Power

Coal demand to jump 3% in 2021: IEA

coal demand for 2021

Next year, coal demand is most likely to rise, as the economic activity starts to recover, relaunching its use for electricity and industrial production. The increase it’s expected by the International Energy Agency to be around 3 per cent.

As coal for metallurgical use has remain somewhat steady along 2020, next year is expected to rise to 7,432 million tons, from prior 7,243 million tons, a 2,6% increase.

The Paris-based agency calculates that, during 2020, overall coal demand fell 5%, as the pandemic-led economic crisis plunged its use, especially for the electricity sector. The fallout is even more dramatic compared to prior years’ levels.

Annual change in coal demand, 1971 – 2020 Source: IEA

Between 2018 and 2020, coal has fallen 7%, or 500 million tons. The push of renewables, competitivity of natural gas and climate change policies are also factors of its decline.

As we reported previously, in the first half of 2020 coal use in the electricity sector fell by almost 30%. Major coal companies went bankrupt, and many other stopped activities in their coal-fired power plants.

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Coal demand will rebounce

For Keisuke Sadamori, IEA’s director of energy markets, “Before the pandemic, we expected a small rebound in coal demand in 2020, but we have since witnessed the largest drop in coal consumption since the Second World War,” he said, quoted by Reuters.

IEA’s report calculates that all over the world, “coal demand has fallen 8%, with its use declining in virtually every sector of every region in the world. In China, coal demand will decline in 2020 by around 5%, despite the gradual recovery since February lockdown. An even greater decline in coal demand is expected in India, where economic growth and power production are slowing significantly.”

Nevertheless, coal’s story for 2021 may be slightly different; as renewables and nuclear are expected to grow significantly, the space for fossil fuel generation will be shrinked. Natural gas, with expected high prices will be hit severely, leaving some room for coal to expand.

“The expected net result globally is that coal-fired generation increases by around 3%, while gas-fired plants increase output by roughly 1%. This would lead to a rise in CO2 emissions from the power sector of around 2% in 2021,” IEA’s report concludes.

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