The International Energy Agency (IEA) has published its latest report on coal power, revealing that global coal demand hit an all-time high in 2024.

Most of the growth is constrained in the Chinese and Indian markets. Coal demand in China is expected to grow by one percent in 2024 to reach 4.9 billion tonnes (Bt), another record.

India is poised to see demand growth of more than five percent to 1.3 Bt, which only China has previously reached. However, the IEA posits that demand could plateau through 2027 if China begins to wean itself off coal power.

GettyImages-937183680 coal
Coal – Getty Images

China currently consumes 30 percent more coal than the rest of the world combined, and two major drivers are contributing to this growth: The electrification of services previously provided by other fuels and the emergence of AI data centers nationwide.

China has invested heavily in its data center sector over recent years. According to Liu Liehong, head of China's National Data Bureau, the country has invested more than $6.1 billion in data centers since 2022. As a result, data center electricity consumption in China is expected to increase by more than five percent by 2030.

The report also highlighted that the decline in the rate of coal consumption in advanced economies has begun to slow. This is especially apparent in the European Union (EU) and US markets, where demand for electricity from the electricity sector has led to a slower decline. As a result, coal consumption in the EU and US is on track to decline by 12 percent and five percent, respectively, this year, compared with 23 percent and 17 percent in 2023.

Several US utilities have cited the energy demand from data centers as a reason to extend the life of their coal power plants. With rising energy demand from AI and high-performance computing, utilities are currently scrambling for all available power, especially in data center hotspots. The Electric Power Research Institute has estimated that data centers could consume up to nine percent of US electricity generation annually by 2030, up from four percent in 2023.

Last month, US utility Southern Co. said it was considering extending the life of some of its coal-fired assets to meet energy demand from data centers and other commercial and industrial properties. According to its CEO, Chris Womack, the company is considering an “all of the above” generation plan and, as part of its strategy, could extend the life of its four-unit, 3,450MW Plant Bowen coal-fired facility in Georgia.

Southern Co. serves more than nine million gas and electric utility customers across Alabama, Georgia, Illinois, Mississippi, Tennessee, and Virginia.

In addition, Coal power producer Hallador Energy has cited the surge in demand from data centers as a “meaningful opportunity” for the fossil fuel sector. It recently signed a non-binding term sheet with an unnamed data center developer to supply it with coal-powered energy over a prolonged period.