IEA Forecasts First Coal Production Decline in Years as Indonesian Exports Slide
The IEA projects output's first contraction in years, even as global coal use set a 2025 record and India fuelled a surge in new mine proposals.
Newcastle coal physical was trading at $140.75 a tonne and the COAL exchange-traded fund fell 0.86% on Friday (2026-09-11), as the IEA's latest production outlook projected a 0.7% annual decline in global coal output — the first contraction in several years, though total supply would remain above nine billion tonnes.
Against a base of more than nine billion tonnes, a 0.7% reduction leaves ample room for demand fluctuations to absorb the difference. Indonesia, the world's largest seaborne coal exporter, produced 357.6 million tonnes in the first half of 2025, according to Energy Minister Bahlil Lahadalia, while exports over the same period reached 238 million tonnes. That pace reflects near-maximum utilisation of existing Indonesian mining capacity.2
But Indonesia's export trajectory has not been linear. Shipments fell 6.43% to 160 million tonnes in the January-to-April 2025 period, according to Energy and Mineral Resources Ministry data, with traders attributing part of the softness to disputes over reference prices, though officials denied the link.3
Global coal consumption hit a record in 2025, but coal-fired electricity output fell. Coal power generation declined 3.0%, with Asia Pacific down 1.2% and Europe down 3.4%, according to data published in July 2026 (2026-07-26). The EU's coal generation dropped 3.6% and represented only 2.6% of global coal-fired output.4
China and India together account for nearly 69% of the world's coal-fired electricity, which means modest percentage moves in either country exert disproportionate weight on global generation totals. Both posted declines in 2025, dragging the aggregate lower even as overall volumes consumed globally rose.4
The United States ran against that trend. American coal consumption rose 10.4% to 8.7 exajoules in 2025, with coal-fired electricity generation jumping 13.1% to 804 terawatt-hours and domestic production up 4.4%. U.S. consumption remains roughly 62% below its 2005 peak and generation about 63% below its 2007 high, so the rebound reads as cyclical rather than a structural reversal.4
The supply picture ahead looks more complex than the IEA's production decline implies. Global Energy Monitor reported in August 2026 (2026-08-12) that newly proposed coalmining projects would collectively add enough capacity to expand global supply by 2.5 billion tonnes a year, an 11% increase from the year before, with India leading the expansion. If even a fraction of those proposals advance, the forecast output contraction could reverse quickly.6
China is keeping seaborne purchases deliberately limited. Domestic mines cover most national demand, with coastal utilities using imports as a flexible buffer that expands when domestic supply tightens or imported prices fall, and contracts when inventories are adequate, according to an analysis published by Hellenic Shipping News on August 14, 2026 (2026-08-14).7
Coal's generation dominance remains substantial. IEA figures show coal producing an estimated 10,974 terawatt-hours of electricity in 2026. Solar is expected to reach 3,289 terawatt-hours and wind 2,898 terawatt-hours, a combined 6,187 terawatt-hours still 44% below coal output even with solar growing roughly 30% this year and wind by around 10%, the IEA estimates. Add hydropower's projected 4,536 terawatt-hours and total renewables approach coal's volume without surpassing it.5
The IEA projects renewables and nuclear will reach 50% of the global power mix by 2030, with renewable output growing about 1,000 terawatt-hours annually through that year. India's expanding mine pipeline, largely aimed at domestic consumption rather than exports, carries the most capacity to invert the IEA's production forecast. Whether Indonesia's early-2025 export slippage persisted into the second half of that year, and how Chinese utilities position import programmes through winter, are the signals seaborne coal traders have yet to price with confidence.1,6,2,7