Coal consumption set to remain near record highs as emerging economies balance renewable growth with energy security needs. ESG BROADCAST shares key takeaways.
Regulatory Extract:
Global coal demand is expected to stay at elevated levels through 2025 and 2026, holding close to the all-time high of 8.8 billion tonnes recorded in 2024, according to the International Energy Agency’s (IEA) Coal Mid-Year Update released in July 2025. While regional fluctuations have emerged, particularly in the first half of this year, the underlying global demand trajectory remains largely flat, shaped primarily by trends in China and India.
The IEA report underscores that the record demand of 2024 was driven by rising consumption in China, India, Indonesia, and other emerging economies, offsetting reductions in coal use across advanced economies such as the EU, North America, and northeast Asia. However, the first half of 2025 saw a partial reversal of this trend as coal demand declined in China and India—attributed to weaker electricity growth and surging renewable generation capacity.
In contrast, coal consumption in the United States grew by approximately 10% in early 2025, buoyed by higher electricity demand and elevated natural gas prices, which pushed power generators toward coal. In the European Union, demand remained mostly stable as an increase in coal use for electricity generation offset industrial declines.
“We expect the world’s coal consumption to remain broadly flat this year and next, in line with our previous forecast,” said Keisuke Sadamori, Director of Energy Markets and Security at the IEA. “Although regional shifts continue to occur, they do not fundamentally change the global picture.” He added that China alone consumes nearly 30% more coal than all other countries combined, reinforcing its outsized influence on global trends.
Looking ahead, the IEA anticipates a marginal global increase in coal use in 2025, followed by a slight drop in 2026, bringing demand just below 2024 levels. The U.S. is expected to post a full-year coal demand increase of 7%, while the EU’s demand is forecast to decline by nearly 2%. China is likely to see a modest decrease of under 1%.
While production is projected to hit a new record in 2025, driven by China and India, global coal trade volumes are set to contract for the first time since 2020—and may continue declining through 2026, marking the first two-year downturn this century. Indonesia is expected to see the sharpest production cuts by volume, while Russian exporters face mounting economic pressures.
Strategic significance lies in the implications for decarbonisation policies and energy security planning. ESG stakeholders will need to closely monitor geopolitical and economic signals as well as policy changes that affect energy transition timelines. Continued reliance on coal in key markets challenges the alignment with net-zero targets, especially where renewables are growing but not yet dominant.
ESG BROADCAST will continue monitoring the updates related to this topic. Stay tuned to be updated on the related policy and pivotal regulatory shift.
