While India will be increasingly important to global coal markets, China will remain the key driver, said IEA. The potential for coal demand growth in China is limited but the country's supply-side reforms will be critical factors for coal prices in the coming years. Meanwhile, the European Union, accounting today for just six per cent of global demand, is set to become an increasingly marginal player.
Coal demand is down 4.2 per cent over the last two years, nearly matching the two-year decline in the early 1990s, which remains the biggest recorded drop since the IEA started compiling statistics more than 40 years ago.
By 2022, global coal demand is expected to reach 5,530 Mtce, the same as the average of the last five-year period. This means that coal use will have had a decade-long period of stagnation.
The share of coal in the global energy mix is forecast to decline to 26 per cent in 2022, from 27 per cent in 2016, because of sluggish demand compared with other fuels. Although coal-fired power generation would increase by 1.2 per cent per year through 2016-22, its share of the power mix would fall to just below 36 per cent by 2022, which would be the lowest level since IEA statistics began.
"The energy system is evolving at a rapid pace all around us, with a more diversifying fuel mix, and the cost of technologies going down," said Keisuke Sadamori, the IEA's director for energy markets and security. "But while everything else is changing, global coal demand remains the same."
Criticising the report, the Institute for Energy Economics and Financial Analysis (IEEFA) forecasts coal demand growth in India at less than half that of the new IEA forecast. "Our confidence is materially increased given Energy Minister RK Singh in December 2017 just increased India's renewables target for 2022 to over 200 Gw compared to the previous and already ambitious 175-Gw target set in 2017," said IEEFA. It forecasts Indian thermal coal demand will peak by 2027.
The IEA forecasts coal-fired power generation will grow four per cent per year to 2022 (three per cent annually coal volume growth) despite ongoing share loss to renewables. However, the IEA acknowledges the 2016 growth of more than 2.4 per cent was just a third of the plus 6.8 per cent annual grow rate evident over the previous decade.