Global coal demand is set to reach a record 8.85 billion tons in 2025, up 0.5%, as policy shifts, weather extremes and fuel prices reverse declines in major economies, the International Energy Agency said Wednesday.
Weather and Policy Drive Unexpected Rebound
The world’s appetite for coal is climbing despite years of expectations that demand had peaked, according to the IEA’s annual Coal 2025 report. The agency said consumption rose in regions previously thought to be in long-term decline.
For the third consecutive year, IEA forecasts for a plateau in coal use have been overtaken by events. Shifts in national energy policies, volatile fuel prices and extreme weather altered power generation choices across several major economies.
“Various shifts in policies and weather-related consumption trends have defied expectations,” the agency said in the report, noting that coal continues to serve as a fallback when alternative fuels become costly or unreliable.
India, the world’s second-largest coal consumer, was a notable exception this year. An intense monsoon season reduced coal-fired power generation, leading to a rare annual decline in use.
The IEA said India’s drop marked only the third time in five decades that the country’s coal consumption fell year over year, underscoring how unusual weather patterns can temporarily disrupt long-standing demand growth.
U.S. and Europe See Coal Use Stabilize
In the United States, coal consumption rebounded after more than a decade of steady decline. The IEA attributed the increase to higher natural gas prices and policy measures that slowed the retirement of coal-fired power plants.
Coal-fired electricity generation in the U.S. is expected to rise further during the winter months, the agency said. Utilities are switching from gas to coal as fuel costs surge.
“Surging natural gas prices are prompting utilities to turn back to coal,” the IEA said, describing the shift as a short-term response to market conditions rather than a long-term reversal of energy transition goals.
In the European Union, coal demand slipped only slightly in 2025. That marked a sharp contrast to the double-digit declines seen two years earlier, when gas prices eased and renewable generation expanded.
The smaller drop suggests that coal remains part of Europe’s energy mix during periods of price volatility and grid stress, even as the bloc maintains its climate targets.
China’s Energy Choices Hold Global Sway
China, the world’s largest coal consumer, saw demand remain virtually unchanged from 2024 levels, according to the IEA. Stability in Chinese consumption played a key role in pushing global demand to a record high.
The agency said China’s power demand growth and the pace of its energy transition will determine the direction of global coal use in the coming years. Small shifts in Chinese policy or consumption can have outsized global effects.
Looking ahead, the IEA expects global coal demand to edge lower by 2030, returning to about the same level as in 2023. That year, demand grew 2.6% to 8.7 billion tons, not far below the 8.85 billion tons expected in 2025.
“Should China see faster-than-expected growth in electricity consumption or slower integration of renewables, global coal demand could exceed forecasts,” the agency said.
The IEA added that major uncertainties remain worldwide, including electricity demand growth, policy approaches and the pace at which coal is replaced in power generation and industry.
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