Coal’s uneven decline: What the data tells us

Coal power is now globally reaching record-low levels of new coal capacity. This is what Global Energy Monitor shows in the last edition of its Boom and Bust Coal report. (1) The global coal transition is underway — but uneven. While major retirements occurred in the EU and the UK, coal also saw troubling momentum in China and India, where new construction and proposals hit record highs. Outside these two countries, development continues to decline, marking ten straight years of contraction. Whether this shift accelerates or stalls will depend on scaling up retirements through environmental policy, cutting off new build outs, and mobilizing climate finance to support a just transition. As the world tediously races to meet its climate goals, financial institutions have a key role to play by immediately halting their contribution to coal power expansion and shifting their investments towards sustainable power.

In 2024, the world opened the lowest amount of new coal power capacity in twenty years. Retired coal power in the European Union grew fourfold, while the United Kingdom shut down its last coal plant — becoming the sixth country to phase out coal power entirely since the Paris agreement. (2) South Korea commissioned what is expected to be its last coal plant according to government pledges: the Samcheok power station, which retirement is planned in 2054. (3) Several Southeast Asian countries — including Indonesia, Malaysia, Vietnam, and the Philippines — are now on defined and established pathways toward phasing out coal or halting new proposals.

At odds with this global momentum, China and India continue to dominate new coal development, accounting for 92% of all newly proposed capacity in 2024. China alone initiated 94 GW of new construction this year — the highest level since 2015. Indeed, China has driven coal power expansion so aggressively that its increase alone exceeds the global net gain in 2024, indicating that while other regions were simultaneously retiring coal plants, China was adding capacity, reducing the overall global advancements in retirement. Compounding the issue, Chinese firms remain active in financing and proposing coal projects abroad, particularly in Africa, where countries like Zimbabwe and Zambia have seen new Chinese-backed coal initiatives, despite China’s 2021 pledge to halt overseas coal financing.

India, on its side, proposed 38.4 GW of new coal power capacity – its highest in nearly a decade – with 60% backed by state-owned companies. Adani Power alone accounted for 9.6 GW, despite facing corruption allegations and close ties to top government officials. Adani Green Energy LTD, a subsidiary of Adani, also secured funding from major banks in 2024, including Deutsche Bank, Barclays and Société Générale. (4) Overall, new proposals increased India’s pre-construction coal pipeline by 75% over 2023, reaching 81.4 GW.

Amid headline retirements and phaseout pledges, one persistent issue receiving far less attention is the rise of captive coal power in Indonesia—plants built to supply power directly to industrial facilities. While the government has committed to phasing out grid-connected coal by 2040, plans for new captive plants are still advancing, often outside the scope of international climate frameworks. A case in point is the Halmahera Persada Lygend nickel smelter which includes a captive coal power plant backed by BNP Paribas, despite the bank’s stated coal exit policy. These types of transactions highlight critical loopholes and threaten to undermine Indonesia’s just transition goals, locking in emissions and fossil fuel dependency for decades to come, even as public coal development appears to be winding down.

As Global Energy Monitor explains, reversing the tide of coal power expansion—particularly in China and India—will require strong domestic policy reforms. The report calls for  caps on new coal approvals, restrictions on long-term power purchase agreements, and national retirement roadmaps to eliminate outdated coal capacity. Financial institutions also have a critical role to play in ceasing support for new coal power and pushing companies to adopt credible corporate climate transition plans.

Progress in commitments from financial institutions, however, remains slow and uneven. Only 46% of the 300 major financial institutions tracked by Reclaim Finance’s Coal Policy Tracker have a basic thermal coal policy, and just 50 have committed to halting thermal coal expansion. Metallurgical coal—used in steelmaking — remains largely unaddressed, with only 13 institutions placing any restrictions on it.

There are however some signs of improvement. According to Urgewald, about 140 banks have significantly reduced their coal financing since 2016. (5) A handful of banks (eight in total) also created policy carve-outs to enable financing for accelerated coal retirements. Still, the broader picture remains concerning:  75 banks have actually increased their support for the coal sector, and commercial banks provided US$470 billion in loans and underwriting to the coal industry from 2021 to 2023, and institutional investors continued to hold US$1.2 trillion in coal-related assets as of mid-2024.

Despite signs of progress, coal power expansion in China and India continues to offset global gains. As Boom and Bust Coal 2025 makes clear, phasing out coal requires both stronger domestic policies in key countries and coordinated financial pressure to end support for new projects. Financial institutions must urgently stop supporting coal expansion. Without faster action, the world remains off track for a 1.5°C future.