Coal demand stalls internationally

International demand for coal stalled internationally in 2014 for the first time since the 1990s, the International Energy Agency (IEA) said.

The IEA blamed the stall mostly on China, where power demand grew at about half the rate of the country’s gross domestic product, despite the fact that the two are usually linked more closely. China uses about half the world’s coal. Environmental policies are the other big challenge for coal, including the new Paris climate accord.

“The coal industry is facing huge pressures, and the main reason is China — but it is not the only reason,” IEA Executive Director Fatih Birol said in a statement upon release of its medium-term market report for coal.

“The economic transformation in China and environmental policies worldwide — including the recent climate agreement in Paris — will likely continue to constrain global coal demand.”

China’s coal demand is being hurt by a transformation to more of a service economy, along with major growth in low- or zero-carbon energy sources like hydropower and wind.

IEA’s Friday report significant slashed its predictions for coal demand through 2020 by about 500 million tons of coal equivalent due to the various challenges to the industry.

It also said that with policies like the Paris climate accord, it is more important than ever for investments in developing carbon capture and storage for coal.

“Governments and industry must increase their focus on this technology if they are serious about long-term climate goals,” Birol said. “CCS is not just a coal technology. It is not a technology just for power generation. It is an emissions reduction technology that will need to be widely deployed to achieve our low-carbon future.”