Phasing out coal: technology, policy and justice

Rapid phase-out of coal power is essential for achieving climate targets. Here, we synthesize historical evidence on coal decline and phase-out to develop realistic scenarios and inform future policies.

We identify 43 countries that have pledged to stop using coal by a specified date. We show that such pledges were initially made by wealthy countries that produce and use little coal, and only after their coal use had already peaked and begun to decline. Over time, these pledges expanded to countries with lower incomes and larger reliance on coal. Still, the planned coal phase-out is not faster than what has been observed historically and is not sufficient to deliver on Paris climate targets. Additionally, the largest coal users including India and China are yet to pledge a definite coal phase-out. We show that in a scenario where these economies phase out coal as fast as planned in Germany, emissions from burning coal would be compatible with 2°C-2.5°C warming.

Such ambitious coal phase-out would require just transition policies compensating negatively affected workers, communities, and companies. To estimate the likely cost of such compensation, we build the first database of coal phase-out compensation policies worldwide. We show that all countries with notable coal phase-out pledges plan just transition compensations, globally amounting to over $200 bln. The size of compensation is roughly proportional to the emissions avoided as a result of enforcing coal phase-out and is comparable to recent carbon prices under the EU’s Emissions Trading Scheme. We show that if China and India pursue coal phase-out in line with Paris climate targets and implement compensation similar to that observed in other countries, the required financial resources would be as large as already pledged climate finance to all developing countries.

We conclude with policy recommendations on accelerating coal phase-out and just transition policies.