IEA Forecasts Record 8.94 Billion Tonnes of Coal Demand in 2026
Asia drives record coal consumption as gas supply disruptions push power plants away from LNG.
Key points
- IEA forecasts global coal demand will reach a record 8.94 billion tonnes in 2026, up 1.2%.
- Asia drives growth as gas supply disruptions push power plants to switch from LNG to coal.
- US coal demand is expected to fall 7% in 2026 due to cheap domestic gas and new renewables.
Global coal demand is projected to hit an all-time high of 8.94 billion tonnes in 2026, a 1.2% increase over the previous year, according to the International Energy Agency. The IEA attributes this surge primarily to rising natural gas prices caused by reduced liquefied natural gas flows through the Strait of Hormuz, which is forcing power generators to revert to coal.
This shift is most pronounced across Asia and parts of Europe. Nations including Japan, India, Bangladesh, the Philippines, South Korea, Thailand, Taiwan, and China are increasing coal usage for electricity generation. The IEA notes that while coal itself is not transported via the Strait of Hormuz, the resulting scarcity of natural gas has altered the competitive balance between the two fuels.
Asian markets drive consumption growth
China accounts for the largest share of this increase, with demand expected to rise by 1% to approximately 5 billion tonnes. India is forecast to see a sharper 4.2% jump in consumption, reaching 1.353 billion tonnes. In China, coal usage in chemical production has also climbed due to high oil prices, further solidifying its role in the industrial sector.
A strong El Niño event could exacerbate these trends. Higher temperatures are expected to boost electricity demand in Asia, while reduced rainfall may lower hydropower output. This combination will likely intensify the reliance on thermal generation, particularly in major markets such as India and Vietnam, as reported by UA.NEWS.
US demand declines on gas availability
In contrast, the United States is expected to see a 7% decrease in coal demand in 2026. This decline follows an unexpected increase in the prior year and is driven by the availability of cheap domestic natural gas. Additionally, the commissioning of significant new solar and wind generation capacity is displacing coal-fired output in the US power mix.
Future outlook depends on gas flows
The energy balance in 2027 will hinge on the restoration of liquefied natural gas flows through the Strait of Hormuz. If supply recovers, natural gas prices may fall, potentially reversing the current trend of switching back to coal. This dynamic will determine the long-term competitiveness of coal versus gas in global power generation.
