Coal is mounting a strong defense against expectations of rapid decline, driven by surging electricity demand, geopolitical disruptions, and structural dependencies, according to the International Energy Agency's mid-year electricity update 2026, published by the Observer Research Foundation's Energy News Monitor on August 27, 2026. Global electricity demand is accelerating significantly. The IEA estimates demand growth of 3.6 percent in 2026 and 3.8 percent in 2027, up from 3 percent in 2025.
Global electricity consumption is projected to reach 30,700 terawatt-hours (TWh) in 2027, up from 28,600 TWh in 2025. The main growth drivers are industrial expansion, greater use of air conditioning and heat pumps, electric vehicles, and data centres. Despite expectations for coal's decline, the fuel is demonstrating remarkable staying power.
Global coal-fired electricity generation is forecast to increase by 1.4 percent in 2026, rising from 10,823 TWh in 2025 to 10,974 TWh, before edging down by less than 1 percent in 2027. Coal-fired power plants will account for nearly one-third of approximately 33,313 TWh of electricity produced worldwide. In absolute terms, coal will generate nearly as much electricity as natural gas and hydropower combined, and 77 percent more power than wind and solar combined.
This 1.4 percent increase in coal generation represents a significant reversal from the IEA's earlier expectations. In February 2026, the agency had projected that coal-fired output would enter a declining trajectory over the 2026-2030 period. The IEA's electricity mid-year update 2025 had forecast that global coal generation would decline by 1.3 percent in 2026.
Instead, coal usage for power generation in 2026 is now forecast to be about 9 percent higher than a forecast made just two years ago. China and India together account for the lion's share of global coal-fired power, and both saw coal output rebound in 2026 after unusual simultaneous declines in 2025. This growth comes even as renewables surge by 8.3 percent in 2026 and 8.5 percent in 2027, revealing a paradox: renewables are ahead in terms of growth, yet coal is still adding more in absolute generation.
China remains the undisputed epicentre of global coal power, generating more than half of the world's coal-fired electricity. Coal-fired generation rose by an estimated 3 percent in the first half of 2026, with full-year growth forecast at around 2 percent. This rebound occurred despite China's solar photovoltaic (PV) generation surging by more than 20 percent in the first half of 2026.
China's national peak load is projected to hit a record 1,600 gigawatts (GW), up 90 GW from 2025. Coal supplied approximately 55 percent of Chinese electricity in 2025, even as the country continued building more wind and solar capacity than the rest of the world combined. Chinese electricity demand is projected to grow by 5.5 percent in 2026.
India's story is equally telling. Electricity demand is forecast to rebound by 7 percent in 2026 after growing at just 1.6 percent in 2025. In the first half of 2026, demand rose by around 6 percent, with May recording an 11 percent year-on-year jump as heatwaves swept the country.
Peak demand hit a record 270.8 GW on May 21. Coal-fired generation rose 3.5 percent in the first half of 2026 and is expected to grow by 3 percent for the full year, followed by a further 1.5 percent in 2027. Coal supplied roughly 71 percent of Indian electricity in 2025 and is expected to meet 68 percent of India's electricity demand by 2026.
The IEA identifies several interconnected reasons for coal's persistence. First, demand is outpacing clean supply growth. Second, geopolitical shocks have tilted fuel economics back toward coal.
The Strait of Hormuz crisis disrupted liquefied natural gas (LNG) shipments, pushing natural gas prices in Asia and Europe to their highest levels since the 2022-2023 energy crisis. The Strait of Hormuz carries about 20 percent of the world's LNG. This triggered widespread gas-to-coal switching.
In India, gas-fired generation fell by about 15 percent in the first half of 2026 due to high prices and disrupted LNG flows. In Europe, coal's decline slowed markedly as higher gas prices improved coal's competitiveness. Energy prices in 2026 are now 30 percent higher than in the first half of 2025, reaching their highest level since the energy crisis of 2022 and 2023.
Third, renewable intermittency and grid constraints create a reliability premium for coal. In China, weak wind conditions and rising curtailment meant that rapid clean capacity additions did not fully translate into lower coal burn. In India, the evening peak net load continues to require thermal backup.
Fourth, existing infrastructure creates path dependence. Both China and India have vast sunk investments in coal mining, rail networks, and thermal power fleets. As a consequence of increased coal generation, global CO2 emissions from electricity generation are expected to rise by 1 percent in 2026 after remaining flat in 2025, with emissions plateauing in 2027.
China is expected to record the largest increase in absolute power-sector emissions in 2026, with emissions rising by around 2 percent because of stronger electricity demand and lower-than-expected wind generation. Source: Observer Research Foundation, Energy News Monitor, Volume XXIII, Issue 5, published August 27, 2026, citing the International Energy Agency's mid-year electricity update 2026.
Source: orfonline.org