Global Coal Power Generation Set to Rise in 2026 Amid LNG Supply Shocks

The International Energy Agency has revised its 2026 outlook, now expecting global coal-fired power generation to rise rather than fall. This marks a sharp reversal from the agency’s previous forecast of a 1.3 percent decline, driven primarily by unexpected disruptions in the global gas market.

The ongoing U.S.-Iran war has severed liquefied natural gas supplies through the Strait of Hormuz, sending gas prices sharply higher across Europe and Asia. Consequently, the IEA now projects gas-fired generation will remain essentially flat this year, making coal considerably more competitive for power generators with dual-fuel capabilities.

Coal is poised to generate 10,974 terawatt-hours of electricity in 2026, accounting for nearly one-third of the 33,313 TWh produced worldwide. This volume is nearly equivalent to natural gas and hydropower combined, and 77 percent higher than wind and solar generation combined.

Asian Demand Anchors Coal Dominance

This fossil fuel’s resilience is heavily concentrated in Asia, where rising electricity consumption outpaces the displacement effect of new clean energy projects. China alone accounts for more than half of global coal-fired electricity, with the fuel supplying 55 percent of the nation's power in 2025 despite massive renewable installations.

India remains even more reliant, with coal providing roughly 71 percent of its electricity last year, while Southeast Asia averaged a 48 percent share. For these economies, new renewable capacity must first satisfy surging demand, projected to grow 5.5 percent in China and 7 percent in India this year, before it can meaningfully retire coal assets.

The Renewable Displacement Challenge

While the IEA expects collective renewables to overtake coal for the first time in 2026, this milestone relies on aggregating hydropower, solar, wind, bioenergy and geothermal output. No single renewable source comes close to coal’s output, and even with solar generation jumping 30 percent and wind rising 10 percent this year, their combined total will still trail coal by 44 percent.

Looking ahead, the IEA forecasts coal will remain the world’s largest individual electricity source through 2030. Generation is expected to decline by an average of just 0.9 percent annually over that period, as renewable expansion is largely absorbed by a global power demand trajectory growing from 28,600 TWh in 2025 to 30,700 TWh in 2027.

For investors and energy executives, this dynamic underscores a critical bottleneck in the energy transition. Scaling renewable infrastructure is no longer just a matter of replacing existing fossil fuel capacity, but of racing to meet accelerating global consumption without triggering further reliance on legacy coal assets during supply shocks.