Coal Demand Has Risen on Spiking Gas Prices
Higher natural gas costs have prompted power plant operators to switch back to coal-fired generation.
Updated on Sept. 25, 2026 in Oil and Gas
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Should nations increase coal use when natural gas prices rise?
The International Energy Agency has upwardly revised its 2026 global coal demand forecast to 8.94 billion tons. This projection follows a 2025 consumption total of 8.84 billion tons, driven by a strategic shift among operators toward coal-fired power.
Why it matters
Rising natural gas prices, exacerbated by regional supply disruptions, have forced power generators to prioritize coal for operational cost management. This pivot reverses earlier projections that anticipated a decline in coal usage throughout the coming year.
Global coal demand is forecast to grow by 1.2 percent in 2026 to hit 8.94 billion tons. This follows 2025 consumption figures where coal-fired power generation alone accounted for 5.954 billion tons of the 8.84 billion ton total.
The players
International Energy Agency
An autonomous intergovernmental organization that provides global energy market analysis and policy recommendations.
The details
Operators with dual-fuel power generation capacity have pivoted toward coal as supply chain constraints in the Strait of Hormuz inflated natural gas prices. Increased costs for LNG have made coal a more economically viable fuel source for utility-scale electricity generation. This transition is being reinforced by regulatory actions in various nations as they work to ensure reliable energy delivery amidst price instability.
Timeline
2025: Global coal consumption reached 8.84 billion tons.
December 2025: IEA initially projected a decline in 2026 coal demand.
2026: Global coal demand is expected to reach 8.94 billion tons.
Market Landscape
This shift marks a departure from previously anticipated decarbonization trends, following a pattern established during the 2022 European gas supply crisis. Geopolitical instability continues to dictate fuel preference for operators who must prioritize cost stability and energy availability.
Operators in power-intensive industries should anticipate continued volatility in energy procurement budgets as gas-to-coal switching remains a primary hedge against supply disruptions. Monitor regional coal inventory levels and regulatory shifts in major consuming nations like China, Japan, and South Korea.
The takeaway
Energy security strategies are increasingly reverting to coal as a reliable buffer against localized natural gas price spikes. Track 2026 consumption reports to see if the current 1.2 percent growth forecast holds as geopolitical supply chain dynamics evolve.
Further reading
For more on energy market shifts, see our latest coverage in Oil and Gas.
Live Poll
Should nations increase coal use when natural gas prices rise?
