phaseout coal for good
of new coal-fired capacity in 2024.
Coal-fired power, the world’s leading source of pollution, is in decline in many countries. Outside of China and India, capacity development has declined for the tenth consecutive year. Only eight countries have proposed new coal-fired power plants by 2024.
However, due to its continued rapid growth in India and China in recent years and despite a slight decline in coal demand in the first half of 2025, its capacity continues to increase globally, although at a slower pace than before.
Despite competition from low-cost renewables, 44 GW of new coal-fired capacity was commissioned in 2024 compared to 70 GW in 2023. Although this is the lowest level in the last twenty years, only 25 GW of capacity has been retired, which still represents a net increase of 19 GW of coal-fired capacity worldwide. However, any further coal expansion contravenes the International Energy Agency’s (IEA) Net Zero Emissions (NZE) scenario, which aims for carbon neutrality by 2050 to avoid the worst impacts of climate change.
To keep the 1.5°C target within reach, there is an urgent need to halt the construction of new coal infrastructure and rapidly phase out existing power plants and coal mines by 2030 for Europe and OECD countries, and by 2040 globally.
International commitments to free the world from its dependence on coal are beginning to gain momentum. But it’s not enough. As OECD countries phase out coal, there is a disparity of commitments and a growing geographic polarization of coal developing countries in Asia: China and India alone accounted for 92% of proposals for new coal capacity in 2024.
At the same time, even if the construction of coal-fired power plants stopped today, existing plants would still use up two-thirds of the global carbon budget. This is why coal development must not only be stopped now, but massive funding must be directed towards accelerating the early closure of operating power plants.
The private financial sector and governments have a responsibility to finance the coal phase-out and enable rapid deployment of sustainable energy. To achieve this, private financial institutions must adopt policies that align their coal sector financing activities with a 1.5°C trajectory with no or little overshoot, and cease all support for new mines, power plants and infrastructure. This can only succeed with strong intervention from public authorities and regulators.
ACCELERATING COAL PHASEOUT
Coal is still used to generate more than a third of the world’s electricity. There are huge differences between countries and regions in terms of their dependence on coal and the pace of coal phaseout. South Africa and India still rely on coal respectively for nearly 80% and 75% of their electricity generation, and China has reached a new record for new coal-fired capacity with 94 GW under construction to be launched in 2024.
Closing coal-fired power plants in the socio-economic and political contexts of different regions and countries, while ensuring energy access and just transitions, is a complex challenge. While the average age of coal-fired power plants in the United States and Europe exceeds 40 years, in the Asia-Pacific region, plants are on average less than 15 years old.
There is some good news, however, as the construction of new coal-fired power plants is generally slowing down, and coal infrastructure in Europe is gradually closing. In the United States, coal capacity has halved since 2011, although this progress is now threatened by the administration of President Trump.
However, the Coal withdrawal is far from fast enough. To accelerate this, the international community has launched new initiatives to finance the closure of power plants in developing countries dependent on coal, such as Just Energy Transition Partnerships (JETPs) launched during COP26 in Glasgow in 2021, and the Energy Transition Mechanism (ETM) of the Asian Development Bank.
Due to the slow pace of these initiatives, some governments, financial institutions and philanthropic foundations are promoting the concept of “transition credits” carbon offsets put up for sale to help finance the purchase of coal-fired power plants. However, these offsets for the transition from coal risk reproducing all problems which have affected offsets in other sectors, in particular, exaggerated emissions reduction benefits and the sale of fictitious offsets to polluters who use them to avoid reducing their own emissions.
Instead of focusing on voluntary agreements that compensate private investors in individual coal plants, governments, as well as the private and philanthropic sectors, should focus on energy sector reforms that mandate the closure of coal plants and accelerate the rapid deployment of sustainable energy.
of global operational coal-fired power capacity (1,684 GW) has no commitment to closure or phase-out.
coal-fired power plants in the world must retire by 2024
FAILURE IN POLICIES THAT ALLOW COAL EXPANSION
Some financial institutions claim to be exiting coal while continuing to support companies heavily involved in coal or companies with coal expansion plans. Those with carbon neutrality commitments that oppose coal expansion are no exception: ten years after the Paris Agreement,voluntary commitments of financial actors remain very insufficient and prove that regulation is necessary. Public actors must ensure the end of all financial services to companies which do not have plans for a complete exit from coal before 2030 in the OECD and 2040 in the rest of the world (with exceptions for support for closure and just transition projects).
Too many coal policies still support expansion
When policies exclude financing for coal producers, many do so on the basis of the share of coal in their business, rather than on the basis of their expected production.
Too many coal policies do not cover all financial services or the entire coal value chain.
There are many flaws in financial players’ current coal policies. For example, while asset managers limit investments through active funds, they continue to invest in coal through their passive funds.
CREDIBLE OUTPUTS WHICH INCLUDE SUSTAINABLE ENERGIES
Public financial institutions alone cannot eliminate coal. Countries with young coal-fired power plants will be unwilling to close these plants early without viable energy alternatives.Although the alternatives are competitive in terms of costs, private funding is still not directed towards sustainable energies and network infrastructure improvements. Financial institutions must commit to allocating six dollars to sustainable electricity supply for every dollar allocated to fossil fuels. For a real global transition from coal,a fair share of these funds should be allocated to the economies of theSouth.
Since Northern countries have benefited from economic development largely linked to coal-based production since the Industrial Revolution, they have a historic responsibility to support coal phaseout and the development of alternatives in coal-dependent countries. This includes putting pressure on the private sector, which will have to represent 60% of investments in so-called clean energy according to the International Energy Agency (IEA) in the economies from the South.
But these governments must support the deployment of a sustainable electricity supply – avoiding false, unsustainable, carbon-intensive solutions such as biomass or unproven technologies, probably extremely expensive, and with very dubious climate benefits,such as carbon capture and co-combustion with ammonia or hydrogen. Gas, wrongly presented as a transition energy to coal, remains a polluting energy that must be avoided in favor of truly sustainable energies. Policymakers must also ensure the inclusion of local populations in transition plans that do not negatively impact employment or the environment. Ultimately, international partnerships like JETPs and theCoal Transition Accelerator (CTA) launched in 2023 by Emmanuel Macron can only succeed if they are translating financing allocated on affordable terms for a socially and environmentally fair exit from coal to sustainable energy.
