Rising uncertainty over Europe’s energy security is prompting several countries to temporarily increase coal use for electricity generation as global supply disruptions and higher gas prices reshape energy markets.
Thermal coal prices for power generation have climbed roughly 20%, reaching around $135 per tonne. The increase follows escalating tensions in the Gulf and disruptions affecting energy flows through the Strait of Hormuz, as geopolitical tensions between the United States and Israel on one side and Iran on the other place pressure on global energy supply chains.
With natural gas prices rising, coal-fired power plants have again become economically viable in parts of Europe. Although coal remains one of the most carbon-intensive fuels, the current market environment is forcing governments and utilities to prioritise energy security and cost stability in the short term.
Despite the recent rise, coal prices remain far below the levels seen during the 2022 energy crisis following the Russia–Ukraine war. At that time, coal prices surged above $400 per tonne, prompting countries such as Germany to reopen coal-fired power plants and temporarily extend the life of existing mines.
Global coal supply conditions are currently more stable than during the 2022 crisis. Major producers continue to maintain significant reserves, while China — the world’s largest coal producer and consumer — has expanded or reopened several mining operations. Higher prices may also encourage Indonesia, one of the world’s leading coal exporters, to reconsider earlier export restrictions.
In the longer term, the International Energy Agency expects global coal demand to stabilise or gradually decline by 2030 as renewable energy, nuclear power and natural gas expand their share of the energy mix. However, geopolitical tensions and volatility in global gas markets could slow this transition.
At the same time, Europe’s energy system is continuing to shift toward renewables. According to data from Ember Energy Research, electricity generated from wind and solar surpassed fossil fuel generation for the first time in 2025. Renewable sources accounted for 30% of EU electricity production, compared with 29% from coal, gas and oil combined.
Analysts note that coal may still play a limited backup role in Europe’s energy mix, particularly during periods of high gas prices or supply disruptions.
