Coal
Why is it important?
Coal still supplies just over a third of global electricity generation even though it is the most carbon-intensive fossil fuel. While coal is being gradually replaced in most countries for power generation, it will continue to play a crucial role in iron and steel production until newer technologies are available.
Where do we need to go?
The IEA’s Net Zero Emissions by 2050 Scenario envisions that all unabated coal generation ends by 2040.
What are the challenges?
With energy demand continuing to grow, many countries feel they have little choice but to continue generating power with coal, while some industrial processes require coal’s carbon content. To have a place as a cleaner energy source in the decades to come, governments and the coal industry need to develop and deploy less polluting and more efficient technologies, including but not limited to carbon capture, utilisation and storage (CCUS).
Tracking Coal-fired Electricity Generation
For the second year in a row, global coal-fired generation reached an all-time high in 2022, pushing CO2 emissions from coal-fired power plants to record levels and accounting for more than one-third of total electricity generation. High natural gas prices brought on by Russia’s invasion of Ukraine, coupled with extreme weather events, led many regions to turn to coal to secure electricity supplies. While the recent uptick in coal-fired generation is likely to be a temporary glitch in some regions, the overall trend is not on track with the Net Zero Emissions by 2050 Scenario, which calls for immediate reductions and a global decline in unabated coal‐fired generation of around 55% by 2030 compared to 2022 levels, and a complete phase-out by 2040.
G7 countries recognise the need to end construction of new unabated coal-fired power generation
G7 countries recognise the need to end construction of new unabated coal-fired power generation
Countries and regions making notable progress include:
- In June 2023, China started operations at the Taizhou coal-fired power plant in the Jiangsu province, making it the third large-scale coal plant in the world to be equipped with carbon capture technology.
- In 2022, two new Just Energy Transition Partnerships (JETP) were announced in Indonesia (with a budget of USD 20 billion) and Viet Nam (USD 15.5 billion) to support decarbonisation efforts, including a just transition away from coal power.
- The Group of 7 (G7) Ministers of Climate, Energy and the Environment released a communiqué recognising the need to end the construction of new unabated coal-fired power generation, as called for in the NZE Scenario.
- At the end of 2021, Portugal closed its last remaining coal plant, becoming the fourth country in the European Union to do so after Belgium, Austria and Sweden.
- In Germany, the end date for coal phase-out was recently brought forward from 2038 to 2030 for plants in the western state of North Rhine-Westphalia.
- Slovakia has expeditated its coal phase-out date from 2030 to 2024.
Global CO2 emissions from coal-fired power plants reached a new high in 2022
Global CO2 emissions from coal-fired power plants reached a new high in 2022
In 2022 CO2 emissions from coal-fired power plants grew by over 2% from the previous year, led in particular by increases in emerging market and developing economies (EMDEs) in Asia. Gas-to-coal switching in many regions was the main driver of this growth.
Only four commercial coal-fired power plants have been fitted with carbon capture, utilisation and storage (CCUS) to date: the Boundary Dam facility in Canada, the Petra Nova plant in Texas, United States, and the Jinjie Power and Taizhou Power stations in China. The Taizhou project only recently started operation in June 2023 and has a capacity to capture 500 000 tonnes of CO2 each year.
To get on track with the Net Zero Scenario, a global annual average reduction of emissions from coal-fired power plants of around 10% is needed through to 2030.
Annual change in generation and CO2 emissions from unabated coal-fired power plants in the Net Zero Scenario, 2015-2030
OpenCoal-fired power generation continued its rise in 2022, driven by high gas prices and extreme weather events
Coal-fired power generation continued its rise in 2022, driven by high gas prices and extreme weather events
In 2022 global coal-fired power generation rose by nearly 2%. Though the year-on-year change is far less than the 8% growth seen in 2021 as coal rebounded from Covid-19 lows, last year’s growth surpasses the nearly stagnant annual average growth seen in the five years preceding Covid-19. In absolute terms coal-fired generation continued its record-breaking streak for a second year in a row to around 10 400 TWh.
- Asia Pacific: The largest absolute increases were in the Asia Pacific region. Extreme weather events and record-breaking natural gas prices led to higher coal use in electricity generation in the region, up nearly 3% from 2021 levels.
- Coal-fired power generation in China grew by around 2% compared to 2021. China continues to add new coal-fired power plants to the grid, with 11 GW added in 2022, driven by energy security concerns, local economic interests, and tendency to pair dispatchable power sources with variable renewable sources.
