Global coal demand climbed to a new record in 2025, defying long-standing expectations of a rapid decline, as sustained consumption in China and India continued to support the market, according to recent assessments from the International Energy Agency (IEA) highlighted by OilPrice.
The latest data shows global coal consumption reached approximately 8.85 billion tonnes, representing a year-on-year increase of about 0.5%. The incremental growth highlights coal’s continued importance in the global energy mix, despite growing investments in renewable energy and cleaner power alternatives worldwide.
China’s Coal Consumption Trends Influence Global Demand
China remains the world’s largest contributor to global coal demand, consuming more coal than all other countries combined. Coal continues to play a central role in China’s electricity generation system, particularly during periods of peak demand or when renewable power output is insufficient.
Although China has significantly expanded renewable energy capacity—including solar, wind, and hydropower—coal-fired power plants still provide critical backup to ensure grid stability. The IEA expects China’s coal demand to remain broadly stable over the next few years, with only a modest decline projected toward the end of the decade rather than a sharp contraction.
Developed Markets See Gradual Declines
Coal consumption across advanced economies such as Europe and the United States has been on a downward trajectory over the past decade, although the pace of decline varies by region. Volatile natural gas prices, supply disruptions, and energy security concerns have forced some power systems to rely on coal for longer than anticipated.
During periods of high gas prices or supply shortages, coal has continued to serve as a fallback option for electricity generation, slowing the overall decline in consumption.
India Poised to Drive Future Growth
India is expected to be the largest contributor to incremental global coal demand growth through 2030. Rising electricity consumption, population growth, urbanisation, and industrial expansion continue to support coal use across the country.
Coal remains the backbone of India’s power sector, generating the majority of electricity supply. In addition, coal-intensive industries such as steel and cement continue to expand, reinforcing coal’s position in the national energy mix, even as renewable capacity grows rapidly.
Southeast Asia Adds to Coal Consumption
Beyond China and India, Southeast Asia is also contributing to rising coal demand. Several countries in the region are expanding coal-fired power generation to support economic growth and meet increasing electricity needs.
Limited access to affordable alternatives and concerns over energy reliability have kept coal central to power generation strategies, particularly for baseload electricity supply.
Energy Transition Proves Slower Than Expected
The continued rise in global coal demand underscores the challenges facing the global energy transition. While many governments have pledged to reduce carbon emissions, considerations around affordability, reliability, and energy security have slowed the pace of coal replacement.
According to the IEA, forecasts predicting a rapid global decline in coal use have repeatedly been pushed back, largely due to strong demand growth in developing economies and continued reliance on coal for industrial processes.
Outlook for Global Coal Demand
The IEA expects global coal demand to peak later this decade before gradually declining. However, consumption levels are projected to remain above pre-2023 levels, indicating that coal will continue to play a significant role in global energy markets for years to come.
China and India are set to remain the dominant forces shaping coal pricing, trade flows, and investment decisions, as the world continues to navigate the complex balance between energy security and climate commitments.
