The International Energy Agency (IEA) expects global coal demand to rise by 1.2% to a record 8.94 billion tonnes in 2026. This increase is attributed to ongoing oil and gas trade constraints resulting from the closure of the Strait of Hormuz, which has forced several countries to revert to coal to meet energy needs as oil inventories are depleted and renewable energy capacity gradually expands.
In its mid-year update, the IEA predicted that higher natural gas prices in 2026, driven by the conflict in the Middle East and trade restrictions via the Strait of Hormuz, would encourage gas-to-coal switching. These disruptions have led to severe global energy challenges, pushing oil and gas prices higher.
The significant reduction in LNG shipments through the Strait of Hormuz has caused energy shortages in some countries, necessitating a shift to alternative sources. Japan, India, Bangladesh, the Philippines, South Korea, Thailand, Taiwan, China, and several European nations have increased their coal usage to compensate. Furthermore, high oil prices have also led to increased coal consumption for chemical production in China.
Coal consumption could see further increases in certain regions if a predicted strong El Niño weather pattern materializes. Higher-than-normal temperatures and reduced hydropower output may drive up power demand across Asia, particularly in major markets like India and Vietnam.
Global coal production reached a record high in 2025 but is anticipated to decrease slightly year over year in 2026. Despite this, the IEA forecasts a 1.2% rise in demand, bringing global consumption to a record 8.94 billion metric tonnes. Demand from China and India, the two largest coal consumers, is expected to increase by 1% and 4.2% respectively, reaching 5 billion tonnes and 1.353 billion tonnes.
The outlook for 2027 remains uncertain due to the unpredictability of trade through the Strait of Hormuz. A recovery in LNG flows next year could lower natural gas prices, potentially leading to a shift back towards gas. However, if energy trade remains restricted, global demand is likely to continue increasing.
The IEA noted, "Although shipping disruptions in the Strait of Hormuz do not directly affect coal markets" and minimal coal shipments pass through it, "tighter natural gas supply has pushed up prices, prompting some electricity systems to switch from gas to coal."
This news is concerning given the UN's acknowledgment that the world is on track to exceed the target of limiting global warming to 1.5°C above pre-industrial levels. At the 2021 COP26 climate summit, countries agreed to "phase down" global coal consumption to support the green transition and uphold climate pledges.
However, since that agreement, several countries have continued to rely on coal for power generation to meet rising electricity demand. While many nations are investing heavily in renewable energy, it is expected to take several years before most countries can eliminate their reliance on fossil fuels for power.
In March, Italy announced plans to postpone the shutdown of its coal-fired power plants by 13 years. Germany is also considering restarting some of its coal plants to meet energy demand, with Chancellor Friedrich Merz stating, "We must supply this country with electricity. I am not prepared to jeopardise the core of our industry simply because we have adopted phase-out plans that have become unrealistic."
Surprisingly, coal consumption in the United States is projected to fall by approximately 7% this year, despite President Trump's efforts to revive the coal sector. The U.S. has been largely insulated from global gas disruptions due to abundant and cheap domestic natural gas. Additionally, significant solar and wind energy capacity has come online in the U.S. this year, further reducing the need for coal.
Nevertheless, the United States made a substantial contribution to the increase in global emissions in 2025. According to the Energy Institute, global energy-related carbon dioxide emissions rose by 1.1% to 35.806 billion tonnes, with the U.S. accounting for about 13.3% of this increase. When considering a broader measure including methane and flaring emissions, the U.S. accounted for roughly one-third of the global rise.
This highlights the detrimental impact of increased coal consumption on global emissions, with coal-related emissions expected to climb significantly this year in line with higher consumption.
