COP26: Making Coal History

The end of coal is in sight – but what will it take to make coal history?

Ending coal power is the single most important step to get in line with 1.5C. Since Paris there has been huge progress on ending the pipeline of new coal plants and there is growing momentum for an OECD coal phase-out by 2030. Significantly, COP26 moved the goalposts of ambition from cancelling new coal plants to phasing out coal altogether.

Throughout 2021 the message has been clear: coal must be consigned to history. This call has been heard from the highest level across the United Nations, the International Energy Agency, the Energy Transitions Commission, the COP26 presidency and the G20 presidency.

For the very first time in a COP statement, the Glasgow Climate Pact calls on countries to ‘phase down unabated coal power’ – a momentous shift, despite the last-minute drama.

Energy Day saw 47 countries sign the Global Coal to Clean Power Transition Statement, with new phase-out commitments from 11 countries. The Glasgow Breakthroughs set out to ensure that clean power is the most affordable and reliable option for all countries to meet their power needs efficiently by 2030.

Now, all of the world’s top 10 coal countries have committed to net zero and three of these have made a new commitment to phase out coal power. In fact, over 95% of coal capacity is now in countries that have a net zero commitment.

Crucially, COP26 has seen the first coal phase-out commitments from emerging economies like Viet Nam, Indonesia and Ukraine, and we have seen multiple new financing mechanisms announced to help emerging economies retire coal plants and scale up clean power.

Major developed coal countries like Australia, the US, Turkey, Japan and South Korea accepted for the first time that they will need to phase out unabated coal power. The momentum underscores the fact that an urgent transition from coal to clean electricity is the best choice for the economy, health and climate.

Here we’ll share some of the highlights on the growing momentum this year and at COP26 and identify what more is needed for the world to finally make coal history.

Why coal matters – now

Right now, coal-fired power generation is the single largest source of global CO2 emissions. By ending coal power and replacing it with clean sources, we can achieve almost half of the emissions cuts needed by 2030.

And it’s a positive feedback loop: once electricity is cleaned up, we can then electrify other sectors, like transport and heating, to continue cutting emissions into the 2030s and 2040s.

The pathways mapped out by the IPCC to keep global heating below 1.5C show that coal-fired electricity generation rapidly declines by 2030 and is near-zero by 2040.

What will it take to make coal history?

Rapidly pivoting global power systems from coal to clean is necessary to limit global heating to 1.5C. So what are the critical steps ahead? And how are we progressing so far?

No New Coal

The first step to ending coal is to stop building new coal. We are getting close to the final coal plant being built, with the Paris Agreement already decimating the global pipeline of new coal power plants, but we’re still going to shoot past the 2021 deadline set out in the IEA Net Zero Roadmap.

However, there has been good progress in the last year, with avenues for funding new coal plants vanishing. We have seen major announcements on an end to overseas coal financing by China, Japan and South Korea, as well as the G20, G7 and OECD countries. It is getting harder and harder to get anyone to fund a new coal plant. At COP26, countries including the US and Germany signed a statement to align international public support towards the clean energy transition and out of unabated fossil fuels.

The global coal power pipeline is rapidly shrinking. In September a group of governments announced a No New Coal Power Compact. Recently Malaysia, Sri Lanka and Chile declared they would build no new coal as they set a target for Net Zero by 2050.

Last month Ember’s No New Coal Handbook revealed that just 21 economies have a pre-construction pipeline of more than one coal plant, with the largest pipelines in China, India, Viet Nam, Indonesia, Turkey and Bangladesh.

At COP26, many countries committed to No New Coal – most significantly Viet Nam, which has the world’s third-largest coal pipeline, and also the Philippines, Poland, Morocco and Kenya which were all planning new plants.

Analysis by CREA at the end of COP showed that 90 new coal power projects (88 GW) are now likely to be cancelled — this is two-thirds of all planned coal plants outside of China.

After No New Coal, comes ‘phase down’ and then ‘phase out’

Advanced economies are already well underway with phasing down coal power and should phase out coal by 2030 at the latest.

Ember’s analysis shows that coal generation has already halved in the OECD in the last ten years – and in the EU in just five years. 62% of OECD & EU governments are now members of the Powering Past Coal Alliance and on their way to phasing out coal by 2030. This year the G7, including the US and Japan, agreed to move away from unabated coal power and “overwhelmingly decarbonise their electricity systems in the 2030s.” The EU’s Fit for 55 package published this year leaves little room for coal power in Europe and COP26 saw new coal phase-out announcements from Croatia and Slovenia.

At COP26, major developed coal countries like Australia, the US, Poland, South Korea, Turkey and Japan accepted for the first time that they will need to phase out coal, all agreeing to the Glasgow Climate Pact under its initial wording of ‘phase out’ before it was weakened to ‘phase down’ of unabated coal power. However, this group are still holding back the OECD in achieving a 2030 coal exit. Only South Korea and Poland announced coal exits at COP26 and both of these are two decades too late (2050 and 2049 respectively).

We showed that rich countries are among the worst coal power emitters when you adjust for population size, and they have a responsibility to move first. Failure to do so undermines the request for developing economies to follow. Both the United States and Germany have signalled they will decarbonise their power sectors in line with the Paris Agreement – they now should show leadership amongst this group and make a clear 2030 commitment – a prediction from Kerry and an “ideally” from Germany’s new coalition will not not be enough.

For the rest of the world, peaking coal and phasing it down is next

The largest coal power countries outside the OECD, including China, India, South Africa and Indonesia, are facing the challenge of building enough clean power to both meet rising demand and replace coal. According to the IEA’s Net Zero Roadmap, coal power should end worldwide by 2040, with the least efficient ‘subcritical’ plants closed by 2030.

