Coal Demand Expected to Decline by 2026, IEA Report Reveals

By Editor


The International Energy Agency (IEA) released its annual coal market report, signaling a significant shift in global coal demand, projecting a downturn after this year’s record-high consumption. For the first time, the report forecasts a decline in global coal usage over its predicted period until 2026.

According to the report, titled “Coal 2023,” global coal demand is anticipated to surge by 1.4 percent in 2023, surpassing 8.5 billion tonnes, yet with substantial differences among regions.

Advanced economies, notably the European Union and the United States, are set to experience record drops of around 20 percent each in coal consumption.

Meanwhile, emerging economies like India and China are expected to witness an increase of 8 percent and 5 percent, respectively, driven by rising electricity demand and weakened hydropower output.

However, the report projects a 2.3 percent decrease in global coal demand by 2026 compared to 2023 levels, even without more stringent clean energy and climate policies from governments. This decline is attributed to a significant surge in renewable energy capacity being introduced over the next three years.

The report highlights China’s pivotal role, with over half of the global renewable capacity expansion anticipated in the country. Consequently, Chinese coal demand is forecasted to decline in 2024 and maintain a plateau through 2026, heavily influenced by clean energy deployment, weather patterns, and economic shifts.

While this projected decline in coal demand signifies a potential turning point due to its status as the largest energy source and CO2 emitter, the report emphasizes that consumption is expected to remain above 8 billion tonnes through 2026. To align with the Paris Agreement’s emission reduction targets, a much faster decrease in unabated coal usage is imperative, IEA said.

Keisuke Sadamori, IEA’s Director of Energy Markets and Security, emphasized the structural nature of this decline, driven by sustained expansion in clean energy technologies. He underscored the necessity for greater efforts to meet international climate objectives, with the pace of renewables in key Asian economies playing a crucial role.

Furthermore, the report highlights a shift in coal demand and production to Asia. China, India, and Southeast Asia are projected to constitute three-quarters of global consumption in 2023, showcasing a remarkable increase from just one-quarter in 1990. Southeast Asia’s consumption is anticipated to surpass that of the United States and the European Union in 2023, while India and Southeast Asia are expected to witness significant growth in coal usage through 2026.

Simultaneously, the three largest coal producers — China, India, and Indonesia — are set to break production records in 2023, contributing to a new global production high. Together, these countries now account for more than 70 percent of global coal production.

Lastly, the report anticipates a contraction in global coal trade due to declining demand, although 2023 is expected to witness a peak in trade, driven by substantial growth in Asia. Chinese imports are poised to surpass 450 million tonnes, surpassing the previous global record set in 2013, while Indonesia’s exports in 2023 are projected to reach close to 500 million tones — a new global record.


The global coal demand surged to an all-time high in 2022, reaching 8.42 billion tonnes (Bt), marking a significant 4 percent year-on-year increase amidst the ongoing global energy crisis.

The principal driving force behind this surge was Asia, with China leading the increase by 4.6 percent (200 million tonnes), India by 9 percent (97 Mt), and Indonesia, notably driven by nickel smelters, witnessing a staggering 32 percent rise (49 Mt).

However, the United States experienced the most substantial decline of 8 percent (37 Mt) in coal demand, while Europe saw a more moderate increase of 4.3 percent, despite subdued hydropower and nuclear electricity generation.

Looking ahead to 2023, the IEA predicts a decline in coal demand across almost all advanced economies. The European Union and the United States are expected to witness record drops of approximately 20 percent. However, these decreases will be outweighed on a global scale by growth in China (around 5 percent), India (over 8 percent), Indonesia, Vietnam, and the Philippines, collectively representing more than 70 percent of global coal demand. Factors such as rising electricity demand and low hydropower output continue to fuel coal consumption in China and India.

Anticipating a change in trajectory, the IEA forecasts China’s coal consumption to decrease in 2024 and remain steady until 2026, as hydropower output recovers and solar PV and wind electricity generation substantially increase.

Despite commitments to accelerate renewable energy deployment, emerging economies like India and Indonesia are projected to rely on coal to sustain robust economic growth. However, among advanced economies, a resurgence in coal use is not foreseen due to their distinct economic and energy contexts.

In 2022, coal demand spiked to 8.415 billion tonnes, driven by growth in coal-reliant nations like China and India. The surge was propelled by high gas prices and weakened nuclear and hydropower production, resulting in a 4 percent increase. Coal demand for power generation rose by 4 percent to 5.687 billion tonnes, while non-power usage increased by 3.7 percent to 2.728 billion tonnes.

China, dominating more than half of global coal demand, recorded a 4.6 percent rise, reaching 4.520 billion tonnes in 2022, with coal constituting over 60 percent of its power generation. India, the second-largest coal consumer, saw a 9 percent increase to 1.162 billion tonnes.

The IEA estimates a marginal 1.4 percent increase in global coal demand for 2023, hitting a new high of about 8.536 billion tonnes. However, the growth momentum is waning due to tepid economic prospects and diminishing factors that drove coal-fired power generation in 2022.

As global coal demand continues to shift eastward, China, India, and ASEAN countries are set to consume three-quarters of the global demand, a stark contrast from their combined 35 percent share at the start of the century. Strong increases in coal demand are expected in China, India, and Indonesia, while notable declines are anticipated in the European Union and the United States, primarily driven by the electricity sector and subdued industrial activity. Uncertainty looms over data and forecasts for Russia and Ukraine, given the ongoing conflict.


In 2022, electricity production soared by approximately 2.3 percent, reaching a total of 29,074 terawatt-hours (TWh). Despite this growth, coal-fired power generation persisted as the leading source, contributing around 36 percent of the total electricity output.

The surge in coal-fired power generation, growing by approximately 1.4 percent (up by 141 TWh), was propelled by rising electricity demand across Asia. Factors such as soaring gas prices driving increased coal utilization for power generation in select regions and a weakened performance from nuclear power (down by 141 TWh) contributed to this growth. The rise in coal demand from the power sector corresponded to a 4 percent increase (up by 220 million tonnes).

The disparity in growth rates is attributed to a decrease in the calorific value of coal primarily used for power generation, particularly noticeable in China. Contrarily, lower gas prices in 2023, nearing pre-crisis levels, prompted a partial reversal of the gas-to-coal transition in the European Union.

However, China and India’s power mixes are less influenced by global gas price fluctuations. Consequently, the development of renewable energy sources and the surge in electricity demand serve as the primary determinants of coal-fired generation in these regions.

Anticipating a slowdown in global power demand growth to 2 percent in 2023, various factors, including subdued economic growth in mature economies post the energy crisis, contribute to this deceleration. Projections suggest coal-fired power generation to have increased by 1.5 percent (up by 158 TWh), corresponding to a 1.4 percent rise (up by 81 million tonnes) in coal use within the power sector. Notably, renewable energy additions are expected to dominate electricity demand growth, capturing a 5 percent share (equivalent to 443 TWh) in 2023.

The 2022 surge in electricity production marks a continued reliance on coal-fired power generation, although a shifting landscape in 2023 with renewed emphasis on renewables signals a potential evolution in the global energy mix.

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