Global coal consumption is set to reach a record high this year, rising 1.2% to an all-time peak of 8.94 billion metric tons. According to the International Energy Agency (IEA), the war in the Middle East is a primary driver of this increase.
Disruptions to maritime shipping in the Strait of Hormuz have made it difficult for many nations to secure sufficient oil and natural gas supplies. This has forced countries in Europe, as well as China, Japan, and South Korea, to rely more heavily on coal for electricity generation.
Despite its high pollution levels, coal remains widely available and is often cheaper than other fuel sources.
El Niño and rising electricity demand
The powerful El Niño weather phenomenon is an additional factor this year. The IEA forecasts that it will drive increased coal usage in countries like Vietnam and India, as it boosts demand for air conditioning while simultaneously reducing hydroelectric power output.
Rising coal consumption is a significant setback for climate change mitigation efforts. Burning coal produces more air pollutants and greenhouse gases—which cause global warming—than any other energy source, including natural gas.
Five years ago, at the international climate conference in Glasgow, diplomats from nearly every nation agreed to gradually reduce global coal consumption to curb the rise in global temperatures.
However, many countries have since increased coal burning to meet growing electricity demand. While solar and wind energy are developing rapidly, they are not yet growing fast enough to meet the total surge in energy demand. Consequently, the use of fossil fuels continues to rise.
In recent years, the IEA had projected that global coal consumption would peak in 2030 before beginning to decline. However, the agency has repeatedly had to revise its forecasts due to persistent demand.
War and disruptions in the Strait of Hormuz
A major factor in this year’s consumption growth is the war between the USA, Israel, and Iran, which led Iranian leadership to block maritime traffic through the Strait of Hormuz.
Before the hostilities began, approximately one-fifth of the world’s liquefied natural gas (LNG) trade passed through the strait. A significant portion of this gas was imported by European and Asian countries for power generation and industrial use.
To compensate for gas shortages, many nations are increasing their use of coal-fired power plants or seeking other ways to utilize the resource, which is abundant in many parts of the world.
South Korea expects its coal consumption to rise by approximately 6% this year due to high natural gas prices.
“Although virtually no coal shipments pass through the Strait of Hormuz, the war-related disruptions have still affected coal markets by causing natural gas prices to rise,” the IEA stated.
The USA remains an exception
The USA is an exception, with coal consumption projected to fall by approximately 7% this year following an unexpected increase last year.
The administration of Donald Trump had ordered several aging coal-fired power plants slated for closure to remain open and continue operating. However, this proved insufficient to halt the overall decline in coal demand.
The USA possesses significant reserves of cheap natural gas and has largely remained insulated from disruptions in global gas trade. As a result, many energy companies prefer gas over coal.
At the same time, solar and wind energy are growing rapidly in the USA this year, despite the administration’s negative stance toward renewable energy sources. This is further reducing coal’s share of the energy market.
Outlook for 2027
The IEA cannot yet determine if global coal consumption will continue to rise next year. Much will depend on whether the conflict in the Middle East ends and whether liquefied natural gas supplies are restored.
“If LNG flows through the strait resume and natural gas prices return to pre-war levels, global demand for coal could decline in 2027. But if the strait remains largely closed to LNG shipments, demand for coal could rise even further,” the agency stated.
Disruptions in the Strait of Hormuz have already prompted some countries to seek alternatives to imported oil and gas to bolster their energy security. Some are accelerating plans to build new renewable and nuclear energy capacity.
However, implementing such plans takes time, and during this period, additional demand may fall on coal.
Source: Clarín
