Coal demand is up. Thank data centers and industrialization.
Coal demand is up. Thank data centers and industrialization.
Global demand for coal grew by about one percent this year — reaching a new all-time high, according to new analysis from the International Energy Agency. The IEA also expects global demand for the fossil fuel to plateau by 2027.
The thing is, it’s predicted a plateau before, only to see demand for coal continue to grow. That’s even as solar and wind and other renewables become a larger part of our energy supply. But demand for electricity is growing too, so coal is sticking around.
To understand why coal continues to be a major energy source, we have to look across the Pacific Ocean.
“The biggest story is China, because China consumes more coal than the rest of the world combined,” Daniel Cohan, a professor at Rice University.
To power their industrializing economies, China — along with India, Indonesia and a few other nations — keep growing their coal use, while the rest of the world has been moving in the opposite direction.
“Coal use in the U.S. peaked in 2007. It’s fallen by more than half since then. The U.K. has closed its last coal plant. Germany and other countries are planning to close their remaining coal plants,” he said.
But in China especially, coal is sticking around largely because demand for electricity is growing so fast, said Greg Nemet, a professor at the University of Wisconsin, Madison.
“And it’s been driven by very rapid uptake of electric vehicles in China, in addition, rapid uptake of using electricity for industrial heat in China and also for data centers,” he said.
China is also adding solar, wind, and nuclear power to its energy mix at a rapid rate. But as its economy electrifies, Nemet said, “coal is kind of coming along for the ride on the drive to electrification, even though renewables are the ones that are really driving it.”
Some of these trends are happening in the U.S. too. Electricity demand is also growing here, in part, due to the energy needs of new data centers that power artificial intelligence and other cloud computing.
That has some coal plant operators reconsidering their plans for shutting down, said Christine Shearer, a project manager and research analyst at Global Energy Monitor.
“So existing plants saying, ‘Well, maybe we won’t retire next year, you know, maybe this, we can sell some of our power to this data center and generate some revenues that way,'” she said.
What’s tricky about that, Shearer said, is a lot of American coal plants are 40 to 50 years old. “There’s a lot of maintenance costs in trying to keep them online,” she said.
So, depending on how quickly power demand grows, she said utilities could opt for other, cheaper sources, including renewables and natural gas.
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