Record Global Coal Demand Projected for 2026
Global coal demand is forecast to climb to an unprecedented 8.94 billion tonnes in 2026, marking a 1.2% increase. This revised projection from the International Energy Agency (IEA) reverses an earlier forecast that anticipated a decline in coal consumption. The surge is primarily driven by China and India, which collectively account for about 70% of the world's total coal usage.
Energy Security Trumps Decarbonization Goals
The IEA's updated outlook highlights a critical tension in the global energy transition: while climate policies aim to reduce fossil fuel dependence, energy security remains paramount, especially when supply chains are disrupted. Recent disruptions to liquefied natural gas (LNG) supplies, particularly linked to the closure of the Strait of Hormuz, have caused gas prices to soar. This has prompted several nations, including those with ambitious climate targets, to increase their reliance on coal.
European countries, Japan, and South Korea, which have been actively reducing coal use, have seen a return to coal-fired power generation as a more affordable alternative to expensive gas. Germany, Europe's largest coal consumer, despite previous efforts to phase out coal and nuclear power, has also experienced this shift. Furthermore, the United States recorded a 10% rise in coal consumption in 2025.
Asia Remains the Core of Coal Consumption
Despite Europe's temporary increase in coal use, its impact on the overall global demand remains limited. Consumption is overwhelmingly concentrated in Asia. According to Energy Institute data from 2025, China consumed 92.2 exajoules (EJ) of coal, representing more than half of global consumption (56%). India followed with 23.1 EJ, approximately 14% of the world's total. Together, these two nations constituted about 70% of global coal consumption in 2025. Indonesia and Vietnam have also seen their coal use double since 2015, underscoring coal's continued significance in rapidly developing Asian economies.
Broader Implications for Energy Policy
This episode underscores that energy policy is fundamentally constrained by the need for reliable and affordable power. The IEA suggests that coal demand in 2027 will heavily depend on geopolitical factors, such as the reopening of crucial shipping routes like the Strait of Hormuz for LNG supplies. Without robust and resilient energy systems and dependable alternative sources, supply shocks can quickly force even climate-conscious markets back to the very fuels they are striving to phase out, emphasizing energy security as a prerequisite for successful decarbonization efforts.