India faces a mixed outlook, with a strong push for domestic production tempered by the urgent need for imports due to coal quality issues

As a traditional feedstock, coal is the cornerstone of electricity generation in many countries. At the same time, it is the single largest source of carbon dioxide emissions globally. This combination places it at the centre of international dialogues on energy. 

The coal market worldwide will have to brace for uncertainty, as a range of different trends could shape the market in the years ahead. Energy systems around the world are undergoing change, as energy transition and decarbonisation become key themes for countries to pursue. 

Global coal use has hit a ceiling and is set to begin a slow decline over the next five years, as renewables and liquefied natural gas (LNG) gain ground, according to the International Energy Agency (IEA). 

The coal demand is expected to edge up 0.5% this year to a record 8,845 million tonnes before slipping 3% by 2030, according to the IEA’s annual coal report published recently. 

It is recognised that coal is the most polluting of all fossil fuels, and it remains the single largest source of carbon dioxide emissions globally. Burning it contributes to accelerating climate change, and many countries, including the UK, France and Spain, have eliminated or are about to phase out its use. 

Yet coal remains a cornerstone of electricity generation (thermal power) in many countries, with China consuming more than the rest of the world combined.

Coal use has reached a ‘plateau’ as renewables scale up. Solar and wind are expanding fast enough to meet all new electricity demand globally, according to experts. Renewables, including solar, wind, hydro and smaller sources, such as geothermal, generated more power than coal in 2025 for the first time. 

Analysts have long struggled to call the moment at which peak coal will arrive, amid stubbornly strong consumption in China and India, even as advanced economies shutter mines and ramp up solar and wind. The IEA cautioned that its five-year outlook “is subject to significant uncertainties that could impact it materially.”

Much of the challenge in determining when the world will hit peak coal comes down to China, which makes up more than half of the global consumption and production. The IEA sees a slight decrease in the nation’s demand over the next five years, although “lower renewable energy dispatch or an acceleration in coal gasification projects could turn the slight drop into a small increase,” it said.

The uncertainties are underpinned by China’s own approach to planet-warming pollution. There are signs that the country’s overall emissions have peaked already, and under its upcoming Five-Year Plan, the government will seek a peak in coal and oil use between 2026 and 2030. In India, meanwhile, a strong monsoon season depressed power demand and boosted hydropower production. As a result, the annual coal power generation is expected to decline in 2025 from 2024, halting an increase in production seen in recent years.

In fiscal year 2023-24, domestic coal-based power plants imported 23.9 million tonnes of coal for blending purposes, but the volume declined to 14.0 million tonnes in 2024-25. However, imported coal-based power plants (designed on imported coal) expanded their import by over 6 million tonnes to 48.6 million tonnes in 2024-25. 

Compared with the annual production target of 1080 million tonnes in 2024-25, India produced 1058 million tonnes. In 2023-24, as against the target of 1012 million tonnes, India produced 998 million tonnes. 

Coal is imported by the power sector and non-power sectors, like steel and cement. In the last two years, imports ranged between 245 million and 265 million tonnes. According to the government, the country is moving towards coal aatmanirbharta (self-reliance). 

Under Mission Coking Coal, the government has enhanced the production target to 140 million tonnes by 2030. While most of the country’s requirement is met through domestic sources, some high-grade coal, like coking coal and low-ash thermal coal, is imported mainly by the steel industry and also imported by coal-based power plants. 

Coal imports are expected to see a sharp decline globally over the next five years. In advanced economies, they are set to keep shrinking through 2030. Meanwhile, India faces a mixed outlook, with a strong push for domestic production tempered by the need for imports due to coal quality issues.