Coal-Fired Power

Not on track
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In this report

After three years of growth and a record high of over 10 000 TWh in 2018, coal-fired power generation dropped by 3% in 2019. Although coal generation plummeted in the United States and Europe, growth in China and other parts of Asia kept coal firmly in place as the largest source (36%) of power generation. That said, spending on coal-fired power reached a decade low and final investment decisions for new plants continued to decline. Preliminary IEA analysis indicates a sharp drop in power sector coal demand in 2020 as a result of the Covid-19 crisis, with coal showing the greatest uncertainty of all fuels used for power. Looking ahead, coal-fired generation without CCUS needs to decrease 5.3% per year to 2030 to be in line with the SDS.

Share of coal-fired power generation in the Sustainable Development Scenario, 2000-2040

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Tracking progress

The Covid-19 crisis led to an unprecedented energy market upheaval in 2020. The IEA expects a sharp drop in power sector coal demand in 2020, with coal showing the greatest uncertainty of all fuels used for power.

After three years of increase, coal-based generation dropped 3% in 2019 as electricity demand growth slowed. It remains the primary energy source for electricity generation worldwide, however, with a share of 36% due to its widespread use in Asian economies.

CCUS-equipped coal generation still accounts for only a negligible share of overall coal-based generation, as just two plants are currently in operation; it is therefore not in line with the Sustainable Development Scenario (SDS).

Coal-fired power generation without CCUS is also not on track with the SDS, which requires a decline of 5.3% per year until 2030. 

Coal generation in Asia – particularly in China and Southeast Asia – continued to expand in 2019. However, increases in Asia were more than offset by lower coal generation in advanced economies, including in the United States and Europe.

Coal-fired power generation in the United States continued to decline in 2019 (by roughly 200 TWh) as overall power generation fell and gas-fired generation continued to expand.

Coal generation in Europe plummeted in 2019 (by 175 TWh), mainly because of strong renewables-based generation and coal-to-gas switching. Many countries have announced coal phase-outs: Germany, the largest coal consumer in Europe, plans to be coal-free by 2038.

Changes in coal-fired power generation capacity by region, 2019

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China and Southeast Asia led the overall increase in coal-fired electricity generation in emerging economies in 2019. Growth in China fell below 2%, however, due to a slowdown in electricity demand growth and continued expansion of nuclear, gas and renewable energy sources.

Coal-fired electricity generation in India fell for the first time, due to a halt in electricity demand growth and greater hydropower generation resulting from a strong monsoon season. 

Global spending on coal-fired power plants dropped by 6% in 2019, the lowest in a decade. The greatest drop was in China once again.

Final investment decisions for coal-fired generation dropped for the fourth year in a row to below 17 GW – the lowest level since 1980, despite an increase in China.

The majority of the 2019 final investment decisions for coal-fired plants (almost 90%) were once again for higher-efficiency plants, with only a very small portion of inefficient subcritical projects, mainly in Indonesia.

Coal capacity by type in the Sustainable Development Scenario, 2010-2030

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The Covid-19 crisis destabilised energy markets to an unprecedented degree in 2020. The IEA expects a sharp drop in power sector coal demand in 2020 after an 8% year-on-year decrease in overall coal demand in the first quarter.

In the current situation, uncertainty about the outlook for coal is higher than for any other fuel. Coal demand for power depends strongly on the level of electricity demand. In addition, the use of coal in power generation is being displaced by low-carbon energy sources such as hydro, wind, solar and nuclear, which have all been less affected by the Covid‑19 crisis. Hence, changes in economic activity and the associated electricity demand have a tremendous effect on coal-fired electricity generation and overall coal consumption.

Of the 2 080‑GW existing coal fleet, 60% is 20 years old or less. The young age of the global coal power plant fleet means that, under current and proposed investment plans and policies, coal-fired generation would use up most of the remaining carbon budget consistent with meeting the stringent UN climate goals agreed upon.

World Energy Outlook 2019 outlines a cost-effective strategy to retrofit, repurpose and retire existing capacity to address coal-related emissions. It includes retrofitting approximately 240 GW with CCUS or biomass co-firing equipment, at a cost of USD 225 billion, and efforts to repurpose plants for more flexibility.

Making the existing coal power plant fleet more flexible and efficient is a priority. To this end, in January 2019 the US DOE announced up to USD 38 million in funding for R&D to enhance the overall performance, reliability and flexibility of existing coal-fired plants.

Building unabated coal plants today risks locking in emissions over the long term and stranding assets. Policy measures are required to ensure that processes are in place to:

  • Assess the potential to deploy lower-carbon generation options.
  • Check that new coal-fired unit efficiencies are consistent with global best practice (currently supercritical or ultra-supercritical technologies).
  • Ensure that new coal-fired units are constructed CCUS-ready whenever possible, so that CCUS can be deployed quickly when policy or economics dictate.

These measures are particularly important for emerging economies in Asia, where electricity demand is rising and coal remains the fuel of choice to meet it.

Resources
Acknowledgements

Keith Burnard (IEAGHG), Andrew Minchener (IEA Clean Coal Centre), Hans-Wilhelm Schiffer (World Energy Council).

References
  1. IEA CCC (International Energy Agency Clean Coal Centre) (2019), Technology readiness of advanced coal-based power generation systems, https://www.iea-coal.org/technology-readiness-of-advanced-coal-based-power-generation-systems-ccc-292/.