- In India, extreme heatwaves in the summer sharply increased electricity demand, which was primarily met by coal-fired generation. This led to a significant year-on-year increase of more than 8.5% in 2022, with a 20% increase in April through July compared to the same period in the previous year.
- Europe: Coal-fired generation increased in the European Union by nearly 7% amid low hydropower and nuclear output.
- United States: Despite electricity demand increasing in the United States, coal-fired generation fell by almost 8% in 2022, reversing a 15% increase in 2021. The decrease in coal output was balanced by an increase in generation from natural gas and strong growth in renewables.
As a result, coal's share of total global generation remained around 36%. This is not on track with Net Zero Scenario, which calls for immediate reductions and a decline in unabated coal‐fired generation of around 55% by 2030 compared to 2022 levels, reducing coal to around 12% of global generation by 2030.
The European Union and United Kingdom resorted to coal to temporarily increase security of supply amid Russia’s continued invasion of Ukraine
The European Union and United Kingdom resorted to coal to temporarily increase security of supply amid Russia’s continued invasion of Ukraine
Russia's invasion of Ukraine and the ongoing energy crisis have forced the European Union and individual countries to take measures to enhance security of electricity supply amid low nuclear availability and tight gas markets. The United Kingdom and several countries in the European Union have decided – or are discussing plans – to bring reserve capacity back into the market or to postpone closure dates.
Germany accounts for most of the additional coal-fired capacity, with almost 10 GW for the 2022 and 2023 winter. In the Netherlands, the removal of the 35% production cap on coal-fired plants will add another 3.8 GW. Under confirmed plans, overall coal-fired capacity will increase by about 15% (19 GW) to 146 GW in the European Union and the United Kingdom combined.
Countries look to policies to transition coal-dependent regions and workers
Countries look to policies to transition coal-dependent regions and workers
In January 2022, Brazil passed legislation to establish a just energy transition programme for the coal-dependent state of Santa Catarina. Under the law, Brazil will phase-out coal-fired power generation by 2040 and set out a plan to prepare the region for the coal phase-out.
In Poland, government and mining union delegates have signed a social contract that sets out a specific timetable for discontinuing hard coal mining at each production unit by the end of 2049.
In the Czech Republic, the European Commission approved the budget of CZK 40 billion (Czech Koruna) to transform the coal regions of Karlovy Vary Moravian-Silesian and Ústí with the aim of increasing the quality of life of its inhabitants, restoring the area, and developing clean energy.
Status of coal phase-down pledges
As of end-year 2023, 84 countries had agreed to phase out coal or to not develop new unabated coal power plants, collectively accounting for around 30% of current coal consumption for electricity generation. Of these countries, 37 have incorporated coal phase-out targets with specified dates in national plans -- most are in Europe, and 80% are advanced economies. They include countries with a strong reliance on coal-fired power such as Poland, Czechia and Montenegro.
As of end-year 2023, only four countries had completed their phasedowns: Belgium (2016), Austria (2020), Sweden (2020) and Portugal (2021). Several large countries with a net zero emissions target remain without a coal phasedown plan or commitment, notably China and India, who remain the two most important single coal consumers.
Explore all coal policies
Just Energy Transition Partnership expands to Indonesia and Viet Nam
Just Energy Transition Partnership expands to Indonesia and Viet Nam
The Just Energy Transition Partnership (JETP) is a programme launched during COP26 in 2021 by France, Germany, the United Kingdom, the United States and the European Union – often called the International Partners Group – to make available the financial resources necessary to accelerate energy transitions and meet climate targets, while ensuring a just transition.
During COP26, the International Partners Group announced USD 8.5 billion for JETP in South Africa, and the programme has since expanded to other countries. In November 2022, Japan, the United States and other partners announced USD 20 billion for JETP in Indonesia, and in December 2022 the International Partners Group announced USD 15.5 billion for Viet Nam’s JETP.
G7 countries recognise the need to end new unabated coal-fired power plants
In April 2023 the Group of 7 (G7) Ministers of Climate, Energy and the Environment released a communiqué recognising the need to end the construction of new unabated coal-fired power generation, as called for in the IEA’s Net Zero Scenario. The G7 leaders noted their intention to work with other countries to end new unabated coal-fired power generation projects world wide as soon as possible, in order to accelerate the clean energy transition in a just manner.
