Coal-fired electricity generation this year experienced its largest ever decline – over 250 TWh – yet over the next five years, global coal demand will remain stable thanks to strong growth in Asian markets.
That’s the conclusion of the latest coal analysis from the International Energy Agency, which stresses that despite this year’s fall, “this is not the end of coal”.
The Coal 2019 report, which was released yesterday and contains forecasts through to 2024, states that the weakness in coal demand this year’s coal-fired electricity generation decline is caused by double-digit falls in the US and Europe.
The study stresses that it is too soon to say whether the expected global decrease in coal power generation this year will be the start of a lasting trend. The IEA forecasts that renewable sources will supply a major portion of the increase in global electricity demand over the next five years. Electricity generation from coal will rise only marginally over that period, at less than 1 per cent per year – and its share will decline from 38 per cent in 2018 to 35 per cent in 2024. This means coal remains by far the single largest source of power supply worldwide.
Ultimately, says the IEA, global trends will depend largely on China, where half of the world’s coal is produced and consumed.
In Europe and the US, coal power generation is sinking to levels not seen in decades. Growth in solar PV and wind, low natural gas prices and stagnating electricity demand have created what the IEA calls ‘a perfect storm’ for coal in both regions, where coal plants retirements continue to take place. These trends will continue through 2024, although the speed of the declines is expected to slow unless coal comes under additional pressure from stronger climate policies or lower-than-expected natural gas prices.
“Wind and solar PV are growing rapidly in many parts of the world. With investment in new plants drying up, coal power capacity outside Asia is clearly declining and will continue to do so in the coming years,” said Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, who launched the report in Johannesburg alongside Gwede Mantashe, South Africa’s Minister of Mineral and Energy Resources.
“But this is not the end of coal, since demand continues to expand in Asia,” Sadamori added. “The region’s share of global coal power generation has climbed from just over 20 per cent in 1990 to almost 80 per cent in 2019, meaning coal’s fate is increasingly tied to decisions made in Asian capitals.”
The report highlights that countries in South and Southeast Asia – such as India, Indonesia and Vietnam – are relying on coal to fuel their economic growth. Natural gas and oil have traditionally been the main sources of power generation in Pakistan, but the country has commissioned 5 GW of coal power capacity since 2017, and another 5 GW is set to come online in the next few years. In Bangladesh, where natural gas has long generated the bulk of electricity supply, coal will gain share in the coming years, with 10 GW of capacity in the pipeline.
“In 2019, global coal power generation will experience the biggest drop ever and coal power generation in India will probably decline for the first time in 45 years,” Sadamori said.
“The global picture, however, has not changed much. Coal is disappearing in many advanced economies, but it remains resilient and is even continuing to grow in developing Asia. The low coal power generation in India this year was due to unusually low growth in electricity demand and exceptionally high hydropower output. It is not at all clear that it will be repeated.”