Peak Coal: Still a Question, Not an Answer

Each year, the International Energy Agency publishes its World Energy Outlook, outlining plausible trajectories for the global energy system. Since the signing of the Paris Agreement in 2015, those trajectories have consistently been trying to pinpoint 'peak coal': the moment when global consumption would reach its maximum and begin an irreversible decline. Yet almost a decade later, global coal consumption continues to defy expectations.

Looking back at past IEA projections, a pattern emerges. Coal demand was expected to peak early in the 2020s and then fall: gradually at first, and more steeply as clean technologies scaled. However, actual data tells a different story. The first figure below shows how, World Energy Outlooks released after 2016 (the last release before the Paris agreement), global demand has exceeded projections under the stated policies scenarios. Even in a more recent scenario from 2023, a decline is still anticipated by 2030, though now preceded by a prolonged plateau.

The fundamental reason for this gap lies not in forecasting error, but in global development dynamics. Countries such as China, India, Indonesia, and South Africa are undergoing structural transformations. These economies are expanding their industrial bases, electrifying transport and homes, and lifting millions into higher living standards. All of this drives up electricity demand, often faster than clean generation can be deployed to meet it.

China offers a clear example. Over the past three years, its electricity demand has increased by roughly 20%, reflecting strong industrial activity, infrastructure expansion, and rising household consumption. As the underlying figure shows, solar, wind, and hydro did contribute significantly to meeting this demand. But not enough. Roughly a third of the increase was met by coal-fired generation.

Source: IEA Electricity 2025

Coal’s continued role is not because it is preferred, but because it is accessible, affordable, and scalable, particularly where domestic supply is abundant. For many governments, the priority is to keep grids stable, prices manageable, and development on track. That often means turning to whatever generation capacity is available, even if it’s fossil-based. In India, for example, three-quarters of electricity still comes from coal, and state-owned Coal India is reopening dozens of mines to meet surging demand. Similarly, Indonesia and South Africa are expanding coal capacity, not as a rejection of clean energy, but as a bridge to meet pressing needs.

There are other reinforcing factors like extreme weather events or geopolitical shocks thathave elevated energy security above climate policy in many capitals. When natural gas prices spiked after Russia’s invasion of Ukraine, coal became a fallback as a cheaper, more controllable option to ensure supply. At the same time, the momentum behind ESG divestment has softened, with some financial institutions and governments revising earlier hardline stances.

This does not mean coal is enjoying a renaissance. The long-term drivers of decarbonisation like cost declines in renewables, rising efficiency, public health concerns remain intact. But in the short to medium term, structural realities are slowing the pace of substitution. In many places, coal is not being displaced, but it is being supplemented. The IEA’s latest outlook from 2024 still projects a decline in coal demand by 2030, but has for the first time in years increased the duration of the plateau throughout this decade. Peak coal thus remains possible, especially if clean energy investments continue at scale and storage technologies mature. But it is not guaranteed. And given current trends, the road to that outcome looks more complex than previously assumed.