North America and Europe have been decreasing their reliance on coal for years, but emerging markets like China and India still heavily depend on it, according to analysts at Wells Fargo.
China and India, the top coal consumers globally, have seen a significant increase in consumption while Western economies shift towards renewable energy sources.
Since 2005, coal consumption in North America and Europe has dropped by half, while India’s usage has almost tripled. China, India, and Southeast Asia now make up about 75% of global coal demand, a significant rise from 25% in 1990.
Despite its environmental impact, coal remains a crucial energy source in many parts of the world, especially in supporting economic growth in emerging markets where affordable and reliable fuel sources are essential.
In China, coal makes up 53% of domestic power consumption, although the country is gradually investing in renewable energy sources. Wells Fargo anticipates that renewable energy will take time to dominate the energy mix in China.
While the future points towards cleaner energy sources, Wells Fargo believes that the global energy transition will present investment opportunities that still involve hydrocarbons.
Fossil fuels are expected to remain the primary energy source for many emerging economies, supporting the demand for petroleum and other related sectors.