A pandemic-driven drop in coal demand in 2020 This can be attributed to a smaller decrease in global electricity demand than was predicted earlier in the year and to the robust economic recovery in China, where more than half of global coal is consumed. The overall decline in global coal demand in 2020 has turned out to be lower than was estimated in the early months of the year as the pandemic spread and intensified around the world. This in turn significantly affected the use of coal for power generation – a trend that was compounded by low natural gas prices. Measures to slow the transmission of Covid-19, notably in the first half of 2020, resulted in an unusual drop in electricity demand. Both of these factors weighed on non-power coal demand in 2020. In China, switching away from small coal boilers for air quality reasons continues. Except for China, industrial output has been severely subdued by the Covid-19 crisis. Coal’s decline is only slightly sharper in power generation than in industrial applications. In 2020, global coal demand will experience its largest drop since the Second World War, falling 5% from 2019 levels. An electricity-driven decline in coal demand in 2019 Across members of the Association of Southeast Asian Nations (ASEAN), coal use rose 14% in 2019, mainly reflecting demand growth in Viet Nam and, to a lesser extent, in Indonesia. In China, growth in coal-fired power generation, increased steel production and shrinking coal use in small industrial and residential boilers resulted in an overall increase in coal consumption of 1%. Only China and Southeast Asia saw significant growth in coal-fired power generation in 2019, but not enough to offset declines elsewhere. In India, 2019 marked the first year in four decades in which coal-fired power generation declined, reflecting the country’s economic slowdown, above average hydropower output, and expanding wind and solar PV capacity. In the United States, it experienced its largest drop in percentage terms and second-largest in absolute terms. In the European Union, coal-fired power generation saw its largest drop ever, both in relative and absolute terms. This spurred significant coal-to-gas switching in the power sector. In the United States, where natual gas is generally cheap, prices in 2019 were 30% lower on average than the previous year. Expanding LNG supply put pressure on natural gas prices, which fell by two‑thirds in Europe from January to September 2019.
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Global electricity generation grew 1% in 2019, the lowest rate since 2009 and almost one-third of the average annual increase since then.Įlectricity generated from renewables increased in 2019, squeezing coal and gas generation. Two trends affected coal-fired power generation in 2019: weak electricity demand growth and low natural gas prices. Power generation from coal declined 3%, and coal use in industry increased only slightly. In 2019, global coal demand decreased 1.8% after two years of growth.