Recent developments have dealt a blow to the idea that global coal demand might soon subside. The drop in coal demand in 2020 was more than offset by a strong rebound in 2021, taking it very close to its all-time high. In advanced economies, where coal use had been declining, demand increased by nearly 10%. In emerging market and developing economies, which account for just over 80% of global coal use today, demand rose by 5%.

Coal production in 2021 struggled to keep pace with one of the largest ever annual increases in demand. Markets have been further upended by Russia’s invasion of Ukraine. Russia was responsible for around half of the coal imports in the European Union in 2021, but that trading relationship ended with the EU ban on Russian coal imports. Meanwhile there have been limited short-term fuel switching opportunities to ease demand pressures. The overall result is that global coal prices reached historic highs in the first-half of 2022.

Key findings

  • Global coal demand rebounded strongly in 2021 to 5 640 million tonnes of coal equivalent (Mtce) as economies recovered from the pandemic and coal-fired power generation reached a historic high in 2021. Both China and India have boosted investment in domestic coal production, but global production struggled to keep pace with demand increases, causing coal prices to surge. Russia – the world’s third-largest coal exporter – and its invasion of Ukraine complicated coal market dynamics and brought additional pressure on prices.
  • The outlook for coal is heavily dependent on the strength of the world’s resolve to address climate change. In the Stated Policies Scenario (STEPS), coal demand declines gradually. In the Announced Pledges Scenario (APS), it declines about 20% below current levels by 2030, and 70% by 2050; coal demand peaks in China in the early 2020s and in India in the late 2020s. In the Net Zero Emissions by 2050 (NZE) Scenario, demand falls 45% by 2030 and 90% by 2050.
  • There is very limited use of carbon capture, utilisation and storage (CCUS) with coal in the STEPS. Around 500 Mtce of coal consumed in 2050 is equipped with CCUS in both the APS and NZE Scenario, corresponding to around 30% of coal demand in the APS and more than 80% in the NZE Scenario in 2050. Unabated coal use drops by 99% between 2021 and 2050 in the NZE Scenario.
  • Following the European Union ban on Russian imports, a short-lived increase in coal consumption in Europe is supplied from a variety of sources including South Africa and Colombia. The Asia Pacific region accounted for more than three-quarters of global coal imports in 2021 and this share is set to rise. Despite efforts to increase domestic production, India becomes the world’s largest coal importer in the STEPS in the mid-2020s, while, by far, China remains the largest producer and consumer. In the APS, coal trade falls by 60% to 2050; in the NZE Scenario, it falls by 90%.
  • Nearly 25 exajoules (EJ) of biomass (equivalent to 830 Mtce) was used for traditional cooking and heating in 2021, mainly in developing economies in Africa and Asia. This falls by 20% to 2030 in the STEPS, which still leaves around 2 billion people without access to clean cooking. In the APS, the traditional use of biomass falls by more than 60% to 2030. In the NZE Scenario, universal access to clean cooking is achieved by 2030 and the traditional use of biomass is fully phased out.
  • Around 35 EJ of modern solid bioenergy was consumed in 2021, mainly for heat, power generation, and conversion into liquid and gaseous biofuels. This increases by 2030 in each scenario, rising by 30% in the STEPS, by 50% in the APS, and by just over 60% in the NZE Scenario.