are we witnessing coal’s last hurrah?

Peak coal could be considered akin to that of mythical folklore – a narrative widely told but never experienced in reality.

Indeed, 2024 was yet another record breaker in terms of demand and production of the black slag, the former reaching a new high of 8.77 billion tonnes (bt), according to the International Energy Agency (IEA) Coal 2024 outlook. While this represents growth of only 1%, a considerable slowdown compared with previous post-pandemic years, it shows coal continues to remain relevant.

New highs were also reached for coal-powered electricity production (10,700 terawatt-hours) and extraction (9bt). China, where 55% of coal power production resides, continues to dominate the picture, as it has done for more than two decades.

There were a few surprises in the data, according to IEA analyst and report coordinator Carlos Fernández Alvarez. The biggest was the volume of imports into China, which surged by 14.4% and was unexpected given the country’s high domestic production, which accounts for half globally and grew by 1% last year.

“First half year of production was a bit weak due to safety inspections in Shanxi, but even after a recovery in the second half of the year, imports remained strong,” says Alvarez.

Coal imports are being funnelled into the most populous country in the world from Australia, Russia and the US – although newly announced reciprocal tariffs are likely to end this arrangement – and Indonesia. This is in response to rising transportation costs within the country, says Dorothy Mei, project manager at the Global Coal Mine Tracker from Global Energy Monitor (GEM).

China’s coal resources are mostly in the western provinces, while its coal consuming centres are in the heavily populated eastern and southern coastline.

“China is trying to import more coal from other countries because it is cheaper than transporting between the two,” she says, adding that Indonesia, which produces high volumes of coal but doesn’t consume a lot domestically, and Russia and Mongolia could ramp up supply to meet China’s increased demand.

In addition, to increase reserves to sure up energy security after several provinces experienced blackouts in 2022, China will continue to expand its domestic coal mining capacity, says Mei.

Since 2021, electricity demand in China has been growing at a faster rate on average than gross domestic product due to electrification of services previously provided by other fuels, such as mobility and industrial heat, and emerging industries such as data centres and AI.

By building a domestic production reserve system by 2027, the one-nation state hopes to stabilise prices and guarantee supplies to power plants, construction of which have increased for four years in a row – despite President Xi Jinping’s 2021 pledge to “strictly control” coal projects.

Predicting future coal demand in the country is getting harder, says Alvarez, due to significant fluctuations in the weather and the impact this has on renewable energy generation, which China has been rapidly rolling out. Such variations could see coal demand up to 140 million tonnes (mt) higher or lower than forecast by 2027 – volumes that can move the market, says Alvarez.

“The highest potential renewable energy generation and the lowest is bigger than the change in the global coal trend,” he explains. “What does this mean? If next year someone asks, will coal demand in China be higher or lower? The answer is: it depends on the weather.”

Alvarez also expected coal demand in the US to decline more than it did. In its latest briefing, the US Energy Information Administration (EIA), upped its forecast for electric power consumption of coal to 386 million short tons in 2025, 4% more than 2024, due to cold weather and higher-than-average natural gas prices.

Last year, coal supplied 16% of US electricity and the EIA expects this to continue in the short term.

Overall, it is thought data centres and electrification could slightly delay the retirement of coal in the US. The sector is also tentatively optimistic that new president Donald Trump will give coal a boost by rolling back some regulations, but so far there have been no concrete plans. Even if there were, experts don’t believe it can significantly shift the dial, as it didn’t during his last term.

What is more, the EIA expects electric power consumption of coal to decrease by just over 20mt next year due to an increase in coal plant retirements. Electricity consumption accounts for well over 90% of total coal use in the US, although some diversification could occur due to new innovative projects potentially coming online.

Examples include projects to produce graphite and hydrogen from coal in West Virginia, a new power plant using supercritical CO₂ in Wyoming, and a modular coal to liquids project. However, the IEA notes the long-term potential of those technologies is uncertain and they are not expected to have any impact before 2027.

Elsewhere, production and demand for coal is clustered in Asia, with India remaining the second-biggest user. The world’s second most populous country, which has large production that is consumed domestically, is expected to be one of several countries where coal demand increases – to just over 100mt through 2027, the IEA predicts – as it looks to fuel its economic expansion.

Other countries with growing coal demand include Indonesia and Vietnam. Collectively, China, India, Bangladesh, Zimbabwe, Indonesia, Kazakhstan, Laos, Turkey, Russia, Pakistan and Vietnam account for 95% of global pre-construction capacity, according to a report by GEM. In the short term, demand increases in these countries are expected to offset falling demand in Japan, Korea, Canada, the EU and the UK, which symbolically shuttered its last-ever coal power plant last year.

Meanwhile, Australia, the fifth-largest coal producer, the second-largest exporter and home to the third-largest reserves of coal in the world, is still resolutely committed to coal. The IEA predicts Australia will become the fourth-largest producer by 2027, surpassing the US and Russia, where producers are struggling amid international sanctions, low profitability and infrastructure bottlenecks.

“Australia still has 263mt under various development stages, so Australian coal will remain in the spotlight,” says Mei.

Just as peak coal remains elusive, so does so-called sustainable coal. Deployment of technologies such as carbon capture utilisation and storage (CCUS) are slow and the IEA notes that carbon dioxide emissions from coal are not expected to have declined in 2024.

Alvarez believes that if the technology was to take off, it would be China that launches it.

“China has the dependency, so they have a good reason, and they also have the resources,” he says.

CEO of global coal trade body FutureCoal, Michelle Manook, says several nations including India, China, Japan and North America, are “increasingly committed to sustainable coal innovation”. She points to several efficiency gains and technology deployments in the pipeline, including a CCUS facility at a China Energy Investment Group site that could sequester 500,000 tonnes of CO₂ annually when operational.

Mei believes widespread CCUS adoption in China or elsewhere is unlikely to happen without an incentive, however, but policy frameworks like the EU’s Carbon Border Adjustment Mechanism, which is still in its infancy, could have an impact.

She adds that currently there is not much data on methane emissions from coal power plants in China or elsewhere, with no country level data reported. “Without the data it is hard to know the scale of emissions,” she says.

Coal demand is projected to begin a sharp decline by 2030. Credit: cbpix via Shutterstock.

Overall, Alvarez says the IEA expects annual global coal production of close to 9bt through 2027. However, despite China’s reliance on coal, including its bid to stockpile the black slag, Alvarez insists that the writing is on the wall and coal will enter a steep decline by 2030, driven by China, as outlined in IEA World Energy Outlook 2024.

“If you remove the magnifying glass and look at the whole trajectory until 2050, as long as coal plants are closed and all the diversification kicks in, you have the decline of coal,” he says.

Mei is not so bullish. She points out that this will also depend on grid infrastructure being upgraded as deployment of renewables is a major technical challenge for China.

“Right now, its [China’s] grid system just cannot host the capacity of wind and solar without huge improvements over the next five years so that energy can be transmitted into provinces – that is when we would see a steep decline in coal by 2030, but this takes time,” she says.

Plans to retire coal plants have certainly slowed: in early 2022, China’s National Energy Administration’s 14th five‐year plan for a modern energy system stated that 30GW of coal power would be retired by 2025, but less than 9GW of power plants have actually been shut down in the past three years.

What’s more, Mei points out that China still has a 1bt of mining capacity in the pipeline, projects that can last up to 100 years.

“I am not optimistic China will reach peak coal as predicted, especially considering its recent emphasis on coal development,” she concludes.

“Peak coal: are we witnessing coal’s last hurrah? ” was originally created and published by Mining Technology, a GlobalData owned brand.

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