Phasing out coal power is the most important step the world can take to curb climate change.
Coal, the most polluting fossil fuel, supplied 36% of electricity generation in 2022. This must drop to 4% by 2030 and then 0% by 2040 if the world is to limit global warming to 1.5 degrees C (2.7 degrees F) and prevent the most catastrophic impacts of the climate crisis. (That’s according to a high-ambition scenario from Climate Action Tracker.)
Removing coal from power generation is also critical to decarbonizing other sectors of the economy. It will help ensure that green technologies that run on electricity, like electric vehicles and heat pumps, are powered by cleaner energy sources.
While the share of coal used in the global power sector has been gradually ticking down in recent years, it needs to start declining much faster. Developed countries should reach zero coal the soonest, as they’re in a stronger financial position than developing nations and are already, for the most part, less reliant on coal. But all countries will require an incredibly swift transition.
Phasing out coal at the speed needed will be extremely challenging, but a handful of countries are already proving that a rapid, sustained shift is possible. While each one must chart its own path forward, other coal power-reliant countries can learn from these leaders.
Which countries have reduced coal power the fastest?
The world has eight years to scale down its use of coal power from 36% of electricity generation in 2022 to less than 4% in 2030. To explore how such a quick phase-down might be achieved, we analyzed the 10 countries that have reduced coal power the fastest over any eight-year period since 2000. Greece and the U.K. achieved the fastest coal power reductions — moving at a quicker pace than what’s needed globally — followed by Denmark, Spain, Portugal, Israel, Romania, Germany, the United States and Chile.
Of the top 10 countries, only Portugal has reached zero coal power already. Some other countries, such as Austria and Belgium, have also eliminated coal power entirely, but did not make the top 10 as they either used very little coal to begin with or phased it out over a longer time span.
Greece reduced coal power faster than any other country in the world over an eight-year span, from 51% in 2014 to 10% in 2022, replacing it with a combination of gas and renewables. At number two, the United Kingdom reduced coal power from 39% in 2012 to 2% in 2020, replacing it mostly with wind and bioenergy but also some gas. Denmark was third fastest and is notable as the only country on the list where the reduction in coal power was replaced by 100% zero-carbon power sources.
While many of these leading countries are European, there are positive examples from other areas of the world as well. The United States cut its coal power use in half between 2014 and 2022, replacing it with a combination of gas, solar and wind. In Chile, coal plants were booming as recently as a decade ago, but the country has quickly reversed course; it is now supporting early retirement of coal plants and replacing them mainly with solar and wind power.
Similarities and differences among the top 10 countries
On the whole, the countries with the fastest coal phase-outs are high income, with relatively small populations, less growth in electricity demand than average, and coal plants already nearing the age of retirement. Nine of the 10 countries have announced coal phase-out targets and eight have implemented some form of national carbon pricing. All of these factors can work in favor of a clean energy transition.
However, key differences among the top 10 countries demonstrate that phasing out coal is possible in a variety of circumstances.
While all 10 countries are currently high income by the World Bank’s definition, Chile and Romania have only recently reached that level. At the time these countries started their steepest coal reductions, GDP per capita ranged from $9,000 per year in Romania (2012) and $15,000 in Chile (2014) to $55,000 per year in the United States (2014).
Seven out of the top 10 countries have populations below 50 million people and thus have lower electricity demand, making for an easier energy transition — although the United States (with 330 million people) and Germany and the United Kingdom (with 84 million and 66 million people, respectively) have proved that a rapid transition can be feasible even with a bigger energy grid.
Electricity demand in most of these countries was either falling or growing slower than the global average during their fastest transition periods, making it easier to retire coal plants. By contrast, electricity demand in Chile, Israel and Spain was growing at a rate near or slightly above the world average, showing that coal phase-out is possible even in places with rising electricity needs. But Israel’s case also illustrates a major challenge in these scenarios: The country’s demand grew so much that even though coal fell as a share of all power, total coal power use remained fairly steady.
The nature of each country’s coal industry matters, too. Six of the 10 countries relied mainly on coal imports, so shifting to other power sources like renewables or domestically available gas could benefit their energy security without causing major economic impacts. However, the U.S., Germany, Romania and Greece were able to reduce coal power dramatically despite having large coal mining sectors and relying on mostly domestic coal production.
Finally, nearly all of these countries have retired older coal plants which were already close to or above the typical retirement age of 37 years. The decision will be more difficult for nations with younger coal plants, which investors expected to operate and generate revenue for decades to come. The biggest exception is Chile, which has so far retired coal plants that were 29 years old on average and plans to close many that are younger still.
Two countries achieving success in coal phase-out
Let’s dive deeper into the United Kingdom and Chile, two countries that have been successful in phasing down coal in very different contexts, to learn from their experiences. (We profiled Denmark’s energy transition in another recent article.)
