The Future of Coal Consumption: What to Expect in 2024 and Beyond

Coal power generation has been on the rise in the last couple of years, mainly driven by the need to overcome electricity shortages in China and India, and Europe's efforts to replace Russian natural gas. This trend, however, is expected to change as the world shifts towards cleaner energy sources.

BloombergNEF has modeled two scenarios for the future of coal demand. The first scenario is purely economic and assumes that there will be no significant changes in current energy policies. The second scenario is driven by policies aimed at achieving net zero emissions by 2050. Both scenarios predict that coal demand will reach a record high next year before gradually declining.

This decline in coal consumption can be attributed to several factors, including the growing global awareness of the need to reduce greenhouse gas emissions, and the shift towards renewable energy sources such as solar, wind, and hydropower. This trend is expected to continue as countries around the world set ambitious climate targets and increase their investments in clean energy technologies.

While the decline in coal consumption may seem inevitable, there are several wildcards that could affect the pace of its decline. For instance, stronger-than-expected power demand, social backlash against the loss of mining jobs, and lobbying from coal plant owners could all slow down the shift towards cleaner energy sources. In addition, China's clean energy policies and economic support for poorer nations' energy transitions could also have a significant impact on the future of coal demand.

Despite the challenges, BloombergNEF predicts that coal use will persist through the middle of the century even under strong net zero policies. This will require coal plants to be equipped with carbon capture systems to keep emissions at bay. However, such technology has struggled to prove its commercial viability at scale, and massive investments will be needed to make it work.

In summary, while coal consumption may continue to fluctuate in the short-term, the long-term trend is towards a decline in its use as the world moves towards cleaner energy sources. As countries set ambitious climate targets and increase their investments in renewable energy, the demand for coal is expected to fall. However, several wildcards could affect the pace of its decline, and policymakers will need to navigate these challenges to ensure a smooth transition towards a cleaner energy future.