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(Bloomberg) — Global coal demand for power generation is set to climb this year as the Iran war drives up other fossil fuel costs, defying a previous expectation for a plateau, the International Energy Agency said.
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Coal-fired generation should rise 1.4% this year, the IEA said in its mid-year update released on Thursday. That contrasts with the agency’s outlook in February, when it projected coal-fired output to enter a declining trajectory over the 2026-30 period, and underscores the challenges to limiting emissions.
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The Middle East conflict has snarled oil and liquefied natural gas flows through the crucial Strait of Hormuz, pushing up prices. While renewable generation has helped meet demand, some utilities have been forced to turn to coal to produce electricity. China accounts for the biggest share of the rise in coal-fired output this year, with India also seeing a significant increase, the IEA said. Coal usage will fall in the European Union, but at a slower pace than forecast in February.
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The IEA has forecast a plateauing of coal demand for many years, only to then revise estimates and show growth. Coal usage for power generation in 2026 is now forecast to be about 9% higher than a forecast made just two years ago.
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The IEA also cited renewables curtailment as a factor behind higher coal-fired generation. Curtailment occurs when wind and solar farms produce more electricity than the grid can absorb or transmit, forcing some renewables to be switched off and then potentially increasing the need for flexible generation, including coal-fired plants.
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Global electricity demand has remained resilient despite the war, and is forecast to increase by 3.6% this year, up from 3% in 2025.
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