No major shift seen for global coal demand in 2025-2026

In China, coal demand is seen to slightly decline this year.

Global coal demand is projected to remain on a plateau this year and next, despite short-term fluctuations across several major markets in the first half of 2025, according to the International Energy Agency (IEA).

“We expect the world’s coal consumption to remain broadly flat this year and next, in line with our previous forecast, although short-term fluctuations remain possible in different regions due to weather conditions and the high degree of economic and geopolitical uncertainty,” said IEA Director of Energy Markets and Security Keisuke Sadamori.

In its latest Coal Mid-Year Update, the IEA reported that global coal demand hit a new all-time high in 2024, increasing by 1.5% to reach 8.8 billion tonnes.

This surge was primarily driven by rising consumption in major coal consumers like China and India, as well as Indonesia. These increases more than compensated for declines observed in advanced economies across Europe, North America, and Northeast Asia.

“However, several of those trends reversed in the first half of 2025 as demand declined in China and India due to weaker growth in electricity consumption and strong increases in power generation from renewable sources,” IEA said.

Meanwhile, coal use grew by around 10% in the US as robust growth in electricity demand combined with higher natural gas prices drove up consumption for power generation. Demand was broadly flat in the EU, with lower consumption by industry offsetting higher demand from electricity generation.

“Despite these short-term variations, the report notes that the underlying structural drivers of the world’s coal use remain broadly unchanged. As a result, it forecasts a slight increase in global coal demand in 2025, followed by a marginal decline in 2026, bringing demand to just below 2024 levels,” IEA said.

Over the whole of 2025, coal demand in China is expected to decline slightly, by less than 1%. The power sector remains the dominant source of demand in Beijing and globally.

Global coal production is expected to rise to a new record in 2025, driven by continued output growth in China and India. By 2026, IEA anticipates a decline in global production, as high stock levels and lower prices begin to weigh on supply.