World’s Coal Consumption To Reach New High In 2022, Says IEA


Global coal demand is set to increase only marginally in 2022 but enough to push it to an all-time high amid the energy crisis, according to a report from the International Energy Agency (IEA) released on Friday.

Global coal use is set to rise by 1.2% in 2022, surpassing 8 billion tonnes in a single year for the first time and eclipsing the previous record set in 2013, according to Coal 2022 (, the IEA’s latest annual market report on the sector.

According to the Paris-based agency’s annual report, the global energy crisis entailed by surging natural gas prices pushed coal use to a ten-year high this year.

The report forecasts the world’s coal consumption will remain at similar levels in the following years in the absence of stronger efforts to accelerate the transition to clean energy.

Based on current market trends, the report forecasts that coal consumption will then remain flat at that level through 2025 as declines in mature markets are offset by continued robust demand in emerging Asian economies. This means coal will continue to be the global energy system’s largest single source of carbon dioxide emissions by far.

Expected coal demand in 2022 is very close to the IEA forecast published a year ago in Coal 2021, even if coal markets have been shaken by a range of conflicting forces since then. Higher natural gas prices amid the global energy crisis have led to increased reliance on coal for generating power, but slowing economic growth has at the same time reduced electricity demand and industrial output – and power generation from renewables has risen to a new record.

In China, the world’s largest coal consumer, a heat wave and drought pushed up coal power generation during the summer, even as strict Covid-19 restrictions slowed down demand.

“The world is close to a peak in fossil fuel use, with coal set to be the first to decline, but we are not there yet,” said Keisuke Sadamori, the IEA’s Director of Energy Markets and Security. “Coal demand is stubborn and will likely reach an all-time high this year, pushing up global emissions. At the same time, there are many signs that today’s crisis is accelerating the deployment of renewables, energy efficiency and heat pumps – and this will moderate coal demand in the coming years. Government policies will be key to ensuring a secure and sustainable path forward.”

International Coal Market

The international coal market remained tight in 2022, with coal demand for power generation set to hit a new record. Coal prices rose to unprecedented levels in March and then again in June, pushed higher by the strains caused by the global energy crisis, especially the spikes in natural gas prices, as well as adverse weather conditions in Australia, a key international supplier. Europe, which has been heavily impacted by Russia’s sharp reductions of natural gas flows, is on course to increase its coal consumption for the second year in a row, as many countries have reopened their coal-fired power plants despite green transition plans on fears of gas shortages, the report said. However, by 2025, European coal demand is expected to decline below 2020 levels.

The world’s three largest coal producers – China, India and Indonesia – will all hit production records in 2022.

The report notes that despite high prices and comfortable margins for coal producers, there is no sign of surging investment in export-driven coal projects. This reflects caution among investors and mining companies about the medium- and longer-term prospects for coal.

Coal demand is forecast to fall in advanced economies in the coming years as renewables increasingly displace it for electricity generation. However, emerging and developing economies in Asia are set to increase coal use to help power their economic growth, even as they add more renewables. Developments in China, the world’s largest coal consumer, will have the biggest impact on global coal demand in the coming years, but India will also be significant.

The IEA’s special report on Coal in Net Zero Transitions, published on 15 November, provides the most comprehensive analysis to date of what it would take to bring down global coal emissions rapidly enough to meet international climate goals while supporting energy security and economic growth, and addressing the social and employment consequences of the changes involved.

Coal used in power generation, the largest consuming sector, is forecast to grow by 2% this year.

At the same time, the IEA expects industrial coal consumption to decrease by more than 1% in 2022 due to a slump in iron and steel production triggered by the economic downturn.

“This means coal will continue to be the global energy system’s largest single source of carbon dioxide emissions by far,” the agency concluded.

The report also indicated that if the energy transition to renewables is not accelerated coal consumption is likely to remain flat at current levels through 2025.

