The coal industry is finally closing more plants than it’s building

Still digging, for now.
Still digging, for now.
Image: Reuters/Jim Urquhart
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For more than half a century, coal has held on to its position as one of the world’s top energy sources. Coal supplies 38% of global electricity, the largest share of any fuel. To meet global demand, producers have continued to burn coal at a rate that’s incompatible with international climate goals and a stable climate.

But this year, new global coal capacity finally started moving in the right direction.

During the first half of 2020, the world’s coal-generated power capacity shrank for the first time since at least the 1950s, according to the non-profit Global Energy Monitor. New plants haven’t entirely stopped coming online: The world added 18.3 GW of new coal-fired generation. But it retired plants capable of generating 21.2 GW, mostly in the US and Europe, cutting about 1% of total global capacity.

Since 2000, new coal capacity has increased by 50GW annually on average. But the balance shifted in 2020 as electricity demand fell during the Covid-19 pandemic and EU pollution regulations made coal plants increasingly unprofitable.

Still, coal is not going anywhere. At least 520 GW of new coal power capacity is either under construction or planned. Most of that planned growth is in China, which has doubled the pace of new coal permitting this year. And only two years ago, coal demand hit an all-time high, according to the International Energy Agency (IEA), which forecasted stable coal demand through 2025 before the pandemic. “Expectations of an imminent coal collapse have come and gone before,” the IEA warns.

But we are seeing two energy worlds emerge. In China and India, coal plants still generate lots of jobs and electricity (as well as attract government subsidies). In industrialized countries, coal plants are closing down as the price of electricity from natural gas and renewables undercuts them, and climate regulations take hold. Net coal capacity would have been declining since 2018 without China, estimates Global Energy Monitor.

To achieve international climate goals, coal plants must be retired early (or their emissions sequestered, a difficult proposition) long before reaching their operational lifetime.

Those cuts are getting easier to make. Coal power is now falling out of favor in countries like Bangladesh and Vietnam, says Christine Shearer, program director for coal at Global Energy Monitor. And they’re not alone. By 2030, the energy and financial think tank CarbonTracker estimates it will be more expensive to run old coal plants than to build new renewable power.

What comes next is anyone’s guess. In April, the IEA revised its forecasts. Global coal demand is now predicted to decline by 8% this year, the largest drop since World War II. ”The uncertainty about the outlook for coal is the highest among all fuels,” the IEA states.