Workers work on a freight train loaded with coal at the Jiangxi Coal Stockpiling Center in Jiujiang, Jiangxi Province, China.
VCG via Getty Images
In an era of energy transition, coal is considered the most polluting and carbon-intensive of all fossil fuels, yet it continues to power much of the world economy. Ironically, despite the voices against coal use, it is the two biggest renewable energy leaders on the planet, China and India, that are contributing greatly to slowing down the transition away from coal.
According to the World Population Review, China still has more than 1,100 coal-fired power plants in operation, and India has nearly 300. Together, the two countries account for about 60 percent of the world's total coal-fired electricity generation.
According to a survey released by Reuters, China will approve 114 GW of coal-fired power capacity in 2023, up 10% from the previous year. The trend noted last year was worrying, as it marked the fourth consecutive year of increase in approvals of new coal-fired power capacity in China.
Moreover, it appears at odds with both China's broader renewable energy ambitions and President Xi Jinping's 2021 promise to “tightly control” and monitor new coal-fired power capacity.
India also scores poorly. According to Bloomberg, Prime Minister Narendra Modi's government is currently building 28.5 GW of coal-fired power plants, despite claims of going green both before and after returning to power following India's elections.
Additionally, construction permits for over 50 GW are due to be awarded over the next three years, marking the largest increase in new coal-fired power plant construction in India in a decade.
Are things only getting dirtier?
The need to meet surging electricity demand in these two emerging economies means coal is far from being consigned to the energy history books: in fact, the International Energy Agency (IEA) has projected a somewhat bleak outlook for coal-fired power generation to be phased out in the near future.
The agency forecasts that global coal demand will “remain broadly unchanged in both 2024 and 2025” as rising electricity demand in some major economies offsets the effects of a slow recovery in hydropower and the rapid expansion of solar and wind power.
This comes after global coal use is set to grow 2.6% to a record high in 2023, driven by the world's biggest coal consumers, China and India. And with China's electricity demand forecast to grow 6.5% in 2024, the IEA said, “a decline in coal consumption is unlikely” in China.
In India, coal demand growth may slow in the second half of 2024 as weather conditions return to seasonal averages, although economic growth is expected to improve as the heatwave subsides.
However, the IEA added that “India's efforts to ramp up coal production continue, with supply expected to rise by around 10% in 2024.”
A new battle for cargo
The surge in electricity demand is also causing subtle shifts in the direction of coal cargoes from a global supply-side perspective. Keisuke Sadamori, director of energy markets and security at the IEA, points out: “The power sector is the main driver of global coal demand, and electricity consumption is growing very strongly in several major economies.”
“Global coal use would have fallen this year if electricity demand had not grown so sharply.”
Instead, some are stepping into the coal import market vacated by others. For example, the World Bank has noted that European coal imports are currently declining and are set to continue declining next year.
Indeed, monthly coal imports into the European Union and the UK have fallen to their lowest levels in the 21st century, paralleling relative declines in imports from Japan, South Korea and Taiwan since 2017.
But other countries are quickly beginning to consume available coal supplies, as the increased electricity production required is far beyond what renewable energy efforts can keep up with.
With imports to China (500 million tonnes) and India heading towards record highs, Vietnam is set to overtake Taiwan as the world's fifth-largest coal importer in 2024. This is further evidence that some countries, led by Beijing and India, are not willing or able to afford to switch away from coal any time soon.
