According to the latest "Quarterly Report on Global Coal Markets" released by the International Energy Agency (IEA) on July 27, global coal consumption in the second quarter of 2026 fell sharply by 4.2% year-on-year, the largest quarterly decline since 2020. China, the world's largest coal consumer, reduced coal use by 6.5% in the quarter, accounting for over 70% of the global decline.
China's coal power capacity growth slows, renewable energy substitution becomes evident
Data from China's National Energy Administration shows that by the end of June 2026, the country's installed renewable energy generation capacity reached 1.86 billion kilowatts, accounting for 51.3% of total installed capacity, exceeding half for the first time. In the second quarter, wind and solar accounted for over 85% of new installed capacity, while newly approved coal power capacity fell 62% year-on-year.
"China is shifting from being driven by dual-carbon targets to being driven by both economic and environmental benefits, and the economics of coal power projects have significantly declined," said Michael Wald, an IEA energy analyst. "Combined with the deepening of electricity market reforms, the utilization hours of coal power continue to shrink. In the second quarter, the average utilization hours of thermal power equipment nationwide fell by 128 hours year-on-year."
Mixed performance in other regions
Coal consumption in the United States fell 7.8% year-on-year in the second quarter, mainly affected by persistently low natural gas prices and the expansion of renewable energy. The European Union saw a 9.1% decline in coal consumption, driven by mild climate and the recovery of nuclear power.
However, India's coal consumption rose 3.2% in the second quarter against the trend, as domestic electricity demand hit a record high and the unstable output of renewable energy strengthened dependence on coal power. In Southeast Asia (Indonesia, Vietnam, etc.), overall coal demand increased by 4.5%, driven by manufacturing relocation and infrastructure investment.
Full-year outlook: Global coal demand expected to peak in 2026
The IEA predicts in the report that total global coal consumption in 2026 will decline by about 1.5% from the high base of 2025 to 8.3 billion tons, the first annual decline since 2019, meaning global coal demand may have already peaked in 2025. However, continued growth in India and Southeast Asia could delay the peak.
The report also notes that the global coal trade landscape is accelerating its reshaping. China and India are increasing domestic coal production, while competition among Indonesia and Australia for exports is intensifying, leading to a downward shift in the coal price center. In the second quarter, the average price of Australian thermal coal fell 18% year-on-year to $92 per ton.
Industry experts: Energy transition enters deep water
Li Hua, a researcher at the Beijing Energy Research Institute, said: "The decline in coal demand is an inevitable result of the global energy transition, but the pace varies significantly across countries. Developed countries have largely phased out coal, while developing countries still need to balance energy accessibility and cleanliness. China, as a 'key variable,' will continue to dominate global trends with its coal control policies and technological progress."
Latest estimates from the Global Carbon Project show that energy-related carbon dioxide emissions fell 3.3% year-on-year in the second quarter, with coal contributing about 70% of the reduction. Analysts believe that if global coal demand continues to decline at its current pace, the international community may achieve the mid-term goal of net-zero emissions by 2050 ahead of schedule.
