The fate of coal power was sealed in 2021 as investors sought cleaner investments and governments committed to work towards a managed decline of the fossil fuel.
Countries agreed at the Cop26 climate talks to wind down unabated coal power, albeit with no timeline nor a consensus for a total phase-out.
Asia turned against coal finance. First South Korea, then Japan and finally China, the world’s largest coal financier, put an end to support for new coal power projects abroad, effectively drying up international cash for unabated coal.
But it could be a long goodbye. Plans to exit coal power at home proved a more difficult conversation for coal-dependent governments, including China, India, Russia and Australia.
And promises made throughout the year are yet to be backed with concrete policies and the accelerated roll out of green alternatives. A carbon-intensive recovery to the Covid pandemic, particularly in China, drove global coal power generation to a record high in 2021.
Here were the biggest moments.
Data emerged showing China’s biggest coal-producing province, Inner Mongolia, had approved power and industrial facilities in 2020 that would lock in annual coal use the size of Germany’s. It was the most striking example of Beijing’s coal-powered recovery to the pandemic.
Central government inspectors slammed China’s energy authority for promoting coal power expansion without regard for Beijing’s environmental goals. The highly critical report was hailed as “groundbreaking” and a show of Beijing’s challenges to reflect president Xi’s climate ambition in all planning decisions.
In Bangladesh, the government announced plans to scrap nine coal power plants. The high cost of imported coal, declining financial support from overseas investors and Bangladesh’s role as chair of the Climate Vulnerable Forum were cited as reasons for the decision.
Plans to build the UK’s first deep coal mine in 30 years for coking coal were suspended after the government was accused of “rank hypocrisy” for greenlighting the project while calling for global climate action.
UN chief António Guterres demanded the G7 group of wealthy nations exit coal by 2030 and “cancel all global coal projects in the pipeline” – putting pressure on Japan and the US to produce exit plans.
In its plan for economic development to 2025, China made no plan to halt coal expansion but promoted “the clean and efficient use of coal”. Analysts said Beijing’s climate policy was “crawling” to carbon neutrality.
Traditional coal backer South Korea pledged to end its coal funding to other countries during a leaders’ summit hosted by newly elected Joe Biden in April. President Xi Jinping said China would “gradually reduce” its coal consumption from 2026-30 – suggesting a peaking date in 2025.
The Asian Development Bank drafted a policy to end all financing for coal mining and power plants, accelerating a shift away from coal across Asia.
The UK Cop26 president Alok Sharma used the momentum of a global shift away from coal to announce the Glasgow summit in November would “consign coal to history”.
In its first 1.5C-aligned scenario, the International Energy Agency (IEA) warned that fossil fuel expansion had to end this year if the energy sector was to achieve net zero emissions by 2050.
After initial resistance, Japan agreed to a G7 pledge to end support for unabated coal power abroad by the end of 2021 – leaving China isolated as the last major coal funder overseas.
The head of the Climate Investment Funds, Mafalda Duarte, trails a $2 billion scheme to support coal-reliant developing nations in the transition to clean alternatives, in an interview with Climate Home. This was to include derisking private capital and helping governments create alternative jobs and social security schemes in mining regions.
China’s biggest bank, the Industrial and Commercial Bank of China (ICBC), said it would no longer finance a 2.8GW coal power plant in Zimbabwe, citing “environmental problems” amid a wave of cancellation of Chinese-backed coal projects.
South Africa’s climate advisors urged the government to step up its 2030 climate ambition by accelerating a shift away from coal and ending new coal power projects.
But Indonesia submitted a long-term strategy to the UN showing that the amount of coal used for primary energy would continue to grow until at least 2050.
At the G20, climate and energy ministers, including from Indonesia, came to an impasse on phasing out coal power with China, Russia and India resisting a deadline to wind down the fossil fuel.
Brazil defied the Italian G20 presidency’s call for a coal phase out and published a plan seeking investment in coal mining and allowing the fossil fuel to be burnt until 2050.
The Sri Lankan government ruled out building another coal-fired power plant.
A report by Greenpeace found that China only approved 5.2GW coal projects in the first half of 2021 – a 79% decline on the coal capacity that was approved during the same period in 2020. Campaigners said decision-makers were receiving “mixed signals on coal” as local governments slowed the approvals of new projects but were “still anticipating financial support”.
President Xi Jinping announced at the UN general assembly that China would stop supporting new coal power projects overseas– effectively drying up international cash for unabated coal. The move came 10 months after China’s environment ministry floated a proposal to ban coal power investment abroad.
The decision was taken amid a severe power crunch across China caused by surging coal prices and supply constraints together with skyrocketing coal consumption across the country. Local media outlets attributed the power shortages to environmental policies, which analysts feared could lead to a backlash against climate action.
Rising energy demand and surging coal prices brought the power crisis to India, with coal stocks shrinking to four days’ worth at one of the lowest points.
During a G20 leaders’ meeting in Rome, some members including China and India baulked at setting a timeline to exit coal. But with China onside, the group committed to end international public finance for unabated coal power generation by the end of 2021.
The future of coal dominated Cop26 talks in Glasgow, UK.
More than 40 countries signed a statement agreeing to phase out coal power, including 18 nations promising to phase out or stop investments in new coal-fired plants domestically and internationally for the first time. Australia, China, India, and the US were all missing from the deal.
Despite a last-minute watering down by China and India, the Glasgow climate pact called on countries to “accelerate the phasedown of unabated coal power” – a significant first in the UN Climate Change process.
An $8.5bn transition package to help South Africa wean off coal was hailed a model to support other large emerging economies transition to cleaner energy sources. But questions remain over how it will be delivered.
Indonesia, India, the Philippines and South Africa were named as beneficiaries of the $2bn Climate Investment Funds pilot scheme to support the transition from coal to clean.
At the end of the month, Germany’s newly formed coalition government announced a plan to “ideally” quit coal by 2030 – eight years ahead of schedule.
Despite significant policy shift away from coal power, the amount of electricity generated from coal surged 9% in 2021 with overall coal demand heading towards an all-time high in 2022, analysis by the IEA found.
This sharp rebound, led by China and India, follows two years of falling global power generation from coal in 2019 and 2020 and is threatening net zero climate plans, the IEA warned. Electricity demand rising faster than low-carbon supply and soaring fossil gas prices are cited as explanations.