Coal 2022: Analysis and Forecast to 2025

December 22, 2022

On December 16, the International Energy Agency (IEA) released the report “Coal 2022: Analysis and Forecast to 2025”.

What is the IEA’s Coal Market Report?

Since the year 2011, the IEA’s Coal Market Report has been published every December. It is the global benchmark for coal demand, supply and trade forecasts. The Coal 2022 report provides a comprehensive analysis of the current trends in coal demand, supply, trade, costs, and prices amid growing concerns about the energy crisis and geopolitical tensions. It also provides coal-related predictions for the year 2025 by region and by coal grade.

Coal is currently central to climate and energy-related discussions as it is the largest energy source in the world for electricity generation and the production of iron, steel, and cement. It is also the single largest source of GHG emissions. The current energy crisis has forced several countries to increase their dependence on coal despite its contribution to the climate crisis.

What are the key findings of the Coal 2022 report?

India and China are the largest producers, consumers, and importers of coal. They are the only two countries in the world that witnessed a surge in investment in coal mine assets. This is because of the increase in domestic production to minimize the dependence on external sources for energy sources.
The domestic production of coal in India is expected to surpass a billion tonnes by 2025. The country’s coal consumption has doubled since 2007 at an annual growth rate of 6 percent. It is expected to continue to drive the global coal demand.
In countries like India and China, where coal is the major source of fuel for electricity systems, the global energy crisis caused by the war in Ukraine had little impact since gas accounts for just a fraction of power generation.
However, these countries witnessed coal usage replacing some gas, which has been bought by countries that are willing to pay a higher price for it.
Europe is among the worst hit by the Russian invasion of Ukraine due to its dependence on Russian gas. This has increased the gas prices, which in turn caused the coal prices to increase to new records this year.
The surge in oil prices as well as the lower output from hydro and nuclear forced the countries in the EU to switch to coal to generate power. However, except for Germany, the EU did not witness a surge in coal-sourced electricity production. The EU coal generation and demand is expected to decline by 2024 due to the growing efforts to improve energy efficiency and renewable energy adaptation.
The United States is also expected to maintain a downward trajectory of coal use.
While coal usage in China remains high, the increase in renewable energy generation is expected to cause coal consumption to remain relatively stagnant at an average of 0.7 percent per annum until 2025.
The global coal demand is expected to remain flat until 2025 due to the absence of low-emissions alternatives to replace coal in the iron and coal sectors.

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