Renewables help fossil fuel’s decline in Europe and US but capacity rises in China

Global demand for coal has fallen this year for the first time in two years as Europe and the US turn their backs on coal-fired power plants in favour of cheap gas and renewable energy.

A report from the International Energy Agency (IEA) found that the world’s appetite for coal declined in 2019 after a two-year resurgence following the steepest ever drop in the use of coal-fired power plants.

The world’s energy watchdog said it is too soon to say whether the global appetite for coal would continue to decline because the fate of the industry rests largely in the hands of China’s policymakers.

Coal remains the world’s single largest source of electricity generation, half of which is produced in China and used to power Chinese power plants.

The IEA’s annual report on the coal industry revealed that the largest ever decline in the use of coal-fired electricity was led by steep cuts in coal demand from Europe and the US.

Western countries are weaning their energy systems off coal power due to abundant cheaper alternatives such as renewable energy and gas, and flatlining energy demand.

Keisuke Sadamori, a director at the IEA, said “this is not the end of coal” because Asia’s demand for electricity is continuing its steep ascent fuelled by strong economic growth and a growing number of homes with access to electricity.

“The region’s share of global coal power generation has climbed from just over 20% in 1990 to almost 80% in 2019, meaning coal’s fate is increasingly tied to decisions made in Asian capitals,” he said.

The IEA expects coal-fired electricity to rise only marginally between 2020 and 2024, at less than 1% a year, which should see its share of the global electricity mix fall to 35% in 2024 from 38% last year.

“Coal is disappearing in many advanced economies, but it remains resilient and is even continuing to grow in developing Asia,” he said.

But the forecasts could deviate widely, depending on China’s energy policy decisions in its next five-year plan, covering 2021 to 2025. The fossil fuel faces rising public opposition due to concerns over air pollution and the climate crisis. Many governments are now considering stronger climate and environmental policies as renewables and gas become cheaper to use. “If China changes – everything changes,” Sadamori said.

India bucked the trend for rising coal use in Asia this year. The IEA said the fast-growing economy is expected to record its first drop in coal-fired power in the last 45 years.

The low coal power generation in India this year was due to “unusually low growth in electricity demand and exceptionally high hydropower output,” according to Sadamori. “It is not at all clear that it will be repeated,” he said.