Historic rebound in coal-fired energy for 2021. Climate objectives under threat.

The amount of electricity produced globally from coal hits a new annual record in 2021, undermining efforts to reduce greenhouse gas emissions and potentially putting global demand for coal on the path to a low. all-time high next year, the International Energy Agency said in its latest annual market report. After falling in 2019 and 2020, global production of electricity from coal is expected to jump 9% in 2021 to a record level of 10,350 terawatt hours, according to the 2021 Coal IEA report published today.

The rebound is being boosted by this year's rapid economic recovery, which has driven demand for electricity much faster than low-carbon supplies can keep up. The sharp rise in natural gas prices has also increased the demand for coal-fired power by making it more financially competitive.

Aggregate demand for coal around the world - including for uses other than power generation, such as cement and steel production - is expected to increase by 6% in 2021.

This increase will not be above the record levels reached in 2013 and 2014. But, depending on weather conditions and economic growth, aggregate demand for coal could reach new historic highs as early as 2022 and remain at that level. for the next two years, emphasizing the need for swift and strong political action.

“Coal is the largest source of global carbon emissions, and the historically high level of coal-fired power generation this year is a worrying sign of how far the world is in its efforts to reduce emissions to net zero , ”said fatih Birol, executive director of the IEA. "Without strong and immediate action by governments to tackle coal emissions - in a way that is fair, affordable and safe for those affected - we will have little or no chance of limiting global warming to 1 , 5 ° C. "

In China, where more than half of the world's coal-fired electricity production is found, coal-fired power is expected to grow 9% in 2021 despite decelerating at the end of the year. In India, production is expected to grow by 12%. This would establish new highs in both countries, even if they are making massive amounts of solar and wind capacity. While coal-fired power generation is expected to increase by almost 20% this year in the United States and the European Union, it will not exceed 2019 levels. Coal use in these two markets is expected to pick up again. decline next year amid weak growth in demand for electricity and rapid expansion of renewable energy.

“The pledges to achieve net zero emissions made by many countries, including China and India, should have very strong implications for coal - but these are not yet visible in our short-term forecast, reflecting the major gap between ambition and action, ” said Keisuke Sadamori, director of energy markets and security at the IEA.

“Asia dominates the global coal market, with China and India accounting for two-thirds of global demand. These two economies - dependent on coal and with a combined population of nearly 3 billion people - hold the key to future demand for coal. "

In 2020, global demand for coal fell 4.4%, the biggest drop in decades; much lower than the annual drop initially expected at the height of containments at the start of the pandemic, the report said. Regional disparities were significant. Demand for coal grew 1% for the full year in China, where the economy began to recover much earlier than elsewhere, while it fell nearly 20% in the United States. United States and the European Union, and 8% in India and South Africa.

Coal prices have seen big roller coaster swings over the past two years. After falling to $ 50 per tonne in the second quarter of 2020, they started to climb towards the end of the year, with reductions in supply balancing the market before rebounds in economic activity and demand for coal. in China do start to drive up prices. In 2021, prices rose further due to demand exceeding supply in China - the global regulator of coal prices - as well as supply disruptions and higher prices for natural gas globally.

Coal prices hit historic highs in early October 2021, with thermal coal imported into Europe, for example, reaching $ 298 per tonne. The Chinese government's rapid political intervention to balance the market had a rapid effect on prices.

By mid-December, European prices were back below $ 150 per tonne.