Coal power generation hits record high this year


Coal-fired power generation is set to reach an all-time high in 2021, according to a report from the International Energy Agency (IEA).

With electricity demand outpacing low-carbon supply, and with steeply rising natural gas prices, global coal power generation is on track to increase by 9% this year to 10 350 terawatt-hours (Twh).

However, coal’s share of the global power mix in 2021 is expected to be 36% – 5 percentage points below its 2007 peak. In the United States and the European Union, coal power generation is forecast to increase by almost 20% this year but will not reach 2019 levels. Coal use in those two markets is expected to go back into decline next year amid slow electricity demand growth and rapid expansion of renewable power.

By contrast, estimated growth of 12% in India and 9% in China will push coal power generation to record levels in both countries. Taking into account the rebound in global industrial output, overall coal demand worldwide – including uses beyond power generation, such as cement and steel production – is expected to grow by 6% in 2021, bringing it close to the record levels it reached in 2013 and 2014, the IEA’s report, Coal 2021, noted.

That increase will not take it above the record levels it reached in 2013 and 2014. But, depending on weather patterns and economic growth, overall coal demand could reach new all-time highs as soon as 2022 and remain at that level for the following two years.

coal prices

Coal prices have been on a rollercoaster ride over the past two years. After falling to USD 50 per tonne in the second quarter of 2020, they started to climb towards the end of the year, with supply cutbacks balancing the market before rebounds in economic activity and coal demand in China started pushing prices up.

In 2021, prices were lifted further by demand outstripping supply in China – the global coal price setter – as well as by supply disruptions and higher natural gas prices globally.

Coal prices reached all-time highs in early October 2021, with imported thermal coal in Europe, for example, hitting USD 298 per tonne. Quick policy intervention by the Chinese government to balance the market had a rapid effect on prices. As of mid-December, European prices were back below USD 150 per tonne.