According to the latest forecast of the IEA, coal demand will grow at an average rate of 2.3%/year through 2018, compared the actual growth rate of 3.4%/year between 2007 and 2012 and the previous forecast (2012) of 2.6%/year through 2017. While China will account for nearly 60% of new global demand over the next 5 years, government efforts to encourage energy efficiency and diversify electricity generation will dent that growth, slowing the global increase in demand. Despite its moderated demand forecast, the report does not project peak coal in China within the next 5 years, and the nation’s consumption and production will remain comparable to that of the rest of the world combined. Moreover, China has approved a number of coal conversion projects to produce liquid fuels and synthetic natural gas – developments that bear watching as they could significantly reduce the country’s demand for other fossil fuels. For the rest of Asia, coal demand is forecast to stay buoyant over the next 5 years. India and countries in Southeast Asia are increasing consumption, and India will rival China as the top importer in the next 5 years.
Coal use in OECD members Japan and Korea will rise by 1.3%/year and 3.0%/year on average, respectively, during the forecast period, but strength in OECD Asia will be offset by sluggishness elsewhere in the OECD. The European coal fever prompted by the price differential between coal and gas – as well as low CO2 prices – will prove temporary, and European demand will fall more than 6% through 2018. In the United States, environmental regulations will hamper construction of new coal-fired plants and bring the closure of some older ones, while increasing shale gas production will continue to encourage coal-to-gas switching.