In line with our estimates in Coal 2023, global coal demand reached a new record of 8.70 billion tonnes (Bt) in 2023, surpassing the previous year’s record by 2.6%. Once again, global coal consumption was led by Asia where more than 80% of coal consumption took place. Conversely, Europe and the United States saw significant declines in coal consumption in 2023.

China, the world’s largest producer, importer, and consumer of coal, was recorded with growth in both power (8%) and non-power (2.5%) use of coal. After severe energy shortages and overall weak economic performance in 2022, electricity demand in China rebounded in 2023 growing by 7%. Despite accelerating deployment of wind and solar, most of this growth was met by coal-fired power generation due to low availability of hydroelectric plants, as coal is the main source of flexibility. Together with moderate growth in metallurgical (met) coal consumption and almost flat demand for non-power uses of thermal coal, China’s coal consumption increased by 276 Mt, reaching a total of 4 883 Mt in 2023. The overall energy consumption growth rate of coal was slightly lower due to a quality deterioration following a leap in the domestic production of coal.

India has been the second largest source of growth in global coal consumption. Its strong economic performance has propelled power demand, and in turn, demand for coal in power generation (+10%). Unlike in many other parts of the world, in India, growth in renewable energy sources is unable to keep pace with the growth in power demand. Moreover, India’s focus on infrastructure has led to more consumption of cement and steel, materials typically produced with coal. As a result, overall coal consumption aggregated to 1 251 Mt in 2023, an increase of 9% compared to the previous year.

Coal consumption in the United States and European Union plunged by 17% and 23% respectively in 2023, representing their most significant annual decline of this century apart from the reduction caused by Covid-19. In the United States, coal consumption decreased because of the retirement of coal plants, decreasing power demand and low gas prices. At the same time, after high coal consumption in 2022, coal demand in Europe returned to a decline, the trend for most of this century.

Beyond that, there were significant regional differences in coal demand. While coal consumption in the ASEAN region mostly increased (+38 Mt), countries like Japan, Korea and Australia saw moderate declines below 10%. 

During the first six months of 2024 we expect global coal consumption to have grown by 1.0% to a total of 4 308 Mt. This is despite consumption of coal being expected to remain unchanged in non-power applications. However, coal consumption in the power sector is expected to have grown by 1.4%. The major contributors to growth within the power sector have been India (+44 Mt) and China (+22 Mt), while the European Union is estimated to exhibit the strongest decline (-2 Mt).

In the second half of 2024, we expect a decline in coal-fired power generation to partially offset gains from the first half, resulting in coal consumption in the power sector of 5 886 Mt for the full year, up 0.5%. Together with stable consumption of coal in non-power applications in the second half of 2024, this would imply a slight increase in global coal consumption. We expect it to reach 8 737 Mt (+0.4%) for the full year 2024.

In our last publication we forecasted coal demand would decrease in 2024 with a moderate decline thereafter. However, this forecast was subject to two important caveats: a recovery of hydropower generation in China after years of low rainfall, and a slowdown in Chinese electricity demand growth. While hydropower has made a strong recovery since April 2024, growth in electricity demand in China has remained robust. In India, the second largest coal consumer, heatwaves and low availability of hydropower in the first half of 2024 have increased the use of coal for power generation and therefore, coal demand. In addition, countries like Viet Nam and the United States have contributed to the adjustment in our forecast for 2024 due to weather incidents and reduced switch to gas.

Following the EU’s major drop in coal consumption in 2023, we expect the European Union to show another significant reduction in 2024. After the difficulties of the 2022 energy crisis, and despite the unprecedented rise in gas prices being largely overcome, the European Union continues to show weak industrial activity and stagnating growth in power demand. Here, the rise of renewables combined with improved performance of nuclear is expected to significantly affect coal demand. We estimate the EU’s coal demand will shrink by 19% down to 287 Mt, making it the first time in IEA records that the coal demand of EU countries falls below 300 Mt. Conversely, we estimate the United States to show no significant changes in coal consumption in 2024 after last year’s big decline. Last year, we forecast a decline, but the growth in power demand is higher than expected and the coal-to-gas switch has reduced.

