Global coal demand is expected to increase by 1.2% this year as higher gas prices and weather-related pressures drive greater use of coal-fired power generation, according to the International Energy Agency (IEA).
The rise to 8.94 billion tonnes reverses the previous expectation of a slight decline.
Coal demand rose by 0.3% to 8.84 billion tonnes in 2025, despite coal-fired generation falling in both China and India for the first time in around 50 years.
The decline in China was driven by rapid renewable energy growth, while an unusually strong monsoon reduced coal-fired generation in India. Global steel production also fell, further limiting coal consumption.
However, these decreases were offset by increased demand elsewhere. US coal consumption rose amid strong electricity demand, higher natural gas prices and policy support, while growth was also recorded in coal-intensive industries including nickel production in Indonesia and coal-to-chemicals in China.
The change in this year’s outlook has been linked partly to the ongoing conflict in the Middle East. Disruptions to Liquified Natural Gas (LNG) shipments through the Strait of Hormuz have pushed up natural gas prices, encouraging greater coal-fired generation in markets with available coal capacity.
Weather conditions are also expected to contribute, with a strong El Niño forecast to increase cooling demand and reduce hydropower generation in parts of Asia.
The outlook for 2027 remains uncertain. If LNG flows recover and gas prices fall, global coal demand could decline by 0.4% to 8.91 billion tonnes. Continued disruption to LNG supplies could instead drive demand higher.
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