Global coal demand likely to decline 2.3% by 2026: IEA
A recent report by the International Energy Agency (IEA) suggests a looming decline in global demand for coal by 2026.
GS – 01, GS – 03 (Mineral & Energy Resources)
- Record Coal Production: Despite reaching a record-high in production this year, global coal demand is anticipated to decrease by 2026. The report projects a 1.4% increase in global coal demand in 2023, exceeding 8.5 billion tonnes for the first time.
- Regional Disparities: While the European Union and the United States are expected to witness a 20% decline each, India is projected to lead with an 8% increase, and China with a 5% rise in 2023. India’s surge is attributed to the growing need for electricity and reduced hydroelectric power generation.
- Climate Influence: The report anticipates a decline in coal demand based on the changing global climate. The shift from current El Nino conditions to La Nina between 2024 and 2026 is expected to lead to increased hydroelectric power output, contributing to the reduction in coal demand.
- Renewable Energy and Nuclear Generation: A substantial increase in low-cost solar photovoltaic deployment and moderate growth in nuclear generation, particularly in China, India, and the European Union, are foreseen. This, coupled with a changing climate, is expected to push coal-fired generation into a downward trajectory from 2024.
- Global Coal Consumption: Despite the projected decline, the report suggests that global coal consumption will remain above 8 billion tonnes through 2026. Coal remains a crucial energy source for electricity, steel-making, and cement production, contributing significantly to carbon dioxide emissions.
- Structural Decline: The decline in coal demand is considered more structural than previous instances, driven by sustained expansion in clean energy technologies. The IEA Director of Energy Markets and Security emphasizes the transformative nature of this decline and the need for increased efforts to meet international climate targets.
- Renewable Energy Dominance: With the expected decline in global coal demand, India’s emphasis on renewable energy gains prominence. The nation’s investments in solar and wind power can become more central to its energy portfolio which aligns with global environmental goals and positions India as a responsible player in the fight against climate change.
- Cleaner Air and Environment: A reduced reliance on coal can lead to improved air quality and a healthier environment and most of the negative impacts associated with coal combustion, including air pollution and carbon emissions, could witness mitigation, contributing to a sustainable and cleaner future for India.
- Global Leadership in Clean Energy: By actively participating in international efforts to combat climate change, India can lead by example and attract investments in its renewable energy sector which inturn can elevate India’s commitment to clean energy and sustainable practices in its global standing.
- Diversification of Energy Sources: The decline in global coal demand encourages India to diversify its energy sources which could enhance energy security, but also reduce vulnerability to fluctuations in global coal markets.
Challenges and Considerations:
- Employment Concerns: The coal sector in India has been a significant source of employment and may pose challenges related to job losses if there is a decline in coal demand. The need for reskilling the workforce alongside government’s intervention to implement strategic measures to address these employment concerns through alternative avenues is also imperative.
- Economic Transition: India’s economy has been traditionally linked to coal-intensive industries. hence, shifting away from coal requires careful economic planning to manage the transition smoothly. Investments in new sectors and industries should be a priority to offset potential economic disruptions.
- Infrastructure Adaptation: The existing energy infrastructure, including coal-fired power plants, may face challenges in adapting to the changing dynamics. Strategic planning and investments in transitioning infrastructure are crucial to ensure a seamless shift toward cleaner energy sources.
- Energy Security Considerations: While reducing coal dependence is positive for environmental reasons, ensuring a reliable and secure energy supply remains paramount. India needs to balance its transition to renewables with measures that guarantee energy security, especially during peak demand periods.
From an environmental and global leadership perspective, the decline in coal demand aligns with India’s commitment to sustainability and cleaner energy. However, challenges related to employment, economic transition, and energy security need careful consideration. The success of India’s transition away from coal hinges on effective policies, investments in alternative industries, and a strategic approach to navigate potential hurdles.