August 2021
In the years following the landmark Paris climate agreement, many countries have made progress in phasing out coal-fired power, but nowhere near as fast as the commitment to keep temperatures below 2C requires, and much of the progress has been offset by even larger planned expansion of the domestic thermal coal sector in China.

If there is one decisive test of the global efforts against climate change, that is phasing out of coal-fired power generation. Reductions in thermal coal use make up the vast majority of the difference between energy futures that lead to climate disruption, and those that succeed in limiting warming to the levels that countries agreed to target in the Paris agreement.


Phase-Out Commitments

In the years since the agreement, 13 countries have made a decision to phase out coal-fired power by 2030, compared with just two that had such a commitment before.



Portugal's last coal plant will close by 2023, bringing the phase-out forward by seven years. Only two plants are currently in operation—Sines (1.3GW) and Pego (618MW). Planned closures for these plants: Pego in 2021 and Sines in 2023.

The French government intends to close or convert the nation's last four thermal coal plants by 2022 and end the sale of gas and diesel internal combustion cars by 2040. In April this year, the Le Havre coal plant unit was shuttered after French President Emmanuel Macron pledged to shut all of his country’s coal-fired power plants by year-end at the WEF in Jan 2018.

In 2019, 0.3% of the country’s electricity generation was from thermal coal, so Macron’s choice to move this date up was largely symbolic of the new leadership position that France is taking in combating climate change.

In the UK, the last coal-fired power station will be forced to close in 2024. The phase out year was brought forward from 2025 by Prime Minister Boris Johnson in February 220. As of July, only four plants remain operational: West Burton A and Ratcliffe-on-Soar coal plants in Nottinghamshire, the Kilroot coal plant in Northern Ireland and two generation units at the Drax site in Yorkshire.

The Italian government announced in October 2017 that the country had set its sights on phasing out thermal coal power plants. A new energy strategy, still under discussion, aims to reach the goal of 27% of gross overall energy consumption from renewable sources by 2030.

In 2025, Ireland plans to shut down its last thermal coal-based power plant - the 900MW ESB Moneypoint generation station. Ireland's government confirmed the decision in March 2018.

Greece is proceeding with the phase out of coal-based power generation by 2028 as announced by its government during the United Nations Climate Action Summit in New York in September 2019.

The Netherlands re-confirmed the nation will shut down its remaining five thermal coal plants which will help the country reduce its carbon emissions by 55%. A non-binding motion by the Dutch parliament passed in September 2016 to this effect. In April, the Dutch cabinet agreed to scale back production at three of the plants.

In Finland, the government announced a plan for a complete phase out in November 2016. A legislative proposal to prohibit the use of thermal coal in heat production by May 2019 was presented to parliament in October 2018. Thermal coal accounted for 9% of Finland's energy mix in 2016.

By 2029, Canada expects to have some 90% of its electricity generated from sustainable sources, up from 80% now.

In New Zealand, the Jacinda Ardern government set 2030 as the target year to switch over the country's electricity grid entirely to renewables.

Denmark currently has three power stations that utilize thermal coal. The Esbjerg Power Station is set to stop using coal by 2023, the facility in Nordjylland will follow suit by 2028, and the station in Fyn will do so by 2030.

Israel has also targeted 2030 to shut down its two remaining thermal coal fired power plants—Orot Rabin and Rutenberg Power Station—with a combined capacity of 4,850MW.  

Slovakia’s government has declared 2030 as the target year for Slovakia’s coal phase-out in both the mining and power sectors. The country’s environment strategy 2030 argues for a “progressive phase-out of power and heat production from coal” due to local air pollution concerns.

Hungary announced 2030 as the phase out year during the United Nations Climate Action Summit in New York in September 2019. To achieve this, Hungary will maintain its existing nuclear power capacity of around 2GW, while increasing its production of solar energy to 6GW. The country has just one operational plant left—the 950MW Matra power plant. Once the plant is shuttered, a 200MW solar farm is planned for the same site.

In Germany, a government-appointed commission announced the country's coal phase out plan in January 2019. The country is targeting 2038 as the phase out year. The plan calls for massive financial transfers worth US$47bn over the next 20 years to German regions where thermal coal mining and coal power generation still play a significant role.

By 2040, Chile expects to shut down all of its 28 operational plants as part of its Energy 2050 plan which aims to meet 70% of national electricity needs with solar, wind, hydropower, geothermal, and ocean energy. The government announced in April that it plans to close half of its coal-fired coal plants by 2025—15 years ahead of a deadline to eliminate the fossil fuel from its power mix.



Phase-Out Factors

Several factors are expected to lead to the gradual decline in global thermal coal-fired power generation over the coming decades.

First, international and domestic pressure will lead to the gradual increase in the number of banks reviewing their coal-fired power project financing strategies.

Second, public opposition to coal projects is raising project realisation risks.

Third, an increasing consumer focus towards environmental policy would encourage utility firms to align their commercial investments more closely with climate change goals.

However, the pace of decline in coal-fired power generation should not be exaggerated. While thermal coal's share of total electricity generation capacity will steadily decline in the coming years, AME expects coal will remain the dominant source of electrical power.