After reaching a new record high this year, global demand for coal is set to plateau and then fall by 2030, the International Energy Agency (IEA) said in its Coal 2025 report published on December 17. During the process, China - the world's largest coal consumer - will continue to have the most influence in shaping market trends.
Edging up by 0.5% from the previous year, global coal demand will top 8.85 billion tonnes in 2025, the IEA believes, to set a new all-time high. Looking ahead, the international energy watchdog sees worldwide demand levelling out before starting "a very slow and gradual decline". By the end of this decade, global coal consumption may ease by 3% from the 2025 level, the IEA adds.
During the process, China's role remains critical, the report notes, pointing out that China's coal consumption alone is 30% more than that of the rest of the world combined.
In general, the IEA anticipates coal demand in almost all of China's major sectors will soften, dragging the country's total consumption down from about 4.95 billion tonnes this year to an estimated 4.77 billion tonnes by 2030.
Presently accounting for roughly 62% of the country's total coal consumption, coal demand from the power sector will remain pivotal in the next five years. However, the IEA predicts that the sector's use of thermal coal will drop from 3.09 billion tonnes this year to 3.03 billion tonnes in 2030, mainly driven by intensified competition from other energy sources.
Despite the 5% on-year growth anticipated for China's overall electricity demand this year, the country's coal-fired power output may dip by 0.2% from the previous year, reflecting "the crowding-out effect of the expansion of clean energy", the IEA says.
While the country plans to lower coal's share in electricity supplies from 55% in 2024 to 43% by 2030 and boost the share of renewables from 37% to 49% over the same period, coal consumption in the sector should continue to fall, with the fossil fuel "increasingly serving as a strategic reserve", the IEA notes, citing government documents.
As for thermal coal demand for China's other non-power applications, the IEA estimates the volume to drop from 1.12 billion tonnes this year to 1.08 billion tonnes by 2030. The agency notes the strong headwinds that China's cement industry – historically the largest industrial consumer of thermal coal – is facing from the sluggish real estate market.
Meanwhile, the country's consumption of metallurgical coal in steelmaking is also expected to decline from 742 million tonnes this year to 665 million tonnes by the end of this decade, as the IEA sees more Chinese mills shifting to electric arc furnace steelmaking from the traditional blast furnace-basic oxygen furnace route.
For coal supply, the IEA expects that global production will shrink from 9.11 billion tonnes this year to 8.64 billion tonnes by 2030, following the downtrend in demand.