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Dramatic Drop in Global Coal Plant Construction

On Tuesday, United States President Donald Trump signed an executive order aimed in part at shoring up the crippled coal industry. The move stands in stark contrast to a new report showing a steep decline in the global number of coal-fired power plants that are planned or started construction.

Trump’s efforts might be too little, too late as the fate of the coal industry has been in steady decline for decades. Even Robert Murray, head of the largest private U.S. coal operation, Murray Energy, told Trump earlier this year he should “temper his exceptions” on the promise to bring back coal jobs. Coal’s fate in the U.S. was seemingly sealed last year when natural gas exceeded coal-fired power for the first time on an annual basis, owing to “mainly a market-driven response to lower natural gas prices,” according to the U.S. Energy Information Administration. Overall, the USA energy profile is in transition and the impact of the recent policy decision on the country’s energy performance and energy security will play out over time. Currently, the USA ranks 4 overall in the terms of energy security in the global rankings on the Energy Trilemma Index.

On the global coal front, from January 2016 to January 2017, there was a 48 percent drop in planned coal plants and a 62 percent drop in construction starts, the report said.

The global slowdown in coal plant construction is highlighted in the report as keeping global warming under the 2 degree Celsius target set at the Paris Climate Summit. The slowdown appears “to have brought global climate goals within feasible reach, raising the prospect that the worst levels of climate change might be avoided,” the report said. “More progress is needed and the margin for error is tight, but the results of the past year provide good reason for optimism.”

The global coal slowdown began in 2013. “Now the dramatic shrinkage in the coal power pipeline … shows that power capacity trends are moving into alignment with declining power generation and that climate goals are indeed within reach without massive asset stranding,” the report said.

China and India Lead the Way

Policy action in China was the main contributor to the shrinking coal plant pipeline, owing to “the imposition of unprecedented and far-reaching restrictive measures by China’s central government,” the report said. Coal consumption in China declined by 4.7 percent last year, according to the National Bureau of Statistics.

China’s move away from coal has been replaced with a push for renewable energy sources, including solar and wind, as much as a way to combat debilitating air pollution in its urban areas as to combat the effects of climate change.

In tandem with the moves by China, India is also experiencing a slowdown in coal plant development, the report noted, “driven primarily by the reluctance of banks and other financiers to provide further funds.”

India is in the midst of its own campaign on renewables; the government plans to install 215 gigawatts of renewable power by 2027. “The combination of excessive coal power capacity and declining cost of renewables has caused many financial backers of coal projects to withdraw support,” the report said.

India could phase out coal power completely by 2050 if the cost of renewables continues to fall at its current rate, which would put it significantly ahead of its Paris Agreement climate commitments.

From 2006 through 2016, China and India accounted for 86 percent of all coal power built. “An end to the coal plant construction boom brings the possibility of a global phase-out of coal over the coming decades, a prerequisite to reining in climate change,” the report said.

Retirement of older coal plants also factors into the climate goals equation. Coal plant retirements have steadily grown over the past 10 years, the report said. For any phase-out plan for coal plants to be effective, the report said it’s crucial that construction currently on hold in China and India remain that way, coal power implementation rates worldwide continue to decline and Organization for Economic Cooperation and Development countries “move aggressively” to install clean energy sources in place of aging coal plants.

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