Peak coal: are we witnessing coal’s last hurrah?

Peak coal could be considered akin to that of mythical folklore – a narrative widely told but never experienced in reality.

Indeed, 2024 was yet another record breaker in terms of demand and production of the black slag, the former reaching a new high of 8.77 billion tonnes (bt), according to the International Energy Agency (IEA) Coal 2024 outlook. While this represents growth of only 1%, a considerable slowdown compared with previous post-pandemic years, it shows coal continues to remain relevant.

New highs were also reached for coal-powered electricity production (10,700 terawatt-hours) and extraction (9bt). China, where 55% of coal power production resides, continues to dominate the picture, as it has done for more than two decades.

There were a few surprises in the data, according to IEA analyst and report coordinator Carlos Fernández Alvarez. The biggest was the volume of imports into China, which surged by 14.4% and was unexpected given the country’s high domestic production, which accounts for half globally and grew by 1% last year.

“First half year of production was a bit weak due to safety inspections in Shanxi, but even after a recovery in the second half of the year, imports remained strong,” says Alvarez.

Coal imports are being funnelled into the most populous country in the world from Australia, Russia and the US – although newly announced reciprocal tariffs are likely to end this arrangement – and Indonesia. This is in response to rising transportation costs within the country, says Dorothy Mei, project manager at the Global Coal Mine Tracker from Global Energy Monitor (GEM).

China’s coal resources are mostly in the western provinces, while its coal consuming centres are in the heavily populated eastern and southern coastline.

“China is trying to import more coal from other countries because it is cheaper than transporting between the two,” she says, adding that Indonesia, which produces high volumes of coal but doesn’t consume a lot domestically, and Russia and Mongolia could ramp up supply to meet China’s increased demand.

In addition, to increase reserves to sure up energy security after several provinces experienced blackouts in 2022, China will continue to expand its domestic coal mining capacity, says Mei.

Since 2021, electricity demand in China has been growing at a faster rate on average than gross domestic product due to electrification of services previously provided by other fuels, such as mobility and industrial heat, and emerging industries such as data centres and AI.