ENB Pub Note: An interesting “Peak Coal” view has been reached, and you may take a moment to celebrate, until you look at the number of new coal plants going up around the world. You then realize that they are pandering to their sponsors. With over 437 new coal plants under construction and another 262 permitted, we are on track to grow coal consumption for a long time. The real question should be how much money was wasted on “renewable wind and solar” that could have been spent on cleaning the coal power plant’s outputs?
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Research suggests global coal consumption likely peaked in 2024, with a slight decline expected in 2025.
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It seems likely that China’s coal demand, a major driver, may decrease in 2025, contributing to the global trend.
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The evidence leans toward a plateau or decline in coming years, driven by renewable energy growth, though regional differences exist.
Background
Current Status
Future Outlook
Comprehensive Analysis of Global Coal Consumption Trends and the Potential Peak in 2025
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The United States saw a 4% decline in coal consumption in 2024, a slowdown from a 17% drop in 2023, driven by stable electricity demand and less switching from coal to natural gas.
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The European Union experienced a 15% fall in coal power generation, with the United Kingdom joining the list of countries without coal power capacity in September 2024.
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Japan and Korea reduced reliance on coal, though at a slower pace than Europe.
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The IEA’s Coal Mid-Year Update from July 2024 estimates global coal demand will decrease slightly by 0.3% in 2025 to 8,714 million tonnes, marking the first decline since 2016, primarily due to a projected 1.1% drop in China’s power sector coal demand, as renewables are likely to outgrow electricity demand.
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The World Bank’s December 2024 blog post projects a marginal decrease in 2025 and further contraction in 2026, suggesting that if forecasts prove accurate, 2024 will mark an important milestone in the global energy transition.
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The IEA’s December 2024 report indicates that global coal demand is set to plateau through 2027, reaching around 8.87 billion tonnes by 2027, based on current policy settings and market trends, with weather factors and electricity demand growth being critical uncertainties.
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Advanced Economies: Coal demand has halved from the 2007 peak, with policies like the EU’s emissions reduction efforts and U.S. cheap natural gas driving declines. The United Kingdom’s closure of coal power plants in 2024 exemplifies this trend.
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Developing Economies: India and Southeast Asia are expected to see continued growth, with India’s coal demand rising due to electricity needs and weak hydropower, while Vietnam saw a 12% increase in 2024. However, these regions’ growth is not expected to offset declines elsewhere in the long term.
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China’s Role: China’s influence is unparalleled, with over one-third of global coal consumed in its power plants. The Action Plan for Low-Carbon Coal Power Transformation (2024-2027), issued in July 2024, supports technologies like biomass co-firing and carbon capture, potentially affecting consumption from 2025, though its impact is not fully assessed yet.
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Year
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Global Coal Consumption (Billion Tonnes)
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Key Drivers
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Forecast Trend
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2023
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8.5
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Record high, driven by China and India growth
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–
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2024
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8.77 (estimated)
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Record high, strong electricity demand
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Peak year, per World Bank
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2025
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8.714 (estimated)
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Slight decline, renewables growth, China reduction
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Plateau or slight decrease
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2026
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–
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Expected further contraction, per World Bank
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Decline projected
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2027
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~8.87 (projected)
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Plateau, per IEA, weather and demand uncertainties
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Plateau through 2027
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The future of coal was one of the dominant topics crystal balled at this year’s Geneva Dry conference, with some panellists believing that last year saw the peak in seaborne trades.
The panel, led by Benjamin Wilkes, chief operating officer of d’Amico’s dry cargo division, opened with coal’s largest importer, China, and discussed where the volumes are heading.
Peter Weernink, chairman of dry bulk operator SwissMarine, told delegates that volumes are declining and that he thinks they will very likely continue to decline.
“The market is weak. Anything you read about the Chinese market suggests there’s no pool for coal imports,” he said.
For Stamatis Tsantanis, chairman and CEO of capesize owners Seanergy and Union Maritime, it’s all about energy security, and the reason for increased imports in China was backed by the need to feed its power production plants.
“If you remember, everything has been revised a number of times about coal and imports of coal, and there are so many things going on in the world, but most importantly outside of the SDG agenda, and we have to think about energy security, and in the world of tomorrow, I think energy security is paramount.”
William Fairclough, the managing director of Wah Kwong Maritime Transport, agreed with Tsantanis that national security is at the heart of the discussion.
“I think what we’ve seen is a fundamental shift in the balance of power between decarbonisation on the one hand and national security on the other hand,” he said, noting that last year China approved and started construction of more coal-fired power stations than at any point in the last 10 years.
This additional coal capacity is, however, seen as a safety net for China as it invests and relies more on renewable energy.
“That capacity is there for a rainy day,” Fairclough argued, reminding that the real question one should be asking is how many rainy days there are going to be between now and 2030.
Asked if China is going to try and maintain a certain amount of import volume, Jason Martinet, ex-head of dry freight at Montfort Trading, said it is very much subject to how much it will outperform on the renewable front, as it has in the last five years.
“Do I think that the share of coal in their energy mix is going to move? is anyone’s guess,” he added.
Turning the discussion to India, Tsantanis finds that imports would continue at pace, with industrial production moving into the country and out of China and projected steel production growth needed for infrastructure projects.
“I don’t see India slowing down their coal imports, whether that’s metallurgical coal or thermal coal, anytime soon,” he said.
Weernink maintained his view on falling coal imports for India as well, noting that “there’s just a lot of call around in India and in China and difficult to place anything.”
Concerns were also raised about the deteriorating Atlantic coal trade since Colombian miners were cutting back on production, and a decrease in US activity was anticipated.
Overall, energy security was cited as a main driver for continued imports, with Tsantanis advocating that Europe and the rest of the world should not be relying so much on renewables, at least for the vast majority of their energy needs.
“We really need to be stocked, up to a point, to undertake the future demands of energy,” he said.
For Fairclough, there will be fluctuations based on how many ‘rainy days’. “I think the key for me is that the capacity is there; that could be a reactive thing to an external event, and we’ve seen a few of those.”
Speaking from the audience, Guillaume Perret, the founder and director of consultancy Perret Associates, noted that in terms of demand, coal has yet to peak, and the big question is whether the Chinese and Indian coal production can follow this demand and whether that will potentially trigger an increase or a decrease in seaborne flows.
Geneva Dry, the world’s premier commodities shipping conference, returns on April 28 and 29 next year, with delegate passes being limited. Tickets are now on sale here.
