Global coal demand to hit 8.94 billion tonnes in 2026: China, India account for 70% of consumption

Global coal demand is on track to reach a record high in 2026, as disruptions to LNG supplies push even some of the world’s most climate-conscious economies back towards coal. The International Energy Agency (IEA) now expects global coal demand to rise 1.2% this year to 8.94 billion tonnes, reversing its forecast from nine months ago, when it had projected a decline.

The shift highlights a central tension in the energy transition: climate policies can reduce fossil-fuel dependence, but energy security remains critical when supply disruptions hit power markets.

Europe turns back to coal

Much of the change in the IEA’s outlook has come from Europe, Japan and South Korea, markets that have some of the most ambitious climate targets globally. LNG supply disruptions linked to the closure of the Strait of Hormuz pushed gas prices higher, with the European TTF benchmark reaching €70, making gas-fired generation significantly more expensive.

As gas supplies tightened, utilities turned to coal where available. The reversal illustrates how quickly energy markets can override longer-term decarbonisation strategies when reliable fuel supplies are threatened.

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The development is particularly striking in Europe, where several countries have spent years reducing coal use and investing in renewable energy. Germany, the continent’s largest coal consumer, shut nuclear capacity early and reduced its reliance on coal. Some coal plants that could have been maintained as strategic reserves were instead retired.

The latest disruption has exposed the vulnerability created when backup capacity is removed before alternative sources can consistently replace it.

China and India dominate coal demand

However, Europe’s return to coal has a limited impact on the global demand picture because consumption remains overwhelmingly concentrated in Asia.

Energy Institute data for 2025 show that China consumed 92.2 exajoules (EJ) of coal, accounting for more than half of global consumption. India consumed another 23.1 EJ, or roughly 14% of the global total.

Together, China and India accounted for about 70% of global coal consumption in 2025. Indonesia and Vietnam have also doubled their coal use since 2015, underscoring the continued importance of coal in fast-growing Asian economies.

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Global coal consumption stood at around 166 EJ in 2025, according to the Energy Institute data.

This means that while European coal consumption can rise sharply in response to an energy shock, its impact on the global total remains relatively small compared with developments in China and India.

Energy security becomes the key variable

The US has also shown signs of renewed coal demand, with coal consumption rising 10% in 2025, before the current conflict, according to the data cited.

The broader lesson is that energy policy is ultimately constrained by the need for reliable and affordable power. The latest IEA outlook suggests that coal demand in 2027 will depend heavily on whether the Strait of Hormuz reopens for LNG supplies.

That leaves an unusual variable determining the trajectory of global coal consumption: not only climate policy or renewable capacity, but the availability of a crucial shipping route.

The episode underlines the importance of energy security as a precondition for decarbonisation. Without resilient energy systems and dependable alternatives, supply shocks can push even climate-focused markets back towards the fuels they had sought to phase out.

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