Global Energy & CO2 Status Report 2019

The latest trends in energy and emissions in 2018
Geco2019

Coal

Global coal demand grew for a second year in 2018, but its role in the global mix continued to decline. Last year's 0.7% increase was significantly slower than the 4.5% annual growth rate seen in the period 2000-10. But while the share of coal in primary energy demand and in electricity generation slowly continues to decrease, it still remains the largest source of electricity and the second-largest source of primary energy.

Annual global change in coal demand, 2011-2018

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Global coal demand increased by 0.7% in 2018, or 40 Mtce, growing for a second year as higher demand in Asia outpaced declines everywhere else.

But the role of coal in the global mix continues to slowly decline. Last year's increase was significantly slower than the 4.5% annual growth rate seen in the last decade (2000-10). Nevertheless, coal remains the largest source of electricity and the second-largest source of primary energy.

Coal's shift to Asia continued in 2018. The growth in demand for coal took place in only some countries in Asia – China, India and a few countries in South and Southeast Asia – primarily because of the increased demand for electricity in these countries, for which coal generally outcompetes natural gas.

In Europe and North America, the decline in coal demand continued, as coal was pushed out by environmental policies, cheaper renewables, and, in the case of the United States, abundant natural gas supplies.

In China, coal consumption rose by 1% last year, although the strong growth in the power sector was partially offset by a drop in the residential and industrial sectors.

Despite the rapid expansion of non-coal sources of electricity, particularly renewables, coal power generation increased by 5.3% in 2018 to meet China's strong power demand growth. In contrast, coal use in residential and industrial sectors is plummeting, replaced mainly by gas and electricity, owing in part to governmental policies to curb air pollution.

Coal demand in selected economies, 2000-2018

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India's 7% economic growth, the highest among large economies, created strong coal demand, especially for electricity generation and steel production as India surpassed Japan to become the world's second-largest steel producer behind China. New solar and wind capacity met less than a third of the growth in electricity demand, while coal supplied the bulk of additional electricity generation. As a result, coal demand in India grew by around 5%.

In Southeast Asia, coal use in Indonesia, Viet Nam, the Philippines and Malaysia increased significantly, driven by the increase in electricity use and the reliance on coal for power generation. With coal generation growing faster than power generation, this is the only region where coal’s share in the power mix increased in 2018.

In Japan and Korea, coal demand posted a small decline in 2018, a change from the substantial growth in demand in 2017. After the significant increase of over 6% in 2017, coal power generation declined slightly by around 1%, as no new coal power capacity was commissioned and utilisation declined slightly in Japan.

In the United States, the retreat of coal continues. Despite the current administration's support and an uptick in electricity demand, the availability of cheap abundant gas, the ongoing expansion of renewables, and an ageing stock of coal-fired plants have all contributed to the continued retirement of coal-fired power generation.

In 2018, coal use declined by over 4% while gas demand grew by over 10%, despite the rise in average gas prices in 2018 from the previous year. This marked the first time since the start of the shale revolution that gas demand has grown at the expense of coal while gas prices increased.

Last year also saw the second-largest coal power capacity closure in a single year since 2015. Overall, US coal consumption declined to levels not seen since the mid-1970s, and the share of coal in the electricity mix dropped below 29%, its lowest share ever.

Change in the share of coal in fossil fuel power generation and change in the gas price in the United States, 2010-2018

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In Europe, coal demand continues to fall, with a drop of 2.6% in 2018. In Germany, coal lost its dominance in 2018 as renewables took over as the top source for power generation. The last hard coal mine in Germany closed last year, ending a very important chapter in German industrial history. In all major European countries – notably France, Spain, Italy and the United Kingdom – coal use declined, mainly owing to higher renewable generation.

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