Global demand for coal is set to increase by 1.4% in 2023, surpassing the 8.5-billion tonnes mark for the first time.
However, the major expansion of renewable energy capacity is expected to start leading to a reduction in global coal consumption over the next three years.
In its latest market report for global coal demand and consumption trends the International Energy Agency (IEA) says it expects coal demand to fall by 2.3% from 2023-2026.
Consumption was already falling sharply in most advanced economies including record drops in the EU and US of about 20% in 2023.
This was offset by increasing coal demand in China — the biggest user of coal in the world — and India, where demand increased by 5% and 8% respectively.
“We have seen declines in global coal demand a few times, but they were brief and caused by extraordinary events such as the collapse of the Soviet Union or the Covid-19 crisis. This time appears different, as the decline is more structural, driven by the formidable and sustained expansion of clean energy technologies,” said Keisuke Sadamori, IEA Director of energy markets and security.
“A turning point for coal is clearly on the horizon — though the pace at which renewables expand in key Asian economies will dictate what happens next, and much greater efforts are needed to meet international climate targets,” Sadamori said.
The IEA predicts an increase in coal demand in Africa over the next three years, driven by an expected improvement in the performance of Eskom.
SA is by far the largest consumer of coal in Africa, accounting for about 85% of total coal demand on the continent, mostly due to state-owned power utility Eskom’s large fleet of coal-fired power stations.
The poor performance of its ageing fleet reduced Eskom’s usage of coal in 2022 and 2023. This, combined with stagnant economic activity, weighed on coal demand.
But, said the IEA, for the period until 2026, this trend would show a U-turn with total coal demand for the continent increasing by about 3% to 193-million tonnes mainly due to better Eskom performance.
Eskom is implementing its generation recovery plan which aims to improve the performance of its power stations.
It has set itself a target of improving the energy availability factor (EAF), which shows total energy generated as a percentage of total installed generation capacity, from where it now stands at about 55% to 65% over the next two years.
The IEA report also noted a decrease in SA’s total coal production in 2023. The industry supplies the local and export market.
“Coal production continues to be affected by a malfunctioning transport system. The national railway operator, Transnet, has recorded multiple severe interruptions in recent years, including derailments, strikes, locomotive shortages, hacking and cable theft,” the IEA said.
As a result of ongoing transport problems SA’s total coal production is estimated to have decreased by 3% to 223-million tonnes this year.
“Up to 2026, we expect SA’s coal production to stabilise at current levels, as we assume moderate gains in [local] coal demand to be offset by a moderate decrease in exports,” said the IEA.
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