Highlights Of The Report

  • Coal markets have been shaken severely in 2022, with traditional trade flows disrupted, prices soaring and demand set to grow by 1.2%, reaching an all-time high and surpassing 8 billion tonnes for the first time. In last year’s annual market report, Coal 2021, we said that global coal demand might well reach a new peak in 2022 or 2023 before plateauing thereafter. Despite the global energy crisis, our overall outlook remains unchanged this year, as various factors are offsetting each other. Russia’s invasion of Ukraine has sharply altered the dynamics of coal trade, price levels, and supply and demand patterns in 2022. Fossil fuel prices have risen substantially in 2022, with natural gas showing the sharpest increase. This has prompted a wave of fuel switching away from gas, pushing up demand for more price competitive options, including coal in some regions. Nonetheless, higher coal prices, strong deployment of renewables and energy efficiency, and weakening global economic growth are tempering the increase in overall coal demand this year. In China, which accounts for 53% of global coal consumption, prolonged and stringent Covid-19 lockdowns have weighed heavily on economic activity, undermining coal demand. At the same time, droughts and heat waves in China this summer accelerated coal burning to meet a surge in power demand for air conditioning.
  • Coal used in electricity generation, the largest consuming sector, is expected to grow by just over 2% in 2022. By contrast, coal consumption in industry is expected to decline by over 1%, mainly driven by falling iron and steel production amid the economic crisis. Global coal power generation rises to record levels In 2022, high natural gas prices led to significant fuel switching to coal in electricity generation in Europe, although both gas and coal generation increased as the growth of wind and solar was insufficient to fully offset lower hydro and nuclear power output. In China, low hydropower output in the summer amid a big heat wave pushed coal power generation significantly higher. In August, coal power generation in China increased by around 15% year-on-year to over 500 terawatt-hours (TWh). This monthly level of generation is higher than the total annual coal power generation of any other country, except India and the United States. In India and China, where coal is the backbone of electricity systems and gas accounts for just a fraction of power generation, the impact of steeper gas prices on coal demand has been limited. Nevertheless, increased coal use in these countries has replaced some gas, which has been purchased by other regions willing to pay more for it. Coal power generation will rise to a new record in 2022, surpassing its 2021levels. This is driven by robust coal power growth in India and the European Union (EU) and by small increases in China – and it comes despite a decline in the United States. Europe’s U-turn on coal is temporary Europe – and the European Union in particular – has been one of the regions hardest hit by the energy crisis, given its reliance on Russian pipeline supplies of natural gas. Lower hydro and nuclear power output due to weather conditions, combined with technical problems in French nuclear power plants, put additional strains on the European electricity system. In response, some European countries have increased their use of coal power generation while also accelerating the deployment of renewables and, in some cases, extending the lifetimes of nuclear plants. Under the threat of gas shortages and potential issues ensuring sufficient power system adequacy, some coal plants that had closed down or been left in reserve have re-entered the market. In most countries, this involved a limited amount of coal power capacity. Only in Germany, with 10 gigawatts (GW), is the reversal at a significant scale. This has increased coal power generation in the European Union, which is expected to remain at these higher levels for some time. But redoubled efforts to improve energy efficiency and expand renewables will see EU coal generation and demand return to a downward trajectory as soon as 2024 in our forecast.
  • In our forecast, global coal demand plateaus around the 2022 level of 8 billion tonnes through 2025. However, given the current energy crisis with all its uncertainties, a lurch into growth or contraction is possible. This could be driven by changes in global economic activity, weather conditions, fuel prices or government policies – among many other potential variables. Developments in China may well have the largest impact on the outlook for global coal demand, since China accounts for more than half of it. China’s power sector alone accounts for one-third of global coal consumption. Coal consumption in China grew strongly in 2021, but growth is expected to remain relatively stagnant at an average of 0.7% a year to 2025, largely because of the increase in renewable power generation. In the 2022-2025 period, we expect China’s renewable power generation to increase by almost 1 000 TWh, equivalent to the total power generation of Japan today. Meanwhile, India’s coal consumption has doubled since 2007 at an annual growth rate of 6% – and it is set to continue to be the growth engine of global coal demand. By contrast, coal use is forecast to maintain its downward trajectory in the United States, and to fall considerably in the European Union by 2025. At a global level, we expect new renewable generation to cover almost 90% of additional electricity demand through 2025. With a modest increase in nuclear power generation and high gas prices prevailing, coal power generation increases slightly to 2025. Therefore, in the absence of low-emissions alternatives that can replace coal at scale in the iron and steel sector in the near term, global coal demand is set to remain flat through our forecast period. An all-time high for coal production in 2022 China and India, the world’s largest coal consumers, are also the biggest producers and, in addition, the top two coal importers. In response to price rises and supply shortages, China and, to a lesser extent, India, pushed up domestic coal production after summer 2021. In March 2022, Chinese production reached a new monthly high and it is set to rise to a new annual record, with expected growth of 8% for the full year, reducing the need for imports and replenishing stocks. In India, the government has tried to increase production for a long time to reduce imports. In 2021, coal production reached 800 million tonnes for the first time. In our forecast, India’s production surpasses 1 billion tonnes by 2025. Indonesia, the world’s third-largest producer, is also expected to expand production to reach a new high in 2022, with exports playing a more important role than domestic demand. With minor growth in the United States and even in Europe, global coal production will rise above 8 billion tonnes in 2022, its highest level ever.
  • Russia is the third largest coal exporter in the world and the sanctions have as a result given rise to a reshuffling of global trade flows as buyers, especially in Europe, seek alternative supplies. In addition, owing to the lack of rail capacity, part of the Russian coal volumes previously sent by rail to Europe or shipped from northwestern Russian ports towards Europe cannot be redirected to the east or the south. This has resulted in a decline of Russian exports and a tightening of the market. The gap left by Russian coal supplies in Europe has been largely filled by South Africa, Colombia and other smaller producers such as Tanzania and Botswana. Indonesia, which started the year banning coal exports in order to meet its own domestic demand, once again demonstrated its flexibility as it shifted its exports to Europe to help offset the Russian shortfall. By contrast, the U.S. is not a swing supplier anymore. Struggling with investment, workforce shortages and transport bottlenecks, U.S. coal exports are set to decline marginally despite high prices. Meanwhile, rains and floods in Australia have curtailed production, contributing to the tight market.
  • Supply and demand imbalances combined with high gas prices pushed thermal coal prices to unprecedented highs in October 2021. Almost immediately, China and India accelerated production in order to ease the market, and prices soon fell back to lower levels. When Indonesia banned exports in January 2022, international prices rose again while Chinese prices remained more stable, as the local market was well supplied. Russia’s invasion of Ukraine in late February, however, sparked a surge in gas prices, which in turn pushed coal prices up to new records in March and during the summer. Further support for prices came from a war premium and an increasing perception of a risk of physical energy shortages. Prices have moderated since the summer as supply worries have eased. Rains in Australia further exacerbated market tightness during the year, exceptionally pushing prices for high quality thermal coal above those for high-value coking coal. With the EU ban on Russian coal phased in from April to early August, prices for Russian coal have been sharply discounted. Despite record profits for producers, there is little appetite for more investment in coal mining assets. The record highs for coal prices seen since October 2021 and a renewed focus on energy security since Russia’s invasion of Ukraine might have been expected to drive an uptick in investment in coal mine assets. However, outside China and India, where domestic production has been ramped up to reduce external reliance, there are no strong signs of reversal of the investment trends. Governments, banks and investors – as well as mining companies – continue to show, in general, a lack of appetite for investment in coal, particularly thermal coal.

