Coal Isn't Dead--It's Setting Records Again

Global coal demand is on track to set another record in 2025despite a slowdown from China, its biggest consumer. That's the latest update from the International Energy Agency, which now expects this year's demand to also reach a new high. China's coal usage is projected to fall 0.5% in 2024, but that's more than offset by rising consumption elsewhere. In the U.S., where President Donald Trump has been vocal about backing fossil fuels, coal demand surged 12% in the first half of the year as electricity usage picked up. Europe is seeing similar trends, with weak wind output forcing utilities to fall back on more traditional power sources.

India is also contributing to the upside, with coal demand forecasted to rise 1.3% this year. In total, the IEA estimates that global coal use climbed 1.5% in 2023 to a record 8.79 billion metric tonsup from its previous 8.77 billion-ton estimate. The agency noted that electricity demand globally is growing faster than new capacity from renewables like wind and solar, leaving coal to fill the gap. Even as governments push decarbonization goals, the shortfall in clean energy infrastructure is keeping the world's dirtiest fuel in play longer than many expected.

The IEA now sees a possible inflection point in 2026but the outlook hinges heavily on China. If demand there stabilizes or picks up again, the forecast could shift. For investors, that opens the door to both risks and opportunities across the energy and utility space. Traditional players like Peabody Energy (BTU) could benefit in the short term, while the broader electrification storyincluding players like Tesla (NASDAQ:TSLA)still depends on how quickly renewable generation can catch up. In the meantime, the market is watching China's next moves.