Coal Retains Key Role in Global Energy Mix Despite Renewable Expansion, Says WB Report
Global coal demand is expected to remain stable in 2026 despite renewable growth, supported by energy security concerns.
June 18, 2026. By EI News Network
"Higher demand for coal is expected to center in China and, especially, in India, as governments turn to domestic sources to bolster energy security," the report states. "Consumption in the United States is expected to be stable after increasing last year, while in Europe it is expected to continue decreasing, although at a slower rate than before the recent outbreak of conflict in the Middle East," the report noted.
The Australian thermal coal price increased by about 20 percent in March 2026 on a month-over-month basis and remained elevated in April. The Australian coal price is expected to rise by 20 percent in 2026 year-over-year to USD 130 per metric ton, before falling by 12 percent in 2027.
The report notes that disruptions in Middle East natural gas shipments raised demand for coal in power plants in East Asia and Europe. Diesel shortages arising from the Gulf conflict and soaring diesel prices are both raising costs for producers or in extreme cases limiting output.
India's role in global coal markets is expected to expand significantly this year. "Partly in response to the conflict-related trade disruptions, supply is expected to surge in India and increase moderately in China," according to the report.
In both China and India, governments have intensified efforts to replace imports with domestic production to increase energy security. "This may presage a prolonged shift, with major consumers prioritizing domestic production, such that exporters may need to adjust to diminishing international demand," the report said.
Global coal production is projected to decrease in 2026 while still meeting projected demand. "Supply in Asia Pacific is expected to fall mainly due to the introduction of lower production targets in Indonesia. International coal trade is forecast to decrease in 2026, as lower production targets in Indonesia restrain the quantity available for export," said the report.
Looking at recent trends, global coal consumption increased by approximately 1 percent in 2025 year-over-year, driven by increases in Eurasia and the United States. The US coal consumption expanded by 10 percent, after a 60 percent decline over the previous 15 years, due to increased power demand, in part reflecting the surge in data center activity, and substitution prompted by elevated natural gas prices.
The report further stated that global supply of thermal coal was little changed in 2025, as increases in China and Eurasia offset reductions in Australia and Indonesia, the two main exporters.
The report outlines significant risks to the price outlook. "Stronger-than-expected growth in renewable electricity generation, potentially driven by the declining cost of energy storage technologies, could reduce the need for coal-generated power and depress global demand for coal," it further added.
"Thus, thermal coal prices could undershoot the baseline projections in 2026 and 2027, especially if the recent sharp rises in renewable energy output in China and India continue," the report noted.
The report also warns that extended delays in reopening the Strait of Hormuz or lasting LNG infrastructure damage in the Middle East, in addition to that which has already occurred, would boost coal's appeal, extending the temporary surge in its consumption for power generation in Asia Pacific and Europe. This could further increase import demand and international prices.
Discussing broader implications, the report notes that energy-importing countries are likely to increase use of available domestic energy sources, in some cases relying on coal reserves, which will create long-term costs owing to increased air pollution and carbon emissions.
"However, the relative attractiveness of hydro, solar, and wind power could also increase, particularly in conjunction with the decline in costs for energy storage already underway. Over the longer term, plans to use more nuclear power could gain momentum, especially as small modular reactors technology develops," the World Bank Group said in its 'Commodity Markets Outlook, April 2026' report.
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