UK To Use Coal-fired Power Plants To Keep Lights On

The UK’s electricity system operator, the National Grid, has put two coal-fired power plants on emergency standby, ordering them to be ready to launch production later on Monday.

“This measure should give the public confidence in Monday’s energy supply. This notification is not confirmation that these units will e used on Monday, but that they will be available,” the National Grid Electricity System Operator (ESO) said in a notice. It added that putting the coal-fired power stations on standby does not mean it expects blackouts, and that the measure is merely a precaution.

The two power units in question, which are owned by Drax energy company, are capable of producing about 1.1 gigawatts of electricity. They operate under winter contingency contracts, meaning they can only go online if ordered to do so by the grid operator.

The standby order comes as temperatures across the UK dropped well below zero on Sunday, prompting yellow weather warnings for snow and ice for much of the country. The weather is expected to remain cold throughout the week, which would force households to boost their heating use, prompting an increase in demand for power and putting pressure on the grid.

The cold snap has also lowered wind power generation in the country, which provided just 3% of the UK’s electricity on Sunday. This left the grid to rely on gas-fired power plants and imports from continental Europe, mainly from France. However, the UK’s gas reserves are already very low, while France’s nuclear power output has been dropping in recent months, sparking fears that the country will soon be unable to meet its own domestic demand.

Britons Struggling To Keep Warm At Home

A quarter of British adults are struggling to keep warm in their homes as they cut back on energy use in the face of soaring costs, according to a new survey by the Office for National Statistics (ONS).

The report, which was published on Thursday, shows that 23% of adults were occasionally, hardly ever, or never able to keep comfortably warm in their living room over the past two weeks.

The ONS data indicated that 63% of adults were using less gas and electricity because of increases in the cost of living, and 96% of those adults were using less heating.

When asked about the measures they were taking to keep warm this winter, 82% of respondents said they were using more clothing or blankets, 46% were only heating rooms they use, 31% were using hot-water bottles or microwave warmers, while 27% were going to bed earlier.

Other measures included cutting back on the use of tumble dryers and washing machines, as well as bathing or showering less.

According to the ONS, many households have already cut back on their energy usage, with 34% of the polled adults saying that reducing heating has negatively affected their health or wellbeing as a result.

The ONS research on the “impact of winter pressure” also found that 16% of adults are worried their food will run out before they have money to buy more, and 19% have cut back on their portion size. The study showed 17% are eating food which is past its use-by date.

The survey of nearly 5,000 British households comes as the nation’s inflation hit 10.7% in November, which is slightly down from the 11.1% in the previous month but still well above the 2% rate targeted by the Bank of England.

Millions Of Britons May Unplug From Power Grid

An earlier media report said:

More than two million households in the UK are unable to pay their gas and electricity bills due to skyrocketing prices and may disconnect from the grid without informing their suppliers, Bill Bullen, the CEO of Utilita Energy, has warned.

The company has surveyed 750 households and found out that many were still using outdated prepayment meters which had no digital connectivity, meaning that a supplier is unable to detect when someone has unplugged.

Bullen noted that this could result in a rise in cold-related illnesses and deaths this winter and urged fellow power utilities to swap old devices for the smart ones.

“Having no choice but to sit at home without heating or light is unacceptable, and our government and the regulator must intervene immediately to stop self-disconnections,” he said, adding that there is no excuse for “legacy” meters to be used unless a customer refuses a digital one.

The UK is grappling with the worst energy crisis in decades, with millions of Britons facing considerably higher electricity prices. The government has allocated £16 billion ($20 billion) to subsidize household bills, but as the winter cold settles in and the demand for heating rises, the aid seems insufficient to cushion the blow.

The National Energy Action warned that 8.4 million Brits from vulnerable social groups risk falling into fuel poverty next year once new electricity tariffs, which will almost double, arise in April 2023.


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