The demand for coal globally has fallen by over 50 per cent in this decade, says the latest report by International Energy Agency (IEA), a Paris-based intergovernmental organisation. Demand for metallurgical coal, crucial for the steel industry, is also showing signs of flattening, the report adds.
Both shifts are driven by China.
Releasing its ‘Coal Market Report’ on Wednesday, IEA said the global coal demand had increased slightly in 2025 by 0.5%, though the growth of its demand during 2015–2024 is more than 50% less than during 2005–2014.
The demand for coal showed a rapid growth between 2005–2014, which was followed by a decline since 2015. Both the increase in demand and the decline were driven by China.
China is the world’s biggest coal consumer, representing nearly half of the global coal demand. The US and the EU had reduced coal use consistently over the past two decades. It is only with China’s renewable energy expansion that the global demand began to reduce sharply in the last decade.
The global demand for metallurgical coal has also fallen for the second consecutive year. China accounts for nearly 50% of the global metallurgical coal consumption, as well. China manufactured over 53% of the world’s steel in 2024, according to the World Steel Association.
With the country having shifted towards low-carbon steelmaking and halted new blast furnace construction, the demand has plateaued.
“When China’s coal demand stops growing, the world’s coal market stops growing with it. The latest IEA data suggests this is not a cyclical pause, but a structural shift – driven by record renewable build-out and fundamental changes in heavy industry,” said Christine Shearer, director of the Coal Programme, Global Energy Monitor.
In its report, IEA observes a decline in coal trade globally for the first time since the COVID19 pandemic. If a decline is observed again in 2026, it will be “unprecedented”, IEA says.
This is a clear indication for investors to think about putting their money in coal, says IEA. “For global coal markets, the era of growth is coming to a close, and investors should take note,” Shearer added.
The IEA report and analyses of coal demand patterns suggest that globally, with China’s shift in energy use, both thermal and metallurgical coal demand has plateaued and may possibly peak. The way China transitions its heavy industry, particularly steel industry, will lead to the global demand for metallurgical coal to plateau, peak or decline sharply, feel experts.
They analysed China’s role in global coal demand, past, present and future.
“China’s coal-fired power generation has been falling for more than 18 months, and crude steel production for more than four years. This is the longest decline in record in steel production. It’s also the first time that demand for coal-fired power is falling even as power demand grows rapidly, testimony to the scale of the country’s clean energy boom,” said Lauri Myllyvirta, lead analyst for the global agency Centre for Research on Energy and Clean Air.
“China’s clean energy growth and economic shift away from real estate construction as economic drivers have put a lid on demand and, as long as these trends continue, will keep driving down China’s coal demand,” Myllyvirta further said.
“The central question is whether coal can find another China. That looks increasingly unlikely. Demand is fragmented across multiple markets, financing is shrinking as energy transition unfolds — an entirely different landscape from China’s coal boom years,” said Putra Adhiguna, managing director, Energy Shift Institute, a thinktank looking at Asia’s energy transition.
“Debates often turn to ‘what about Southeast Asia, what about India?’ But coal’s competitors are also moving fast. Clean energy is advancing on cost, energy security, and climate—all at once. Coal exporters and buyers face a narrowing window: adapt now, or double down and discover too late that there is no way back,” Adhiguna observed.
According to IEA data, the global coal demand in 2005 began at 6 billion tonnes and ended at close to 8 billion tonnes in 2014, a growth of about to 2 billion tonnes. In 2015, it began at under 8 billion tonnes and ended in 2024 at 9 billion tonnes, a surge of about 1 billion tonnes.
The Compound Annual Growth Rate (CAGR) for 2005-2014 was 2.81%; for 2015-2024 it was 1.31%.
This was good news for India, claimed an expert, though the country remains heavily dependent on coal power.
“India has made remarkable progress on renewables, with 2025 slated to be a record-breaking year. Coupled with the decline in coal demand, this augurs positive signs for the country’s energy transition. Continuing this trajectory of renewables and storage expansion can help India ensure affordable clean energy for its multiple objectives of development, growth, security, and climate,” said Madhura Joshi, Programme Lead, Global Clean Power Diplomacy, E3G.