Peak in Global Coal Usage and Emissions Expected in 2023
Posted 05/12/2023 13:54
A new report from Rystad Energy forecasts a peak in global coal-fired power generation in 2023, marking the beginning of a decline in coal's dominance in the power sector. The shift is driven by the expansion of renewable and low-carbon energy sources, particularly solar and wind. In 2024, new electricity supply from renewables is expected to surpass power demand growth, leading to a marginal decline in coal-fired generation to 10,332 terawatt hours (TWh), down 41 TWh from 2023. The decline signals the start of the renewable energy era in the power market, although coal and natural gas power plants will continue to play a role in providing baseload supply and flexibility.
The global power sector has been heavily reliant on coal for the past 30 years, contributing to about 40% of all carbon dioxide (CO2) emissions. Coal's gradual displacement is expected to reduce associated CO2 emissions as renewables gain traction. While investments in coal capacity have decreased in Europe and North America due to emissions policies and the availability of affordable natural gas, Asia, particularly China, has maintained global coal consumption. However, rapid development of low-carbon power sources is expected to lead to a cleaner energy system.
Asia has been a significant driver of global coal power generation, accounting for over three-quarters of the world's coal power generation due to abundant reserves and the need for quick energy supply to support economic growth. Despite Asia's continued growth, Europe and North America have systematically replaced coal generation with cleaner sources like natural gas and renewables. The surge in demand for coal in Asia in the second half of 2022 due to rising gas and LNG prices is expected to be temporary, as coal will be gradually displaced by renewables.
Asia is anticipated to add more than 40 GW of new coal capacity in 2024, with forecasts suggesting capacity additions until 2027, albeit at a slower pace, before coal power plants begin to decline. The utilization rates of new Asian coal power plants will depend on factors such as electricity demand growth, renewables capacity growth, and the age and health of existing coal infrastructure. Despite the growth in coal generation capacity, it is overshadowed by the rapid increase in new renewable energy capacity, with solar PV and wind installations expected to set new records.
The challenge lies in meeting the growing demand for electricity globally, especially in Asia, where economic activity is expanding. The forecasted growth in electricity demand is expected to reach around 25,400 TWh in 2024, with a significant portion coming from Asia. However, the growth in generation from carbon-free sources, including solar PV, wind, nuclear, hydro, and bioenergy, is expected to outstrip the increase in demand. With renewable power generation having lower operational costs than fossil-fuel plants, clean energy sources are expected to take priority in the merit order, displacing fossil-fueled power generation and potentially reaching peak coal generation and carbon emissions from the power sector in 2023.