IEA (2021), Phasing Out Unabated Coal: Current Status and Three Case Studies, IEA, Paris https://www.iea.org/reports/phasing-out-unabated-coal-current-status-and-three-case-studies, License: CC BY 4.0
The recently published World Energy Outlook 2021 highlights the need to end investment in new unabated coal-fired power plants, as well as strategies to retrofit, repurpose or retire existing ones. The Net Zero Emissions by 2050 Scenario (NZE) envisages that by 2030 advanced economies would end all power generation by unabated coal-fired plant. It also foresees the end of all unabated sub-critical coal generation in emerging markets and developing economies. Unabated coal generation would be phased out by 2040. This outlook coincides with commitments by a growing number of jurisdictions to phase out unabated coal in power generation. However, the contributions that these pledges will make to reducing global energy-related CO2 emissions fall far short of what is required in the NZE scenario.
Since the Paris Agreement in 2015, 53 countries and the European Union have pledged to achieve net zero emissions. As of mid-2021, however, only 21 countries using unabated coal for electricity generation have committed to phase it out, between 2021 (Portugal) and 2040 (Chile). Among them, few countries have already done so, such as Austria (2020), Belgium (2016) and Sweden (2020). Collectively, these commitments cover just 4.1% of global coal-fired generation and 1.3% of global energy-related CO₂ emissions.
While the phase-out policies cover only a small share of coal generation capacity, and every country must tailor policies to its own circumstances, the experiences of jurisdictions in phasing out coal can be instructive for other countries. They can shed light on three main considerations: potential impacts on the local economy, the price of electricity and the security of electricity supply. These considerations depend in turn on factors such as the current share of coal in electricity generation; growth of electricity demand; reserve margin in the grid; availability of alternative sources of power generation; supporting network infrastructure, including interconnections; and whether local coal is supplying the power plants.
Of the 21 countries that have pledged to phase out coal, in 14 countries less than 10% of the electricity supply came from coal. In countries where coal contributes little to the power supply and there is no domestic coal industry, phasing out coal is likely to be feasible without detriment to the economy, electricity prices or security of electricity supply.
In three of the 21 countries, by contrast, coal represents more than 20% of the electricity supply. Seven countries also have a domestic mining industry that supplies coal for power generation. In such countries, phasing out coal will be longer and more complex. This short report analyses the phase-out experiences of the Canadian province of Ontario, the United Kingdom and Germany. Based on their experiences, we present six recommendations.
1. Allow sufficient time for consultation and implementation
Phasing out coal may be a long and complex process. It may face political challenges and have numerous effects on communities, electricity prices, security of electricity supply and beyond. All these impacts need to be properly assessed and communicated to the public, together with the benefits involved.
2. Provide support for affected workers and communities
When coal plants and coal mines close, communities lose jobs and revenue. As a result, workers need compensation and reskilling, and both workers and capital need to be redeployed as part of comprehensive strategies.
3. Ensure that security of electricity supply is a cornerstone of phase-out policies
Security of electricity supply should be paramount. Plant closures should only proceed if security of electricity supply can be maintained by combining supply, demand and storage technologies with interconnections to reliable sources.
4. Implement carbon pricing
In many regions, a key way of reducing coal generation is to establish a CO₂ price or a similar instrument, such as a carbon tax, that encourages power plant operators to reduce the amount of CO₂ they emit. CO₂ prices can affect business competitiveness and affordability of energy supplies, so these economic impacts need to be considered.
5. Improve the climate for investment in clean electricity and the necessary infrastructure
If there is to be a smooth transition away from coal-fired power generation, investment in energy efficiency, low-carbon generation and electricity transmission and distribution networks needs to accelerate. Mobilisation of investment in electricity networks is likely to be challenging. Long approval processes and frequent delays, often linked to public opposition concerns, can present major obstacles to development.
6. Consider conversion of coal generation assets
Converting coal-fired plants to low-carbon uses not only helps to phase out coal but also reduces the need for new transmission investments. Plants can be retrofitted to enable carbon capture, utilisation and storage (CCUS) or to use low‑carbon fuels such as biomass or ammonia. They can also be converted to provide the ancillary services necessary to support electricity transmission from generators to consumers, such as frequency control. This can be a useful means to obtain an adequate return from existing assets and reduce emissions while keeping jobs and wealth in local communities.