The global demand for coal is projected to remain nearly flat through 2022, marking a decade of stagnation, according to the International Energy Agency's annual coal market report.
"The energy system is evolving at a rapid pace all around us, with a more diversifying fuel mix, and the cost of technologies going down," Keisuke Sadamori, the IEA's director for energy markets and security, said in a release. "But while everything else is changing, global coal demand remains the same."
In 2016, the second straight year of decline attributed to lower natural gas prices, a jump in renewable energy and improvements in energy efficiency, global coal consumption fell 1.9% to about 5.4 million tonnes of coal equivalent. Demand decreased in China, the U.S. and the U.K. but rose in India and other Asian countries.
The IEA predicts the overall share of coal in the global energy mix to fall from from 27% in 2016 to 26% in 2022 due to "sluggish demand compared to other fuels," although coal-fired power generation will increase 1.2% per year from 2016 to 2022. In India alone, coal-fired generation is expected to jump 4% per year.
China will continue to be a major driver of the global coal market, the report said. Even though the potential for demand growth there is limited, supply-side reforms will play an important role for pricing in the next few years.
Pakistan, which faces an energy shortage, could see coal demand more than quadruple by 2022 and emerge as a significant international player, with imports accounting for half of its consumption, the executive summary for the report said. Bangladesh is also planning an expanded role for coal, while the United Arab Emirates will soon open the first large coal power plant in the Middle East.
The agency called for urgent action to develop carbon capture, use and storage technology, noting that progress "is lagging far behind other low carbon technologies."
Without it, "the climate challenge will be much bigger" and "coal use will be seriously constrained in the future," the report said.
International demand for U.S. thermal coal has been high this year, but some of this relief might be short-lived due to shifting geopolitical situations.
The IEA report forecast the U.S. to remain a swing player in the international market.
"Recent [changes] in the policy and regulatory environment are reducing costs for U.S. producers, but will not significantly change their position in the seaborne supply curve. In 2017, a rise in coal imports and prices led to greater U.S. exports; but as prices ease, so will exports," the executive summary said.
Analysts from Seaport Global Securities LLC predicted metallurgical coal exports to increase in 2018, and producers such as Corsa Coal Corp. are also optimistic about short-term demand for coking coal.