Encouragingly, COP26 has seen some important new announcements. Viet Nam and Indonesia became the first major emerging coal countries in Asia to commit to end coal power – for Viet Nam this was in the 2040s, and Indonesia’s would be in line with their 2060 net zero pathway although could be accelerated with international finance. Another impressive commitment came from Ukraine, which announced a new 2035 coal exit, putting pressure on European laggards like Poland and Turkey.

China – which is responsible for over half of the world’s coal generation – has ramped up its climate aspiration in the last year, committing to peak coal generation by 2025 and to reach net zero by 2060. Already it has seen its coal plant pipeline shrink by 74% since the Paris Agreement. However, it still has the world’s largest pipeline of coal plants and faces huge challenges in pivoting away from coal. At COP, the country didn’t increase its targets but a new US-China Pact does raise the prospect of renewed focus on methane emissions.

India – the world’s second-largest coal power country – made the headlines at the start of COP by announcing a new net zero pledge, and it made the headlines again at the end for blocking the agreement text on ‘phase out’ and amending to ‘phase down’ of coal power. In India’s case, even this is new and significant. Of perhaps greater importance are its increased renewables target and visionary plans for the world’s first multi-country solar grid. The end of coal growth in India may be closer than we think – we recently showed that if India reaches its ambitious 2030 renewables target, it would need less coal power in 2030 than at present. This would allow India to cancel its coal pipeline and close old, inefficient plants, and still meet rising demand.

Financing is going to be crucial. A raft of new funding facilities launched in the last two weeks will help developing countries retire coal plants and build clean electricity whilst continuing to raise living standards. South Africa secured a deal with the EU and the Asian Development Bank set out plans to buy out and retire coal plants in Indonesia, the Philippines and Viet Nam. New major funds were launched, including the Coal Asset Transition Accelerator (CATA), Accelerating Coal Transition (ACT) and Global Energy Alliance. These groundbreaking programs can become a model for climate financing.

Transitioning straight from coal to clean

Ending coal needs to go hand-in-hand with the rapid deployment of clean electricity. Countries cannot waste time with carbon-intensive ‘transition’ fuels. False solutions like biomass or fossil gas are now top emitters in regions like Europe where coal phase-out is well underway. After countries have moved beyond coal, the next step is to target 100% clean power, which G7 countries are already setting their sights on.

The recent energy crisis has shown that there are a range of benefits from accelerating the transition from fossil fuels to renewables – stable prices, cleaner air, better health and a more resilient, home-grown energy supply. A recent blog by Ember’s Dr Muyi Yang discussed how solar power provides a stable-cost alternative to China’s loss-making coal power plants. Meanwhile, in Europe, Ember’s Sarah Brown showed how renewables provide a reliable alternative to the volatility of imported fossil gas, which has driven up EU electricity bills. There’s never been a better time to accelerate the transition to clean power.

Beyond COP26

At the start of 2021, many of the world’s governments were still funding new coal projects overseas: now even China will not. New investment pledges at COP26 will support coal-reliant countries like South Africa and India to double down on clean power. Even laggards like Australia and Turkey have recently committed to Net Zero, which implies a 2030 coal phase-out.

It is time to turn these commitments into a wave of action: financing the rapid scale-up of clean electricity to push coal out of the picture; refining coal retirement mechanisms to avoid costly pay-outs to uneconomic polluters; and bringing along communities so that everyone can benefit from this transformation and no one is left behind. There are many lessons we can learn from Europe’s coal phase-out as countries across their world take on the challenge. There’s global consensus on ending coal, we now need to get on with achieving it.

At COP, the final document not only promised a coal phase down, but also requests that countries submit a new 2030 NDC by the end of 2022 that is consistent with the Paris Climate Agreement. The ambition gap remains huge, but the earlier that countries realise this, the more time there is to plan a rapid exit from coal.

UNEP (2021) Production Gap Report

The net is closing in on fossil fuels, and coal is at the frontline. It was awe-inspiring throughout COP to hear leaders discuss coal phaseout with a passion and energy that I’ve never seen before. The momentum has reached a new gear. However, there is a massive bridge from the real world of rising coal generation this year, to how quickly a phasedown – and ultimate phaseout – of coal can happen.

Dave Jones
‍Global Programme Lead, Ember

Europe’s coal exit is well underway. The few remaining countries clinging to coal have nowhere left to hide. The European Green Deal has set the region on course for Net Zero by 2050 by fully embracing the future green economy. The EU is also stepping up to help other countries, including South Africa, to get off coal.

Charles Moore
‍European Programme Lead, Ember

China has ramped up its climate aspiration in the last year. This started with the Net Zero announcement, followed by a more explicit target to peak coal power by 2025 and phase it down thereafter. Even with the current power crisis, China has not changed its mind. Indeed, it has reiterated its commitment to accelerating the clean energy transition through massive energy savings and a rapid clean energy deployment, as outlined in the recent working guidance for achieving the so-called ‘Double Carbon’ goals. We would hope this would be calibrated to deliver the aggressive coal phase-down needed later this decade, to put China in a 1.5 degree pathway.

Dr. Muyi Yang
‍Senior Electricity Policy Analyst, Asia, Ember

India’s journey towards becoming a renewables superpower has well and truly begun. Its ambitious 2030 target of 450 GW renewable energy is starting to attract investment, while clean power deployment is being ramped up across India. Its ambitions go even further, with visionary plans for the world’s first multi-country solar grid. India is well placed to take advantage of all that the green economy can offer. Now that international funding seems to be available to help speed up India’s coal-to-clean transition even further, can it use this opportunity to begin to plan a phasedown of coal, to truly put India on a 1.5 degree pathway?