IEA (2020), Global Energy Review 2019, IEA, Paris https://www.iea.org/reports/global-energy-review-2019
Global coal demand declined 1.7% in 2019, the third decline in the last five years, more than offsetting the 0.9% growth in 2018. Coal still represents the second-largest source of primary energy in the world, but its share has fallen from over 29% in 2012 to the current 26%, with annual fluctuations due to developments such as economic growth, weather conditions and fuel price changes. Coal continues to be the largest single source of electricity generation with a share of 36%; however 2019 is the first year in which low-carbon generation, i.e. renewables and nuclear, produced more electricity than coal.
The drop in coal demand in 2019 was driven by a decline in coal use for power generation, while uses in industry were broadly stable. Coal power generation declined by 3.1% or 315 TWh globally. It experienced its largest drop ever in Europe (20%), one of its largest in the United States (15%) and its first decline in India since 1973.
Overall, the main trend of coal demand, the shift to Asia, continues as demand declines in Europe and the United States. The European Union and the United States together represented 40% of the global coal demand in 1990 and 20% in 2010, now account for hardly 10%.
China remains the centre of global coal demand. Economic growth and electricity demand growth slowed in 2019, and strong rainfall contributed to hydro output growth of nearly 6%. These factors reined in coal power generation growth to only 1.7%, the third‑lowest growth in the decade. Steel, cement and chemicals production increased significantly, and hence, coal consumption in those sectors. In small industrial and residential sectors, however, the coal-to-gas switch continued. As a result of these different trends, overall coal consumption increased 1%.
In India, a significant slowdown of economic growth in 2019 has dented electricity use. A heavy monsoon increased hydro output significantly and reduced electricity demand for irrigation (agriculture accounts for almost 20% of India’s electricity use). As a result, electricity consumption and coal power generation declined for the first time in decades, driving a decline in coal consumption despite some increase in the industrial sector.
In the European Union, coal power generation experienced the almost perfect storm: a big fall in electricity demand, increasing wind generation, plummeting spot gas prices and higher CO2 prices. In some periods of the year, the cost of the CO2 allowances for coal generators was higher than the fuel plus CO2 costs for natural gas combined cycles. As a result, coal generation almost disappeared from the mix in places with enough gas power capacity, like Spain. Coal power generation in the European Union dropped by 26% or 175 TWh, the largest drop ever both in percentage and absolute values. Coal supplied 15% of the European Union electricity generation and was overtaken by gas. Overall, coal consumption in Europe declined almost 20%.
In the United States, the shift away from coal continued: very low gas prices, expansion of wind and solar, and sluggish electricity demand squeezed coal in the power sector, where more than 90% of coal is consumed. With a fall of around 200 TWh (still a smaller decline than in 2012 and 2015), the United States was the main contributor to the drop in global coal power generation. The share of coal in the United States power mix has dropped to 25%, the lowest share ever.
The only region in which coal demand increased significantly was Southeast Asia, where coal use grew over 10%, pushed mainly by Viet Nam, Indonesia and, to a lesser extent, the Philippines. For instance, in Viet Nam, electricity generation grew by 9%, cement production by 8% and steel production by more than 30%, underpinning the use of coal.