IEA: Global coal demand to remain stable in 2025 and 2026

Global coal consumption reached a record high of 8.8 billion tonnes in 2024. Nevertheless  stagnation in consumption is expected in 2025 and 2026, according to the International Energy Agency (IEA), with the main drivers shifting from the power sector to industrial use, particularly steelmaking.

According to the IEA’s July report, “Coal 2024 Mid-Year Update,” global coal demand will reach its peak this year. It rose by 1.5% year on year to around 8.8 billion tonnes. This growth was driven mainly by higher consumption in China, India and, to some extent, the United States. Over the next two years, however, demand is expected to remain at roughly the same level, with no further significant increase.

China remains the largest consumer, using around 30% more coal than the rest of the world combined, according to the IEA. But change is also underway there: coal consumption in China is expected to fall slightly in 2025—by less than one percent, but symbolically marking a turning point in the trend. Coal nevertheless remains the backbone of China’s energy sector, and the share of coal-fired power plants in electricity generation exceeds 59%.

In the US, coal consumption is set to rise by 7% in 2025, according to the government’s Energy Information Administration (EIA), driven by higher electricity demand and rising natural gas prices. Coal-fired power plants could therefore temporarily increase their share of the US energy mix, from 16% in 2024 to 17% in 2025. The following year, however, it is expected to fall again to around 15%.

The trend in the European Union remains clearly downward. Coal consumption in the region is set to fall by nearly two percent in 2025, according to the IEA. While coal use for electricity generation temporarily increased in the first half of the year because of fluctuations in renewable energy generation, industrial consumption remains low. Overall coal consumption is expected to continue falling as a result of decarbonisation and the growing competitiveness of other energy sources.

China and India still view coal as a cornerstone of the energy mix

There are also interesting developments on the supply side. Global coal production is expected to reach a record high in 2025, mainly because of increased output in China and India, where coal is still seen as a means of ensuring energy security.

In 2026, however, the IEA expects production to fall slightly, due to high inventories and downward pressure on prices. International coal trade is undergoing a major shift: according to the IEA, global coal trade volumes will fall for two consecutive years for the first time since 2020, an unprecedented development this century.

Although coal is gradually losing its role as a primary source of electricity generation, particularly in developed countries, industrial use is becoming a new driver of demand. Interest in so-called metallurgical coal, which is essential for steel production, is growing significantly. Analysts say this segment could grow to 18.4 billion dollars by 2032, with the strongest demand coming from India, China and Southeast Asia.

The IEA outlook suggests that coal is entering a new phase. A period of rapid growth is giving way to stabilisation, as the nature of demand and the regional distribution of consumption change. While Europe and North America are moving towards a gradual phase-out, Asia continues to rely on coal as a key and secure energy source, and increasingly as a primary raw material for industrial growth.