Global Coal Consumption Keeps Rising, But Growth Is Slowing

Christoph von Friedeburg

Global coal consumption keeps rising, reaching 3,826.7 million tons of oil equivalent (mtoe) in 2013. (See Figure 1.) This represents a 3-percent increase from the previous year, and it came on the heels of 2.6-percent growth in 2012. But the pace of growth is down from 7.1 percent in 2010 and 5.4 percent in 2011, when economies rebounded from the Great Recession. Consumption rose from 1,074 mtoe in 1950 to 2,261 mtoe in 1988, after which it leveled off at around 2,200–2,300 mtoe in the 1990s before resuming strong growth.

Looking at recent developments by region, energy-hungry emerging economies have been driving the expansion in coal use since the beginning of this century. China used 1,933 mtoe in 2013, and India, 324 mtoe. In contrast, coal consumption in the United States and the European Union (EU) is declining. These countries have been replacing part of their coal consumption with natural gas and renewable energy, although China is taking steps in the same direction. The United States used 455.7 mtoe in 2013. The EU, at 285.4 mtoe, accounts for over 56 percent of the consumption of the Eurasian region; Russia uses 93.5 mtoe. (See Figure 2.)

The International Energy Agency (IEA) projects world coal demand will reach 6,350 mtoe in 2040, but it expects the growth rate to drop to 0.5 percent annually, principally because of weaker demand in countries that belong to the Organisation for Economic Co-operation and Development.

As a consequence of growing demand, worldwide coal exports have increased over the past decade, with the exception of a slight dip during the global downturn. Australia's exports have risen steadily but have recently been overtaken by Indonesia, whose annual sales skyrocketed to more than 200 mtoe. South Africa is effectively a swing producer between the Atlantic and Pacific coal markets; its main competitors for the European market are Russia, Colombia, and the United States. (See Figure 3.)

Global coal prices, for example in northwest Europe, have been increasing since the 1980s — from $30–40 per ton to peaks of up to $148 per ton in 2008, although the prices fluctuate considerably. They slumped during the downturn, and recovered to $121.50 per ton in 2011. Only recently has an oversupply of coal put pressure on prices, dropping the price in 2013 to $81.20 per ton in Europe.

The coal supply is getting "dirtier" as strong demand and lower prices create markets for coal with a lower energy content. In 2012, for instance, the average heat content of coal produced in the United States was about 23.4 megajoules per kilogram (MJ/kg); back in 2005, by comparison, it was 29.17 MJ/kg. This means that more and more coal needs to be burned to generate the same amount of heat for a desired electricity output.

Christoph von Friedeburg is a research fellow at Worldwatch Institute.

The Asia-Pacific region accounted for more than 70 percent of global coal consumption in 2013. Coal remains the dominant fuel there, accounting for more than 50 percent of the region's primary energy consumption. Africa has the second highest share of coal, at just over 20 percent of total energy use. Coal plays only an insignificant role in the Middle East and Latin America, where oil and natural gas and large-scale hydropower, respectively, are the main energy sources. And in North America and Eurasia, coal's share is below 20 percent.

Since domestic coal production cannot meet demand in Asia-Oceania, coal imports in the region as a whole leapt from 45.2 mtoe to 446.4 mtoe from 1980 to 2012. The biggest consumer is China. Coal demand there has almost tripled since 2000, rising from 683.5 mtoe to 1,933.1 mtoe in 2013 — more than half of the global figure. Coal's share in the country's energy mix stood at 67.5 percent in 2013. To meet coal demand, the nation so far has been relying on its domestic production, increasing it by up to 10 percent a year. But analysts doubt that this is sustainable for another decade or longer, as the mining sector is already grappling with infrastructure bottlenecks, and the coal deposits that are the easiest to mine have already been partly exploited. Imported coal is becoming competitive. As a consequence, China's imports have outweighed its exports since 2009. Australia accounted for 38 percent of the imports, Indonesia for 34 percent, and South Africa for 13 percent. At more than 180 mtoe, imports account for around 8 percent of total consumption, and they are gaining a larger share.

To diversify its energy sources, the Chinese government in December 2012 increased its solar energy target from 21 gigawatts (GW) to 40 GW of installed capacity by 2015, with at least 10 GW from distributed solar energy. In fact, in terms of capacity, investments, and exports, China has become a new world leader in renewable energy technology. Furthermore, China is looking into increased imports and domestic extraction of natural gas. In addition, the government intends to reduce the nation's energy intensity — the energy consumption per unit of GDP — by 16 percent by 2015.

In the United States, coal consumption has been in retreat since the start of the domestic shale gas boom. Coal's share in electricity generation declined to 39 percent in 2013, from 52 percent in 1990. (See Figure 4.) In absolute figures, and despite the continued rise in energy demand, U.S. coal consumption decreased from 574.2 mtoe in 2005 to 455.7 mtoe in 2013. During the same period, U.S. coal production decreased from 577.2 to 484.7 mtoe, with projections of a similar figure for 2014. However, imports dropped drastically from 16.8 mtoe to less than 3 mtoe, while exports rose from 40.1 to 58 mtoe. These trends could change in coming years if, as some analysts predict, many of the wells for hydraulic fracturing run dry and natural gas prices rise again or if substantial exports of liquefied natural gas begin.

Coal consumption in the EU has been on a marked downward trend since 1990. From a peak of 500 mtoe in 1987, demand fell to just above 300 mtoe from the late 1990s to 2008. It dipped as low as 265 mtoe in 2009 before inching up to 293.4 mtoe in 2012 and then dropping back to 285.4 mtoe in 2013.

There are two reasons for this trend. First, the EU's overall energy consumption has been nearly flat since 1990. Energy intensity has shrunk to 69 percent of the 1990 value, while GDP is 47 percent higher than in 1990. Second, coal's share in the EU primary energy consumption has shrunk from about 25 percent in 1990 to only 17 percent in 2013. Contributing to the shift have been policies and financial incentives that raised the share provided by renewables to 14.4 percent in 2012, with a further target of 20 percent by 2020.

Solid fuel imports into the 27 members of the EU in 2011 totaled about 144 mtoe, up from 116.1 mtoe in 1995. Thus, dependence on imports has risen from 29.7 percent to...