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Global coal demand expected to decline by 2026: IEA report

While coal demand in the U.S. and EU is likely to fall by 20% each, it is expected to rise 8% in India and 5% in China by end of 2023

Coal from the ship being loaded on to a barge to be taken to the Cuddalore port. | Photo Credit: C. Venkatachalapathy

Despite reaching an all-time high in production this year, global coal demand is expected to decline by 2026, said a report by the International Energy Agency (IEA). While this decline is expected to be due to a shift towards renewables and plateauing demand from China, India would remain the “driving force” for the fuel until that year.

The report, released on December 15, sees the global demand for coal rising by 1.4% in 2023, surpassing 8.5 billion tonnes for the first time. This increase however masks stark differences among regions. While demand in the European Union and United States is expected to drop 20% each, 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.

The IEA’s expectations of a decline in coal demand is premised not only on a rise in renewable energy capacity but also a change in global climate. The current El Nino conditions, usually linked with drier monsoons in Asia, are expected to turn to La Nina and generally linked to better rainfall during 2024-2026. This will presumably translate to greater hydropower output.