The United Kingdom has had two periods of rapid coal phase-down
Coal fueled the industrial revolution in the United Kingdom, but two separate periods of rapid phase-down in recent decades have pushed its coal power use to near zero. Today the country has only one coal power station left which is scheduled to close in September 2024.
The U.K.’s first period of coal power decline, in the 1990s, was driven by market forces. New EU regulations in 1991 allowed gas to be used for electricity; when coupled with the high cost of mining in the U.K. and the development of cheap, abundant gas in the North Sea, this led to a rapid shift from coal- to gas-fired power plants. Coal tumbled from about 65% of the power mix in 1991 to around 30% in 1999.
After remaining relatively steady in the early 2000s, the U.K.’s coal power use plummeted again in the 2010s. And this time the reduction in coal was replaced not by gas but by renewables.
Around this time, the EU and U.K. enacted a series of policies aimed at phasing out coal. The EU introduced tighter limits on local coal plant pollution in 2008 which would require expensive upgrades for old coal plants. With the average coal plant in the U.K. already nearing retirement age, many chose to close rather than comply.
In 2013, the U.K. introduced a carbon price floor which went above and beyond the EU’s existing carbon price, then raised it multiple times in subsequent years. This drove up the cost of coal power so that it was more expensive than gas and much more expensive than renewables. By 2015, coal plants were no longer profitable and were being shut down in droves.
The government set a target in 2015 to fully phase out coal by 2025; this has since been moved up to 2024. With tightening regulations, clear policy signals from the government and unfavorable economics — as well as strong public support for climate action — the country’s remaining coal plants quickly closed. Meanwhile, falling costs and supportive policies helped trigger a boom in renewable power, especially wind energy, which made up for most of the reduction in coal.
The U.K. also benefitted from having electricity interconnections with neighboring countries like France, which can help balance supply and demand as renewable power fluctuates. And its overall electricity demand was going down at the time, thanks to increasing energy efficiency standards, technological improvements and deindustrialization.
Chile has reversed course on coal, even as electricity demand continues to rise
Unlike in the U.K., Chile’s electricity demand has been rising. From 2009 to 2019 the country built 14 new coal power plants with the goal to meet electricity demand and increase energy security. But the tide began to turn against coal even before these had finished construction. In recent years, Chile’s solar and wind production have so far outpaced demand growth that it’s been able to shut down coal plants. Coal fell from a high of 46% of the electricity mix in 2013 to only 23% in 2022.
Chile has benefitted from some of the best solar and wind availability in the world. To leverage this advantage, the government passed a renewable energy quota in 2008 and enacted other supportive laws which made it easier for new companies to enter the renewable energy industry. Falling costs have made solar and wind competitive without any subsidies needed, and Chile’s copper mining companies (a mainstay of the economy) are increasingly demanding and funding renewable energy. The country is also planning to become a major exporter of green hydrogen produced with renewable power. Thanks to these developments, it’s ranked as the most attractive emerging economy for clean energy investments.
At the same time, Chile has taken active steps to phase out coal. The government implemented several policies that made coal power less competitive, like pollution and efficiency standards on power plants and a small carbon tax. And in 2018, on the back of a new government decarbonization strategy, Chile’s Ministry of Energy convened a working group to decide how to phase out coal power. This included governmental agencies, coal companies, the national electricity coordinator, environmental NGOs and the coal workers union. The following year, its members announced a voluntary plan to close several coal plants in the near term and all units by 2040.
Since then, Chile has accelerated its near-term timetable and companies have often closed plants ahead of schedule. Of the country’s 28 coal power plants, 8 have already retired and another 12 are set to retire by 2025. Seven of the coal plants scheduled to shutter will be 15 years old or less when they are decommissioned, setting an example for other countries facing retirement of younger coal fleets.
Looking ahead, Chile must work to retire the final eight coal plants that will remain after 2025 — which experts say needs to happen by 2030 rather than by 2040 as originally planned to stay in line with global climate goals. This will require integrating increasingly high levels of renewable power on the grid as well as upgrading transmission lines, building out energy storage, and developing a smart grid to maximize grid flexibility and reliability.
Coal-reliant countries can learn from these examples
Other countries reliant on coal power can learn from the success of these leaders and adapt the lessons for their national circumstances.
The United Kingdom’s example is especially relevant for some developed countries. For example, Poland and Russia’s coal plants are nearing retirement age like the U.K.’s were. Japan and South Korea’s coal plants are generally younger, but they have even less domestic coal mining that the U.K. did — relying essentially 100% on imports — which will lessen the domestic economic impacts of the transition.
Meanwhile, Chile’s example is most relevant for developing countries with relatively young coal plants and growing electricity demand. Turkey, Malysia and Vietnam, for example, are in a similar position today to where Chile was in 2014, with rising demand and coal at around 40% of their electricity mix.
