Coal power surged to a record high in 2021, pushing up emissions

14 January 2022

The amount of electricity generated worldwide from coal reached a new annual record in 2021, undermining efforts to reduce greenhouse gas emissions and potentially putting global coal demand on course for an all-time high next year, the International Energy Agency (IEA) said in its Coal 2021 report.

After falling in 2019 and 2020, global power generation from coal is expected to jump by 9% in 2021 to an all-time high of 10,350 TWh, according to the IEA. The rebound is being driven by this year’s rapid economic recovery, which has pushed up electricity demand. The steep rise in natural gas prices has also increased demand for coal power by making it more cost-competitive.

Overall coal demand worldwide—including uses beyond power generation, such as cement and steel production—is forecast to grow by 6% in 2021. 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, threatening the GHG emission reduction targets adopted in the European Union and other countries.

The bulk of the increase in 2021 is from three countries: China, India and the United States. Coal consumption increased by 159 Mt (+4%) in China, by 125 Mt (+13%) in India, and by 74 Mt (+17%) in the United States. Coal consumption has also recovered in other regions, including the European Union (+45 Mt) and Southeast Asia (+14 Mt). Although coal demand is anticipated to grow slower after the strong recovery of 2021, it surpasses the record of 2013 in 2022 and rises to an all-time high of 8,031 Mt in 2024.

The growth of coal consumption in 2021 has put the world further away from reaching the “net zero” emission goals by 2050. “Coal is the single largest source of global carbon emissions, and this year’s historically high level of coal power generation is a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero,” said IEA Executive Director Fatih Birol. “Without strong and immediate actions by governments to tackle coal emissions—in a way that is fair, affordable and secure for those affected—we will have little chance, if any at all, of limiting global warming to 1.5°C.”

In the United States, economy-wide GHG emissions increased by 6.2% in 2021, though emissions remained 5% below 2019 levels, according to estimates by Rhodium Group. Energy-related CO₂ emissions are expected to rise further by 2.2% in 2023, reaching 4.97 billion tonnes. This is still down from a peak of 6.02 billion that was reached in 2007. From 2007 through 2020, emissions showed a declining trend, driven mainly by a switch from coal to gas-based generation.

Between 2007 and 2023, US emissions will have fallen at an average rate of just 65 million tonnes per year, according to EIA predictions. To achieve the US net zero target, energy-related emissions would then need to fall by 184 million tonnes per year between 2023 and 2050, almost three times as fast.

Coal prices have been on a rollercoaster ride over the past two years, noted the IEA. After falling to USD 50 per tonne in the second quarter of 2020, they started to climb towards the end of the year, pushed by the rebound in economic activity and rising coal demand in China. In 2021, prices were lifted further by demand outstripping supply in China 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.

Source: IEA