CREA Warns Super El Niño Will Drive India Coal Demand Higher Over Next Year
A Finland-based climate research group says an intensifying El Niño will open a power generation gap in India that coal will mostly fill.
A Finland-based think tank warned on Monday (2026-07-06) that a super El Niño weather event will significantly boost India's coal-fired power generation over the next twelve months, reversing what had briefly looked like a structural decline in thermal power. The Centre for Research on Energy and Clean Air said higher temperatures would open a generation gap that coal would mostly close.7
The timing complicates an already mixed picture. Coal powers roughly 60% of India's electricity output, and the country has 39 new coal-fired plants under construction. A seasonal climate shock risks reinforcing that dependence rather than allowing the recent clean energy surge to keep narrowing it.7,4
CREA's concern follows a familiar El Niño mechanism: hotter ambient temperatures lift power demand while simultaneously reducing output from hydroelectric and some solar resources. Combine those two effects, the think tank said, and India faces a generation gap that only coal can absorb at the required speed.7
The forecast cuts against data that, only weeks ago, looked encouraging. Coal power generation fell in both India and China in 2025, the first simultaneous decline in half a century, as record clean energy additions displaced thermal output. In India, coal generation dropped 3.0% year-on-year, equivalent to 46 TWh, according to a Carbon Brief analysis published in May (2026-05-19).6
China's trajectory offers a contrasting case. Coal imports there fell 9.6% in 2025 to 490 million tonnes as higher domestic production and the rare drop in coal-fired generation reduced seaborne demand. India's path looks set to diverge: capacity additions continue climbing and the El Niño scenario points demand back upward rather than down.5
Newcastle thermal coal, the seaborne benchmark for Asian buyers, stood at $122.40 per tonne on Monday (2026-07-06). JKM Asian LNG front-month futures were at $16.06 per MMBtu — the competing dispatch cost for utilities able to switch fuel. ICE Brent crude front-month held at $71.98, up 0.36% on the day.7
India's renewable developers are moving in the opposite direction on longer timescales. The Adani Group's solar and wind complex at Khavda, targeting 30 gigawatts of capacity, would cover roughly 4% of current national electricity consumption when complete. Gautam Adani has set a 45-gigawatt renewable capacity target by 2030. He and Mukesh Ambani together plan to invest $150 billion in clean energy over the next decade.3
Capital commitments play out over years. El Niño operates over months. CREA frames the coal surge as a bridge demand event, but India's track record of retaining capacity complicates that framing: a country that already draws close to three-quarters of its electricity from coal and is actively building more plants does not shed thermal capacity easily when a short-term demand impulse fades.7,4
Coal remains the world's largest source of electricity generation, accounting for roughly 35% of global supply, with more than 2,100 gigawatts of capacity still operational even as developed markets retire plants. The global retirement timeline, combined with continued Asian demand, keeps Newcastle pricing relevant well beyond any single seasonal event.2
Dinita Setyawati, a senior energy analyst at Ember, has warned that any pivot toward coal carries substantial environmental and public health costs. For thermal coal traders, the near-term signal is how quickly the El Niño-driven demand materialises in Indian import volumes and whether Newcastle physical prices respond given subdued Chinese buying.1