However, countries that rely more heavily on coal will face much steeper challenges — like China (61% coal power share), Indonesia (62%), India (74%), and South Africa (85%). To meet global climate targets, these countries will need to decrease their coal power use far faster than has ever been achieved before.
Some, like China and India, will face steeper challenges
China and India together are responsible for two-thirds of the world’s coal power generation today, so much of the success of global coal phase-out hinges on them.
These countries’ sheer amount of coal capacity — around 1,100 GW for China and 240 GW for India — will make the transition difficult. Electricity demand in both countries also increased by roughly 50% from 2014-2022, more than twice as fast as the world average. While the share of coal power has been falling slightly in China and remained fairly flat in India, both countries continue to approve and build new coal plants to meet growing demand, so coal power use is still rising overall. Renewable power has been growing exponentially in both countries, breaking records, but it will need to accelerate ever faster to meet demand growth.
China and India also have far larger domestic coal mining industries than any of the top 10 countries. China is currently home to 3.4 million coal miners and 740,000 coal power plant workers (more people than the entire population of Croatia), while India has 1.4 million coal miners and 600,000 coal power plant workers. This will increase both the cost and the difficulty of ensuring a just transition for all coal-dependent communities.
While challenging, however, transitions of this magnitude have happened before. China already lost more than 2 million coal jobs from 2012-2018 as production slowed and became more efficient, leading the government to create a transition fund. China and India can also draw learnings from other countries and communities that have successfully transitioned away from fossil fuels.
China is predicted to reach peak coal in 2025 and its government has pledged to reduce coal over the 2026-2030 period, but it has not yet committed to a full phase-out. India has no plans to retire any coal plants before 2030 and has indicated that coal will play a substantial role for decades to come. Both governments will need to step up their efforts — but they shouldn’t have to do it alone.
Ending coal power globally will require more international support
Asking developing countries to phase down coal power at a faster rate than developed countries have ever achieved raises important ethical questions. In order to give more time for developing countries, developed countries should take the lead and completely phase out coal power by 2030 or earlier. But, while critical, this would not provide much leeway for developing countries that are large emitters. Developing countries will still need to phase out the vast majority of their coal power by 2030 and reach zero by 2040, replacing it with clean energy.
For this to be possible, developed countries must seriously step up international finance and support for developing countries’ transitions.
The G7 group of countries (Canada, France, Germany, Italy, Japan, the U.K. and the U.S.) have already launched Just Energy Transition Partnerships (JETPs) with countries like South Africa, Indonesia and Vietnam to support their coal phase-out efforts. So far $47 billion has been pledged, but that is not nearly enough. The G7 and other developed countries should expand these partnerships and increase finance, preferably in the form of grants instead of loans. They should also supply technical assistance to help countries develop policies that are conducive to clean energy investment; develop public-private partnerships to leverage private capital; and explore innovative financial mechanisms to de-risk private investments. Multilateral Development Banks like the World Bank should also stand true to their commitments to stop funding coal and shift fully to funding renewables.
Governments, development banks, and companies must also plan ahead to support the workers and communities that will be most affected by the energy transition. This could include shifting coal workers to other careers in energy or industry, offering unemployment or relocation compensation, and providing financial support to regions that have lost coal revenue. Just transition policies cannot be implemented overnight and are not one-size-fits-all, so planning needs to begin now.
Keeping the end of coal power in sight
Just because a transition this rapid and far-reaching has never happened before doesn’t mean it’s not possible. Unlike most previous energy transitions, which happened gradually over time, there is a clear deadline for coal phase-out that countries are deliberately trying to meet. What’s more, renewable power is now more cost effective than fossil fuels in the majority of countries. And it is a positive trend that many countries which had planned to expand coal — like Turkey, Vietnam and Bangladesh — have cancelled most of those plans. The number of coal plants in construction or planned for construction is half what it was in 2017 and less than a quarter of what it was ten years ago.
The world will need urgent efforts and close cooperation to achieve this shift, but the end of coal is nearer than it’s ever been. It has to be.
Unless otherwise noted, national electricity data used in this article is from Ember’s yearly electricity data as of November 9, 2023.
This article is the third in a series of deep-dive analyses from Systems Change Lab examining countries that are leaders in transformational change. The first two articles analyzed countries rapidly scaling up renewable power and electric vehicles. Systems Change Lab is a collaborative initiative — which includes an open-sourced data platform — designed to spur action at the pace and scale needed to limit global warming to 1.5 degrees Celsius, halt biodiversity loss and build a just and equitable economy.
Read the full article originally published by World Resources Institute on Nov. 30, 2023.
It is republished under a Creative Commons licence.
