Global coal demand declined 4% in 2020, the biggest drop since World War II. The main driver of the decline was lower electricity demand due to Covid-19 restrictions and the resulting economic downturn, the International Energy Agency’s (IEA) annual Global Energy Review said.
Overall, declines in the power sector accounted for over 40% of lower global demand in 2020. The Covid-19 pandemic also affected industrial output, notably steel and cement, further lowering coal demand.
The largest declines in coal use for electricity generation were in advanced economies, down 15%, which accounts for more than half of coal’s global decline. Coal was particularly squeezed in the power mix by lower electricity demand, increasing output from renewables, and low gas prices. In 2021, coal demand has rebounded strongly, reversing all of the declines in 2020, though with major geographic variations. The decline in 2020 was concentrated in the United States and Europe, and demand in advanced economies is expected to recover only one- quarter of its 2020 drop, curtailed by renewables deployment, lower gas prices and phase-out policies. Meanwhile, China is projected to account for 55% of the 2021 increase, the report explained.
The rise in consumption of fossil fuels is a major climate change concern, as it would lead to higher amount of carbon dioxide being released in the atmosphere. Coal demand is on course to rise 4.5% in 2021, with more than 80% of the growth concentrated in Asia. China alone is projected to account for over 50% of global growth. Coal demand in the United States and the European Union is also rebounding, but is still set to remain well below pre-crisis levels. The power sector accounted for only 50% of the drop in coal-related emissions in 2020. But the rapid increase in coal-fired generation in Asia means the power sector is expected to account for 80% of the rebound in 2021, the IEA annual report said.