IEA cuts coal demand forecast for fifth year in a row

Global coal use is flatlining as China continues to restructure its economy, says influential energy think-tank

A ruling by India's Supreme Court makes the business case for coal imports tougher (Pic: Smeet Chowdhury/Flickr)


The volume of coal used across the world fell for the second year running in 2015 and is set to stay below peak levels in 2016.

That was reported by the International Energy Agency – an autonomous Paris-based organisation – on Monday as it downgraded its medium-term coal market forecast for the fifth year in a row.

The influential think-tank expects demand to plateau until 2021, but not fall fast enough to align with the international goal of holding global warming below 2C.

China will be critical, as the consumer of half the world’s coal. There remains “a large degree of uncertainty” around its trajectory, said Keisuke Sadamori, director of energy markets at IEA.

Last year’s historic climate deal in Paris put the writing on the wall for fossil fuels, the biggest source of greenhouse gases. Yet a shift away from the most polluting – coal – in the US and Europe is being matched by an energy boom in emerging Asian economies.

Analysis: China cuts pollution at home, grows coal abroad

China is starting to ease off on the heavy industry that drove its rapid wealth creation and environmental destruction in the past decade, shifting to service sectors. Meanwhile, it is exporting coal power technology to Asian neighbours, Africa, some poorer European countries and even the US.

The one technology that could potentially throw the sector a green lifeline – carbon capture and storage – is stalling, the IEA warned.

Four pilot projects to pump greenhouse gas emissions from burning coal underground are collectively storing 8 million tonnes of carbon dioxide a year. Total coal emissions are 1,500 times that.

Investment decisions for the schemes in operation were taken years ago. No new projects have got the green light since 2014.

“One year after the Paris Agreement, we don’t see progress on carbon capture and storage, despite the fact CCS is crucial to achieving the 2C target,” said Sadamori.

Report: India claims subsidy-free carbon capture using UK, US-backed tech

The coal market report was prepared with input from the Coal Industry Advisory Board, which includes mining majors like Peabody and Glencore.

As such, the Institute for Energy Economics and Financial Analysis (IEEFA) noted it painted a rosier picture for the industry than the IEA’s latest world energy outlook, which highlighted pressures on coal from energy efficiency, renewables and policy measures.

Sadamori acknowledged that the IEA did not predict the structural decline of coal in China. Two years ago, it was still expecting growth. “At the time, Chinese demand growth was continuing rather robustly, so we didn’t anticipate the Chinese demand development,” he said in a press call.

In its 2015 report, the Agency outlined a scenario under which Chinese coal use had already peaked, although it was not taken as the central case.

Even with its tendency to see upsides for miners, the IEA expects the recent revival in coal prices to be short lived.

In the US, the world’s third largest coal market, there was a massive 15% drop in consumption in 2015. While the report does not directly address the impacts of Donald Trump’s election to the US presidency, it highlights market factors driving coal off the system.

For all Trump’s promise to put miners back to work, those economic trends are not expected to change.

Read more on: Fossil Fuels |