September 23, 2026 - Global coal demand is going to set another record this year, according to the International Energy Agency (IEA). Growing energy demand and increased reliance on coal in the wake of the ongoing conflict in the Middle East will increase global demand by 1.2% this year compared to last. Coal demand will reach an all-time high of 8.94 billion metric tons, reversing earlier forecasts that predicted a decline. Global demand has now nearly doubled since 2000.

This is not the first time the IEA has predicted a decline and had to reverse course; it’s becoming an annual tradition. Again and again, modelers have discounted geopolitical risk and consequently overlooked coal’s irreplaceability in an era of reemerging prioritization of energy security and affordability. It might be time for a new base case.   

Security First

The jump in coal demand this year is tied tightly to the disruption of oil and gas flows through the Strait of Hormuz and ongoing price shocks. From Europe to China, Japan and Korea, countries are using more coal for electricity generation to reduce reliance on far pricier fuels. There’s also sound reason to believe the pivot to coal may have staying power.   

Patrick Pouyanné, CEO of French oil and gas giant TotalEnergies, recently warned that emerging nations are “losing trust” in liquified natural gas following two successive price shocks. The result, he said, is simple: “Back to coal.”

Countries are also finding other uses for coal to offset tight oil and gas supply. China has been using more coal instead of oil to produce chemicals and even diesel. India is following suit, looking for more secure and affordable inputs for fertilizer production, among other end uses. New Delhi launched a nearly $4 billion coal gasification effort in May.

Surging Power Demand

There’s also a global boom in power demand that can’t reliably or affordably be met by renewables alone.

Global power demand reached a record high in 2025, growing at more than twice the rate of overall energy demand. And while the story in the U.S. is AI and data centers, and electric vehicles in Europe, globally the great driver of power demand is air conditioning.

Since 2015, global electricity consumption for air conditioning has increased by 50%—an increase equal to the total annual electricity consumption of the entire European Union. And the cooling boom is in its early innings.

The IEA projects that electricity demand for cooling will grow by an amount equal to the combined annual electricity consumption of Japan and South Korea by 2035. Meeting that demand – much less what is coming from AI, EVs and industrialization – will require an immense expansion of global power supply. It will be all but impossible to meet it without leaning on coal.

Coal remains the undisputed leader in global electricity generation and the IEA expects coal plants to produce nearly one-third of global generation in 2026. While new coal capacity is being added – notably in China and India – installed capacity will be key.

As we just saw in the U.S., interest rates are climbing again with the Federal Reserve’s recent 25 basis point rate hike, it’s first hike since 2023. Higher rates are going to raise borrowing costs and squeeze infrastructure developers—developers of pipelines, transmission lines and new renewable projects or gas plants. Increased competition for capital could very well leave the energy sector high and dry. Projections of new capacity additions may fall far short while demand continues to soar.

Pick a single reason, or all of them, there’s very good reason to be bullish about coal. Instead of once again predicting a decline in demand for next year, the IEA modelers might want to assume growth. It’s been the far safer bet.