Coal remains essential to keeping the lights on and economic development

Energy security takes centre stage as global coal demand hits record high in 2025 (Image source: © Future Coal Future Coal

The findings of the International Energy Agency’s (IEA) latest annual coal report reinforce the reality that coal remains a critical pillar of energy security, industrial competitiveness, and economic development.

At a time of increasing volatility and strain across global energy systems, the report underscores the need for pragmatic, inclusive energy policies that recognise coal’s continued role alongside efforts to reduce emissions and advance climate objectives.

Key findings

Key findings from the report include:

• Global coal demand is forecast to increase by 0.5% in 2025, reaching a record 8.85 billion tonnes.
  
• Global coal production is expected to hit a new all-time high of 9.11 billion tonnes in 2025, surpassing the 2024 record.
  
• Total global electricity generation is projected to rise from approximately 31,100 TWh in 2024 to around 32,200 TWh in 2025, representing an increase of about 3.5% year on year.

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Regional coal demand

Regionally, coal demand growth reflects the choices of developing and emerging economies that are prioritising industrialisation, population growth, and energy security, often with greater strategic realism than is currently evident in current European policymaking.

• The IEA emphasises that India's coal consumption is poised for the most significant growth worldwide through 2030, with demand expected to increase by approximately 3% annually, adding over 200 million tonnes (Mt).

• Southeast Asia is projected to see the fastest global growth, with coal demand rising by more than 4% each year amid expanding manufacturing and electricity needs.

• China remains central, representing over half of global coal consumption, with demand highly dependent on electricity growth, renewable adoption, and investments in coal gasification and advanced coal technologies.

This reassessment extends beyond emerging economies.

• In the United States, coal demand is set to increase by 8% in 2025, driven by higher gas prices, slower plant retirements and $625m commitment by the Department of Energy to modernise the coal fleet, reflecting coal’s vital role in energy security and industrial strength.

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A balanced energy mix

“Across the developing world, coal has never been ideological; it has been about delivering power, supporting jobs and enabling economic growth,” says Mike Teke, chairman of FutureCoal and CEO of Seriti Resources Group.

“What we are now seeing is advanced economies beginning to confront the same reality — that reliable and affordable energy cannot be delivered without firm generation alongside renewables.

“A balanced energy mix underpins resilience, development and credible climate outcomes, in line with the Paris Agreement’s original intent.”

Adjusting to the realities

The global financial system is adjusting to these realities.

Over the past year, net-zero finance alliances have dissolved or been paused as investors acknowledge the limitations of exclusionary strategies, with capital increasingly allocated to performance-driven investments focused on reliability, affordability, and measurable outcomes.

“These findings confirm what energy systems around the world are now confronting openly,” said Michelle Manook, chief executive of FutureCoal.

“Coal remains essential to keeping the lights on, industries operating, and economies stable.

“After years of being sidelined for political reasons, energy security, affordability, and reliability are firmly back on the table.

“The question for policymakers and investors is no longer when coal will be phased out, but whether it will be modernised responsibly.

“Sustainable Coal Stewardship aligns energy security, emissions reduction and economic development. The world is moving in this direction, and those who fail to adapt risk being left behind.”