BP plc slashed its 2035 global coal demand forecast by 5.6% relative to its 2016 outlook, attributing the decline to the rebalancing of economic growth within China, along with stringent climate and environmental policies.

"Much of this slowdown is driven by China as its economy adjusts to a more sustainable pattern of growth and government policies prompt a shift away from coal towards cleaner, lower-carbon fuels," the giant oil and gas company wrote in its 2017 Energy Outlook.

"China's coal consumption is projected to broadly plateau over the next 20 years, in sharp contrast to the rapid, industrialization-fueled growth of much of the past 20 years."

Even so, the report said, China will remain the world's largest market for coal, accounting for nearly half of global coal consumption in 2035, while India is the largest growth market.

BP forecast global coal consumption to peak in the mid-2020s, with its annual growth sharply declining to 0.2% a year, compared to an annual average of 2.7% over the past 20 years. Consumption of the controversial fossil fuel in countries belonging to the Organization for Economic Co-operation and Development is projected to plunge by more than 40%, with renewables and natural gas expected to dominate the power sector.

Meanwhile, demand for renewables in 2035 was raised 15%, while gas consumption was lowered by 2.5%. Gas is also expected to overtake coal as the second-largest fuel source next to oil by 2035, said the report.

Renewables will continue to thrive as the fastest-growing source of energy, with their share of primary energy rising to 10% by 2035, compared to 3% in 2015.