerging economies with growing populations are seeking affordable and secure energy sources to power their economies. This is the contradiction of coal – while it can provide essential new power generation, it can also lock in large amounts of carbon emissions for decades to come.”
Mary Anne Hitt, director of the Sierra Club’s Beyond Coal campaign, says the IEA report highlights the global shift to clean energy.
“The latest data is crystal clear – in the U.S. and around the world, renewable energy growth will keep accelerating as we move away from coal and increasingly power our homes and businesses with clean energy,” she says in a statement. “Utilities, states, and communities are increasingly choosing affordable and accessible clean energy over polluting and expensive coal power, which is why nearly half of U.S. coal plants are slated for retirement and renewable energy is skyrocketing. For decision-makers, the only responsible path forward is to engage and invest in this transition, ensuring that America continues to lead the way in clean energy innovation and the jobs and opportunities that come with it.”