IEA says Middle East war is driving more coal-fired power generation

Coal-fired power generation is set to rise in 2026 because of supply difficulties and soaring natural gas prices linked to the war in the Middle East, the International Energy Agency said.

The IEA said the conflict, pitting the United States against Iran, has caused regular blockages of the Strait of Hormuz since March 2026. It said 20 percent of liquefied natural gas transits through the strait, and the disruption is pushing some economies back toward coal.

In a new report, the agency said global coal-fired generation is expected to increase by 1.4 percent in 2026, after staying roughly flat in 2025. It also said higher energy prices are contributing to the increased use of coal-fired power plants.

The IEA said energy prices in 2026 are up 30 percent compared with the first half of 2025 and are at their highest level since the 2022 and 2023 energy crisis triggered by the war in Ukraine.

The agency forecast that global carbon dioxide emissions from electricity generation will rise by one percent in 2026, with large differences by region. It said emissions are expected to increase by six percent in Southeast Asia, while the European Union is expected to record a five-percent decline.

The IEA said electricity-sector CO2 emissions should stabilise in 2027 because of growth in renewable electricity generation. It said renewable power is overtaking coal as the world's largest source of electricity generation after reaching near parity in 2025.

Renewable supply is expected to grow by eight percent in 2026, and renewables' share of global electricity supply is expected to rise from 33 percent in 2025 to 37 percent in 2027. The IEA said solar power is driving growth and is expected to pass wind power generation in 2026, becoming the world's second-largest renewable electricity source after hydropower.

The agency said electricity demand is forecast to keep rising, driven especially by industry, electric vehicles and data centres. It forecast demand growth of 3.6 percent in 2026 and 3.8 percent in 2027, compared with three percent in 2025.

The IEA also said the El Nino climate event is stronger than expected this year. It said the weather phenomenon could affect electricity demand by increasing cooling needs and limiting hydropower and wind power generation.