Japanese bank announces plans to phase out funding of coal projects
Japanese bank announces plans to phase out funding of coal projects
Opposition to coal is not new, but in recent years an increasing number of governments have announced policies to restrict or prohibit financing for coal projects and investments. Further momentum to restrict financing for coal comes from the financial community, where many institutional investors, pension funds, banks, insurance companies and others have committed to reduce or end their involvement in coal.
In February 2023 the Sumitomo Mitsui Banking Corporation (SMBC) announced that it will phase out project and corporate financing of coal mining projects and coal-fired power plants by 2040. Although SMBC did not specify a detailed timeline for the phase-out, it noted that this will include funding for new mines, expansion of existing mines and related infrastructure.
We would like to thank the following external reviewers:
We would like to thank the following external reviewers:
- Andrew Minchener, ICSC TCP
- Eren Cam, IEA
Recommendations
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Efforts to address emissions from existing coal-fired power plants, including those from the large number of young plants in EMDEs, are essential for reaching net zero goals. Industry should consider a three-pronged approach, and governments should adopt appropriate policies to enable this approach, to stay on track with the phase-out of unabated coal plants by 2040:
- Repurpose coal plants (i.e. reducing operations to focus on system adequacy or flexibility services) for flexibility. This means an unabated coal plant produces less electricity over a certain period but remains available at times when the system needs are highest, and is available to ramp up and down to meet needs for flexibility, contributing to the reliability of power systems.
- Retrofit coal-fired power plants with CCUS: This provides a means to supply low‐emission power from existing coal assets, and provide stability services such as inertia, ramping flexibility, and firm capacity at peak times. This would also make use of existing transmission infrastructure, and allow current plants to be operated so that investments can be recouped, while reducing their carbon footprint. This is particularly important for emerging economies in Asia, where the average age of coal‐fired power plants is only 13 years and new plants continue to be built.
- Retrofit to co-fire with ammonia or biomass in order to reduce the CO2 emissions intensity of the electricity produced.
- Retire less-efficient coal plants before they reach the end of their technical lifetimes, and potentially convert the site to another use, in order to cut emissions from unabated coal‐fired power plants.
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Governments can accelerate CCUS deployment at coal-fired power plants through targeted policies such as a carbon pricing, granting funding for CCUS projects, tax incentives and carbon contracts-for-difference. In addition, increased funding for large-scale demonstration projects can help drive down costs and increase capture rates. Simultaneous support for CO2 transport and storage infrastructure is also vital, and governments can play a key role in identifying and funding strategic CO2 transport networks and storage sites.
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Given the dependence of a number of countries and regions on coal, the closure of power plants could have significant economic and social consequences. Coal-dependent regions are often highly specialised “mono-industry” areas, where the economy and the local identity are closely tied to the coal value chain.
Governments should manage closures appropriately and successfully by planning for the impacts on affected workers and communities by facilitating early dialogue with affected stakeholders and establishing the right financial mechanisms to ensure a just transition. Social safety net expansions, retraining and job relocation programmes for coal power plant workers and their communities are essential to ensure that no-one is left behind. Establishing clear long-term energy transition strategies would foster investment in promising technologies, such as CCUS and renewable energy, resulting in stable job creation opportunities. Another crucial goal should be to carefully design relevant interconnected policies to avoid regressive distributional impacts.
In addition, governments should pre-emptively manage any potential energy security concerns that may arise from coal plant closures. Recently, South Africa noted that it may need to pause the decommissioning of some coal plants to ensure its energy security needs in the short term. Phasing down and ultimately replacing coal in electricity systems in a secure and affordable manner requires several regulatory and operational changes, including actions to use a wider set of smaller and more distributed sources for grid services.
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Ammonia, which does not emit CO2 when burned, is an alternative fuel to reduce emissions from coal-fired power plants. To get on track with the Net Zero Scenario, the private sector should begin to evaluate co-firing opportunities and conduct small-scale ammonia co-firing tests, with an eye towards commercial plant application in the coming years.
Co-firing sustainable bioenergy is another option to allow coal-fired power facilities to continue contributing to flexibility and ensuring adequate capacity while reducing CO2 emissions. However, the biomass feedstocks used must be considered sustainable in order to ensure a net CO2 emissions reduction from co-firing.
Programmes and partnerships
Driving Down Coal Mine Methane Emissions
Tackling methane in the coal sector is a major opportunity for climate action that can also strengthen energy security. Experience shows that there are several steps countries can take today – using existing technologies and tools – that can lead to significant reductions in methane emissions from coal mining.
Authors and contributors
Lead authors
Carl Greenfield