Hormuz Crisis to Push Global Coal Demand to Record High
The International Energy Agency expects coal demand to increase this year in response to ongoing oil and gas trade constraints stemming from the closure of the Strait of Hormuz. Several countries have been forced to turn back to coal to fill the gap, as oil inventories are depleted and countries gradually expand their renewable energy capacity. In its mid-year update, the IEA predicted that coal…
The International Energy Agency forecasts a record-high demand for coal this year, driven by ongoing restrictions on oil and gas trade following the closure of the Strait of Hormuz. Countries have been compelled to rely on coal to compensate for depleted oil inventories and the expansion of renewable energy capacity. The IEA predicts a 1.2 per cent rise in coal use in 2026, reaching 8.94 billion metric tonnes, despite a slight decrease in global production.
China and India are expected to increase their coal consumption by 1 per cent and 4.2 per cent respectively, reaching 5 billion tonnes and 1.353 billion tonnes. While the Strait of Hormuz does not directly impact coal markets, tighter natural gas supply has led some electricity systems to switch from gas to coal. This surge in coal demand is worrying, as the United Nations has acknowledged the world is likely to exceed its goal of limiting global warming to 1.5C above pre-industrial levels.
Although some countries are investing in renewable energy, it may take years to eliminate fossil fuels for power. Coal consumption in the United States is expected to fall by around 7 per cent this year due to abundant, cheap domestic gas and increased solar and wind energy production, but the country still contributes significantly to global emissions.
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