China continues to build new power plants: 70% of the world’s pipeline depends on Beijing. The rest of the world is holding back. For the IEA, 2023 may have been the year of the coal peak.
Record global demand for coal: more than 8.5 billion tonnes in 2023
The most polluting fossil source, coal, continued its race also in 2023. But with several positive signs compared to the previous year. When production, consumption and electricity generation from coal had reached the highest values ever at a global level thanks to post-Covid rebound. There is no shortage of new coal records in 2023, but there are some forecasts that we may be close to the real turning point, two years after the global commitment to the gradual reduction of coal at COP26 in Glasgow.
Demand at the highest, is record for coal in 2023
Overall coal demand is not positive. This year we have exceeded the threshold of 8.5 billion tonnes, for the first time. The International Energy Agency (IEA) estimates the percentage increase on 2022 at +1.4%, up to 8.54 billion t. Ten years ago it was hitting around 8 billion t and the curve had then started to fall, albeit very slowly. From 2020 onwards there was a new leap, up to the current volumes.
Are we at coal peak?
How will the trajectory continue shortly? Also according to the IEA, it is possible that 2023 was the year of the coal peak. In the latest forecast report, the Agency estimates that global demand for coal will start to fall in 2024 and will remain flat at least until 2026. Year in which, compared to today, it could be 2.6% less.
In any case, China, the world’s largest consumer of coal, will guide this path. The IEA estimates that the combination of Beijing’s slowdown in economic growth next year, resumption of hydropower (brought to its knees by drought) and continued growth of new installed capacity of renewable sources (especially photovoltaics) will lead to a structural decline in demand in the Asian country.
New power plants continue to go online in China
China,, meanwhile, is continuing to invest heavily in the construction of new coal-fired power plants. Only between January and June, Beijing built 1.5 plants a week. And its pipeline continues to stretch, continuing the acceleration that began in the summer of 2022. To date, the total capacity at stake in the Asian country, counting coal-fired power plants under construction, those in permitting or pre-permitting and those only announced, reaches 557 GW. The plants under construction or with the authorization process already completed are almost half, 243 GW.
The rest of the world holds back
On the contrary, in the rest of the world the tendency is to abandon coal. So much so that today 70% of the global pipeline of new plants is located in China alone. In the first half of 2023, Beijing added almost 26 new GWs while the rest of the world stopped less than 9. India, Indonesia, Japan, Pakistan and Vietnam total almost 8.5 GW, of which more than 1/3 in India alone. But Europe is also not immune: in February, the 5th unit of the lignite plant in Ptolemaida, Greece, came into operation.
Finance does not play its part
Even if you invest less in coal, globally 4 out of 10 companies in this business still have plans to expand the extraction of fossil fuels. This was calculated by 40 NGOs led by the German Urgewald that monitor the output from coal and the behavior of global flows of finance. Only 5% of the more than 1,400 global companies surveyed set an official date for the phasing out of coal. And if the companies that bet more on coal are Chinese, the investors who support them are mostly Americans. While the big European banks feed, with their investments, 30% of the production of coal in the USA. That to date remains the 4th world producer.
