Coal Peaked in 2024: Where is it Headed?

As the United States continues to shut down coal producers in the hope of reducing carbon emissions, overall coal demand reached an all-time high in 2024. This is the culmination of the last three decades, during which time coal consumption has doubled despite repeated efforts to limit usage. With a total demand of 8.77 billion tonnes, coal is far from a 20th-century fuel source.

One of the biggest questions regarding coal is when China will reach its peak coal consumption. As the largest producer and consumer, China has used coal to expand their economy rapidly. However, as the world hopes to reach carbon reduction goals, China must change its coal consumption. Of the 8.77 billion tonnes of coal in demand, China accounts for 4.9 billion. With one country representing more than half of the world’s coal consumption, the steady decreases in the United States and Europe cannot offset overall coal dependence.

It is crucial for India, with its rapid economic and population growth, to find a way to power economic development without resorting to the use of coal. A report from the International Energy Agency shows that while coal demand is expected to remain consistent through 2027, India is expected to see demand increase by over 100 Mt. With government incentives to produce more significant amounts of coal, production was expected to grow by 7% in 2024. After surpassing 9 Bt of coal supply for the first time in 2024, the reduction in usage is an uphill climb.

The overall market for coal has undoubtedly shifted eastward. While China, India, and the ASEAN countries represented 35% of coal demand in 2000, their share skyrocketed to 75% by 2024. Both the import and export of coal are dominated by a few countries. In 2023, almost 60% of total coal imports were done by three countries: China, India, and Japan. Coal exports were even more concentrated, with nearly three-quarters coming from three countries. Coal exporting was led by Indonesia, followed by Australia and Russia. Russia has noticeably shifted its coal exports eastward in response to the European ban on importing Russian coal, meaning that international coal trade is centered on Eastern shipping lanes.

Urgewald, an organization that tracks coal usage globally as a prominent contributor to carbon emissions, released a report in 2024 regarding banks’ continued investment in thermal coal. This report found that commercial banks provided 470 billion USD in loans and underwriting to the thermal coal industry from January 2021 to December 2023. The vast majority (92%) of this capital came from banks in only seven countries: China, the United States, Japan, Canada, India, the United Kingdom, and Indonesia. This report found that the thermal coal industry's financing rates were nowhere near the reductions required to meet climate goals.

I was fortunate to speak with Katrin Ganswindt, Head of Finance Research at Urgewald, who emphasized these banks' role in reducing coal investment. She made it clear that whoever provides the money carries the responsibility. However, regulators charged with overseeing these banks should also be held accountable.

While some good coal policies are already in place, they almost always focus solely on thermal coal. Metallurgical coal, which is primarily used in steel production, has rarely been considered in such policies. However, technologies to produce coal-free steel are already there and must be further developed. The distinction between metallurgical and thermal coal must not be used as a loophole to make both countries and banks accountable for coal production.

Lia Wagner, head of metallurgical coal research at Urgewald, explained that it has become increasingly complex to secure financing for thermal coal. To maintain access to external funding, several coal companies are now expanding their portfolio with metallurgical coal. To hold banks and countries accountable, a straightforward truth must be acknowledged: coal is coal.