Accelerating Just Transitions for the Coal Sector

Managing the transition to low-emissions power: Everything, everywhere, all at once

Summary

  • Governments need to introduce policies to ensure that public and private actors in the power sector invest in clean energy and reduce coal use in line with emissions targets while minimising economic and social costs. The most cost-effective mix of direct regulation, financial incentives and market-based measures varies by country.
  • Reducing reliance on unabated coal power calls for rapid growth in low-emissions fuels and technologies. Nearly 75% of the drop in global coal-fired generation over 2022‑2050 in the APS is replaced by solar PV and wind, followed by hydropower and other renewables with 13% and nuclear with 8%. This expansion of solar PV and wind hinges on strong policy incentives as well as carefully implemented measures to enable the integration of variable renewables into the electricity system.  
  • Emissions from existing coal‐fired plants can be cut by repurposing plants to provide load balancing services (adequacy and flexibility) rather than baseload power, retrofitting them with CCUS technology, retrofitting them to permit co‑firing with low‐emissions fuels such as ammonia or biomass, or retiring them early and converting existing sites to other uses. Were all the coal assets in industry and power around the world to continue to operate as they do today through to the ends of their normal operating lives, they would “lock in” over 300 Gt of cumulative emissions between 2023 and 2050, by themselves tipping the world past the 1.5° C limit.
  • Repurposing coal plants for flexibility is widely adopted in the APS because it can limit losses of revenue and jobs while enabling the existing coal fleet to support the integration of renewables, yielding large emissions savings. As a result, the average annual capacity factor of unabated coal plants declines from 52% in 2022 to just 24% by 2050 in the APS. Retrofitting coal plants with CCUS also provides a means to preserve existing assets and jobs, supply dispatchable electricity, and help maintain grid stability. Global capacity of coal with CCUS expands rapidly after 2030 in the APS, reaching nearly 150 GW by 2050. Co‑firing low‐emissions ammonia or bioenergy in conjunction with coal also offers valuable system benefits as a source of dispatchable power. Other coal plants will need to be retired early; this is most feasible in advanced economies where plants tend to be older, and costs more easily absorbed.
  • The system services provided by coal-fired power plants, as well as their electricity output, must be replaced as the transition progresses to ensure secure electricity supply. This is particularly important in emerging and developing economies, where electricity demand grows rapidly. In the APS, the global contribution of unabated coal‐fired capacity to system adequacy declines by over 40 GW per year to 2050 and is replaced by a broad suite of technologies.
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