Coal Demand May Remain Higher For Longer Period

Global demand for coal may remain elevated through 2030 due to increasing power needs, defying earlier projections for “peak coal” demand in the mid-2020s, a new report indicates. The latest Horizons report from consulting firm Wood Mackenzie models two demand scenarios, finding that under a “high coal demand” scenario, coal-fired generation stays 32% above the base case projection.

That would result in wind, solar, storage, and gas generation capacity falling by 2,100 gigawatts (GW)  by 2050, and 2 billion additional tons of CO2 entering the atmosphere if not coupled with meaningful carbon capture deployment. 

The key drivers of the higher projections are increasing global electrification, widespread energy infrastructure and security concerns, geopolitical shocks inflating fuel prices, and a young coal infrastructure in Asia, which accounts for 78% of all global coal consumption. While declining costs for renewables, storage upgrades, nuclear revival, and gas capacity constrain coal’s long-term outlook, the convergence of rising demand and delays in clean transition tools could materially slow coal’s decline.

In the U.S., coal maintains a spot in the fuel mix, even as it continues to shrink. U.S. coal production in 2023 totaled 578 million short tons, just under half of 2008’s peak. While this illustrates long-term decline, early 2025 showed a 2% quarterly uptick in production. Coal accounted for 16% of electricity generation in 2024.

Coal-fired capacity is also being drawn out, as the nation’s coal fleet is projected to fall from 172 GW in May 2025 to 145 GW by the end of 2028, and 58% of planned retirements are concentrated in the Midwest and Mid-Atlantic regions.

Wood Mackenzie analysts still believe that its base-case scenario of global coal demand peaking in 2026, but note that as coal has proven more resilient as a fuel source, a high-demand scenario is a possibility. Without continuous scaling up of renewables, storage, transmission, and carbon capture, coal may persist longer than assumed, particularly as developing Asian countries continue their reliance.

“Our high coal demand case is neither a sure thing nor desirable. However, it does reflect a growing shift in energy markets around the world: countries want more control over energy resources to expand affordable and reliable electrification,” the report states. “As a result, energy investments could take a different tone in the next five to 10 years – away from net-zero pathways to falling back on established options, including coal-fired solutions.”

For investors and policymakers, the challenge isn’t just projecting decline, but also anticipating how much of the existing coal infrastructure will remain, under what conditions, and how policy tools can accelerate its phase out while satisfying grid reliability and cost pressures.