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Coal phase-out

Environmental policy intended to stop using coal

  • 30 min read
  • 3 chapters
Just over one year ago the largest coal-fired power plant west of the Mississippi shut down for good. Today, the three 775-foot tall smoke stacks were brought down – restoring the original unobstructe
Alan Stark · CC BY-SA 2.0

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China and India burn a lot of coal. But the only significant funding for new plants is for coal power in China. Developed countries may part finance the phase out for developing countries through the Just Energy Transition Partnership, provided they do not build any more coal plants. It has been estimated that coal phase-out could benefit society by over 1% of GDP each year to the end of the 21st century, so economists have suggested a Coasean bargain in which already developed countries help finance the coal phase-out of still developing countries. Meeting the IEA's 1.5°C pathway for coal would require closing around 70% of existing coal-fired capacity early, rather than retiring plants at the end of their operating lives.

The health and environmental benefits of getting rid of coal quickly exceed the costs, but some countries still favor coal, and there is much disagreement about how quickly it should be phased out. However many countries, such as the Powering Past Coal Alliance, have already or are transitioned away from coal; the largest transition announced so far being Germany, which is due to shut down its last coal-fired power station between 2035 and 2038. Germany is using reverse auctions to compensate coal-fired power plants for shutting down ahead of schedule. Some countries are making a just transition and pensioning off coal miners early. However, low-lying Pacific Islands are concerned the transition is not fast enough and that they will be inundated by sea level rise, so they have called for OECD countries to completely phase out coal by 2030 and other countries by 2040. Phasing down coal was agreed at the 2021 United Nations Climate Change Conference in the Glasgow Climate Pact. Vietnam is among few coal-dependent developing countries that pledged to phase out unabated coal power by the 2040s or as early as possible thereafter

In 2022–2023 coal use rose. The IEA pointed out high gas prices due to the Russian invasion of Ukraine and extreme weather events as contributors to the increase. The G7 countries have agreed to close all coal power plants by 2030–2035 unless their greenhouse gases are captured.

Peak coal

Peak coal is the moment of maximum consumption of coal, after which it is assumed that coal consumption would decrease. Historically, it was widely believed that the supply-side would eventually drive peak coal due to the depletion of coal reserves. However, since the increasing global efforts to limit climate change, peak coal has been driven by demand. This is due in large part to the rapid expansion of natural gas and renewable energy. As of 2024 over 40% of all energy sector carbon dioxide emissions are from coal, and many countries have pledged to phase-out coal.

The peak of coal's share in the global energy mix was in 2008, when coal accounted for 30% of global energy production. Coal consumption is declining in the United States and Europe, as well as developed economies in Asia. However production increased in India, Indonesia and China, which offset the falls in other regions.

In 2024 the International Energy Agency said: “While coal demand in advanced economies continues to shrink, this decline is expected to be offset by growth in a few emerging and developing economies, such as India, Indonesia and Viet Nam, where the additional energy demand associated with economic growth is set to be met with a variety of sources, including coal. Despite increasing renewable electricity generation, India is expected to see the largest increase in coal use in the coming years, driven by consumption from the power sector and industry. Still, as has been the case for 25 years, China, which consumes 30% more coal than the rest of the world put together, will continue to define global trends.”

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