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China, India set to boost global coal demand to all-time high

Global coal demand is forecast to hit a new all-time high in the next two years driven by robust energy demand from China and India despite pledges for net zero emissions.

The International Energy Agency’s (IEA) 2021 Coal report, released on Friday, forecast that coal demand will surpass its 2013 record in 2022 at 8,025 million tonnes and rise to an all-time high of 8,031 million tonnes in 2024, driven by consumption from China, India and Southeast Asia.

“The pledges to reach net zero emissions made by many countries, including China and India, should have very strong implications for coal – but these are not yet visible in our near-term forecast, reflecting the major gap between ambitions and action,” the IEA said in its report.

China’s coal consumption growth is expected to average less than 1% a year between 2022 and 2024, adding 135 million tonnes in the period. In India, stronger economic growth and increasing electrification are forecast to drive coal demand growth of 4% a year. The South Asian country is set to add 130 million tonnes to global coal demand between 2021 and 2024.

The forecast assume that global gross domestic product rises at 4% compound annual growth rate from 2022 to 2024.

“If the economy does not perform as expected, especially in China, it will clearly affect coal consumption,” the IEA said. China and India account for a combined two-third of global coal consumption.

Another critical forecast assumption related to gas prices. Coal and gas are the main competitors in the electricity market to fill what is known as the “thermal gap”. The thermal gap is the difference between electricity demand and the amount produced from nuclear and renewable sources.