Coal consumption reached an all-time high in 2022, IEA confirms

These are the headline takeaways of the International Energy Agency’s (IEA) latest annual coal market update.

According to the update, coal consumption rose by 3.8% year-on-year in 2022. This was primarily driven by the use of coal in heavy industry in China, India and Southeast Asia. This region is likely to account for 75% of the world’s coal consumption in 2023 by IEA forecasts.

The IEA confirmed that a spike in coal use in Europe at the start of the Russia-Ukraine conflict was temporary. Nations had scrambled to replace Russian fossil fuels with coal from elsewhere but have now improved energy efficiency and firmed up plans to procure alternatives to coal. Coal demand in the EU was down 24% year-on-year in 2022.

Demand was also down year-on-year in the US, by 16%.

But these demand drops in the west were more than offset by a continuation of demand increase in Asia. China and India will account for 70% of global consumption this year, the IEA predicts, while the EU and US collectively will account for some 10%.

“Coal is the largest single source of carbon emissions from the energy sector, and in Europe and the United States, the growth of clean energy has put coal use into structural decline,” said IEA Director of Energy Markets and Security Keisuke Sadamori.

“But demand remains stubbornly high in Asia, even as many of those economies have significantly ramped up renewable energy sources. We need greater policy efforts and investments – backed by stronger international cooperation – to drive a massive surge in clean energy and energy efficiency to reduce coal demand in economies where energy needs are growing fast.”

Coal remains so attractive in Asia, the IEA states, partly because prices have been falling in the first half of 2023. Moreover, coal prices have not been as volatile as oil and gas amid the price crisis.

Policy interventions

Late last year, the IEA published a special paper on ways in which to bring down coal emissions in line with the Paris Agreement as part of an orderly and just energy transition.

It outlined how many countries need short and medium-term finance support to help them switch to clean energy, bringing coal to price parity with clean options. These include Indonesia, Mongolia, China, Viet Nam, India and South Africa.

This finance will likely come from a mix of sources rather than coming solely from Governments. Philanthropists including Michael R Bloomberg are contributing to early coal plant closure finance, as are investors like Citi and BlackRock.

To help maintain energy security as coal declines, the IEA is advocating for a doubling of the rate of energy efficiency improvements this decade. This is an aim which energy ministers from across the world recently pledged to support at this year’s UN climate summit.

The Agency is also contributing to global efforts to forge an agreement to treble the world’s renewable energy capacity this decade. This will help to displace fossil fuels and to meet UN goals on electricity access – but consensus has not yet been reached.

Clean cooking

The coal market update follows on from a separate IEA briefing on emissions and pollution from cooking fuels earlier this week.

According to the agency, one in three people globally are still cooking using unsafe fires or stoves. This exposes them to air pollution, and this issue mainly impacts women in the global south, who cook for an average of five hours a day.

China and Indonesia have halved the number of citizens without access to clean cooking since 2010, partly by providing free gas stoves to those using unsafe charcoal, coal and firewood options. But this progress has been offset by an increase in those lacking cleaner cooking options in Africa. Most African nations will not reach universal cleaner cooking access until the 2050s without intervention.

The IEA concludes that clean cooking fuels are now affordable and could be deployed with “modest investment”. The benefits would more than exceed the cost, when issues like public health and economic development are accounted for.

IEA executive director Fatih Birol said: “This report shows universal clean cooking access could be reached worldwide by 2030 with annual investment of $8bn, which is just a tiny fraction of what the world spends on energy each year.

“Tackling this injustice is affordable and achievable… [it] does not require a technological breakthrough. It comes down to political will from governments, development banks and other entities seeking to eradicate poverty and gender inequality.”

$8bn is less than 1% of what governments spent in 2022 globally on energy affordability.

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