Surge in clean energy will keep coal usage in check through 2027, IEA says

Global coal use has rebounded strongly after plummeting at the height of the pandemic, the IEA’s latest annual coal market report, titled Coal 2024 , said.

The electricity sector in China is particularly important to global coal markets, with one out of every 3 tons of coal consumed worldwide burned at a power plant in the country.

This year, China continued to diversify its power sector, advance the construction of nuclear plants and accelerate its huge expansion of solar PV and wind capacity, the report said.

Solar PV refers to solar photovoltaic technology, which converts sunlight directly into electricity using solar panels made of semiconductor materials such as silicon.

This should help limit increases in coal consumption through 2027, according to the report, though it also highlights a number of key uncertainties in its analysis.

Electricity use in a number of countries, including China, is growing at a strong pace due to a combination of factors, including the electrification of services like transport and heating, rising demand for cooling, and increasing consumption from emerging sectors such as data centers.

Weather patterns could also drive fluctuations in coal consumption in the short term.

According to the report, coal demand in China by 2027 could be up to 140 million tons higher or lower than forecast due to weather-related variability in renewable generation.

“The rapid deployment of clean energy technologies is reshaping the global electricity sector, which accounts for two-thirds of the world’s coal use. As a result, our models show global demand for coal plateauing through 2027 even as electricity consumption rises sharply,” IEA director of energy markets and security Keisuke Sadamori said.

“However, weather factors–particularly in China, the world’s largest coal consumer–will have a major impact on short-term trends for coal demand. The speed at which electricity demand grows will also be very important over the medium term,” Sadamori said.

In advanced nations, coal demand has already peaked and is expected to keep decreasing through 2027.

The pace of decline will continue to depend on the enactment of strong policies, such as those implemented in the European Union, and the availability of alternative power sources, including cheap natural gas in the United States and Canada, the report said.

Meanwhile, demand for coal is still increasing in some emerging economies where electricity demand is rising sharply along with economic and population growth, such as India, Indonesia and Vietnam.

In emerging economies, growth is mainly driven by coal demand from the power sector, although industrial use is also going up.

Coal prices are today 50% higher than the average seen between 2017 and 2019. Coal production reached an all-time high in 2024, though growth is expected to flatten through 2027 as structural changes take hold, the study added.

International trade of coal by volume is also set to reach a record in 2024 of 1.55 billion tons, the study forecasted, while pointing out that looking ahead, global trade volumes are set to shrink, with thermal coal seeing the biggest decline.

Asia remains the center of international coal trade, with all of the largest importing countries in the region, including China, India, Japan, Korea and Vietnam, while the largest exporters include Indonesia and Australia, it added.