The International Energy Agency expects global coal consumption to remain stable through 2023, growing about 0.2% annually.
The agency wrote in its report "Coal 2018: Analysis and Forecasts to 2023," which was released Dec. 17, that growth in India and other Asian countries is expected to offset the declining demand for coal in Europe and the United States as the world's coal consumption rises from 5,355 million tons of coal equivalent, or Mtce, in 2017 to 5,418 Mtce in 2023. China, where a quarter of the world's coal is burned for power, is expected to see a gradual decline in demand.
Overall coal demand grew by 1% in 2017, following two years of decline, as improved global economic conditions yielded more industrial output and power use, and is expected to grow again in 2018, given the strong coal-fired power generation in China and India.
The agency also projects that coal's share of the world's energy sector will decline from 27% to 25% by 2023 due to competition with renewable energy sources and natural gas. Thermal coal usage is expected to rise slightly from 4,050 Mtce last year to 4,127 Mtce in 2023, while global metallurgical coal consumption is expected to increase through 2019 from 1,027 Mtce in 2017 and then decline to 1,015 Mtce by 2023.
China continues to dominate the world's coal consumption, accounting for 48% in 2017, and the IEA anticipates electricity use will increase in the country's transportation and heating sectors and by its growing middle class. But the agency also expects this growth to taper off as the economy transforms, resulting in a decline in "electricity intensity" and ending coal-fired power growth by 2020. China's coal demand will continue to decline by less than 1% annually on average.
Other Asian nations' coal use is expected to increase the next few years. India's coal power generation has grown since 1974, with demand averaging a more than 6% increase per year during the last decade. The subcontinent is expanding its renewables and "supercritical" technology in new coal power plants, which will slow demand growth to less than 4% annually through 2023.
Though India is expected to boost the largest absolute growth in demand through 2023, southeast Asia will have the fastest demand growth with a more than 5% uptick annually through 2023.
Keisuke Sadamori, director for energy markets and security for the IEA, said on a Dec. 14 call discussing the report that India is "increasing relevance in the global markets." Southeast Asia is also poised to consume as much coal as the European Union by 2023.
"We see that the center of gravity in the global coal market shifts dramatically to Asia regions in just two decades," Sadamori said.
The U.S. was the fourth-largest coal exporter in the world in 2017, trailing Indonesia, Australia and Russia, and the second-largest metallurgical coal exporter. Domestic demand is expected to fall 2.2% per year, from 473 Mtce in 2017 to 413 Mtce in 2023, and output is projected to decline by 2.1% per year from 533 Mtce in 2017 to 469 Mtce in 2023 due to the decline in coal-fired power generation.
"U.S. coal exports are not expected to offset this effect," the report states.
Western and Eastern Europe are seeing different trends. Western Europe is "accelerating its coal exit" amid environmental concerns and an expansion in renewable energy sources. France and Sweden plan to shut down the last of their coal-fired fleet by 2023, leaving Germany as the "only significant coal consumer" in Western Europe. Meanwhile, there are few policies in place to move Eastern European nations away from coal and new coal-fired power plants are under construction in the Balkans, Greece and Poland, which will replace older capacity.
"The countries with lower dependency on coal in the power mix are those who have committed to close down their power plants, whereas in countries with higher dependency, the challenge is bigger," Sadamori said.