In China, we estimate that coal-fired power generation increased about 1.5% during the first half of 2024. High precipitation starting in April 2024 increased the availability of hydroelectric power. Given the accelerating deployment of renewables, particularly solar PV, we estimate Chinese coal demand in the power sector will grow by 0.9% in 2024. This would be the lowest growth rate since 2015. However, there is significant uncertainty concerning the availability of hydropower and the growth in power demand, which are key determinants for coal demand in China. Coal is used for many different applications beyond the power sector in China. The iron and steel industry, consuming mostly met coal, is the largest non-power consumer. Production of building materials (mainly cement) and chemicals (mostly through coal gasification) are the main consumers of thermal coal. Overall, we expect non-power demand to remain flat amid declining use in the building sector owing to a dragging real estate market, whereas consumption of coal used for coal gasification is expected to increase.

In India, for the first half of 2024 we estimate the consumption of thermal coal for power generation to have increased almost 10% and met coal consumption in India to have increased by just over 2%. Heat waves have escalated electricity demand while hydropower output has been very low. With this trend likely to decline during the second half of the year, we estimate a coal demand of 1 330 Mt in 2024, up 6% compared to 2023. Weak performance of hydropower and strong growth in power demand are also causing significant growth in coal demand in Viet Nam during 2024 (+12%).

In 2025, we estimate global coal demand to enter a trend reversal after four years of growth, decreasing slightly by 0.3% to a total of 8 714 Mt. A key reason for this is that China, which has traditionally driven coal demand growth, is likely to show its first decline in coal demand since 2016. This combined with ongoing declines in the European Union, United States, Japan, Korea, and other parts of the world, is expected to outweigh continuous growth in India and ASEAN.

Global coal consumption is highly driven by developments in the power sector, which currently accounts for more than two-thirds of global coal use. Within the power sector, coal demand is highly affected by weather. Fluctuations in weather conditions influence both the supply and demand side, particularly relating to the growing capacities of weather-dependent renewable energy sources and ongoing electrification. Additionally, fundamental drivers, such as the production of clean energy technologies like electric vehicles or global trends like AI propelling demand from data centres, will have a significant impact on electricity demand, and in turn, coal demand in the coming years. Indeed, policies to phase out coal and reduced support for coal from institutions like banks or insurers in many parts of the world are going to put further pressure on coal demand. Regionally, the expected decline in coal demand in developed economies and the growth in some emerging countries seems certain, leaving China as the largest source of uncertainty, potentially deciding the global trend for coal demand.

For 2025, we estimate Chinese coal demand in the power sector to decline by 1.1%, since renewables are likely to outgrow power demand. However, this forecast comes with caveats regarding electricity demand, hydropower output and solar PV curtailment rates. If there are no remarkable changes in coal demand for non-power applications, China is estimated to show a reduction by 49 Mt in 2025, contributing the most to the reduction in global coal demand. On 15 July, 2024, China issued the Action Plan for Low-Carbon Coal Power Transformation (2024-2027), which supports three key technologies to reduce CO₂ emissions from coal plants: biomass, ammonia co-firing and Carbon, Capture, Utilisation and Storage. This Plan will affect coal consumption in China from 2025 onwards, but it is too early to make a detailed assessment of the impact, so it is not included in this report.

Further reductions in coal demand are estimated to occur in the United States (-8 Mt or -2.0%) and in the European Union (-9 Mt or -3.0%) given the region’s ongoing efforts to phase out coal.

In India, the rise of renewables will likely not cover the growth in power demand. Therefore, we expect coal plants to capture part of the growth. Given India’s rising demand for coal in industrial applications, we estimate aggregate coal demand to increase by 3.1% to 1 371 Mt in 2025. In 2024, India aims to commission 14 GW of new coal-fired capacity, more than four times the annual average in the last five years. Likewise, coal demand in ASEAN is estimated to grow by 3.0% in 2025.