Accelerating Just Transitions for the Coal Sector

The context: Turning a tanker

Summary

  • Global coal demand has been broadly flat over the last decade, with the fuel accounting for about 25% of total energy supply in 2023. China dominates the market for coal, accounting for over 55% of world demand and more than half of global output, though growth in production slowed in 2023. India is also a notable user of coal with over 10% of all demand. Other emerging and developing economies (EMDE) account for 15% of global demand, with demand growth beginning to taper in recent years. Demand from advanced economies is just 15% of the global total, down from half in 2000 and continuing to drop. Coal is the largest source of electricity, and power generation is the biggest user of coal, making up two‐thirds of the market.
  • Coal demand starts to fall back over the rest of the current decade in all three scenarios as countries reorient towards lower-emissions power sources, though the pace of decline depends on the stringency of climate policies. In the Stated Policies Scenario (STEPS), demand falls by over 15% over 2023‑2030 and by 40% to 2050. In the Announced Policies Scenario (APS), it falls by around 25% to 2030 and by nearly 75% to 2050 as renewables drive down the use of coal in power. In the Net Zero Emissions by 2050 (NZE) Scenario, demand falls by 45% to 2030 and by 90% to 2050; by 2040, there is no unabated coal power anywhere in the world.
  • A growing number of countries have adopted net zero emissions pledges, which require very deep reductions in the use of unabated coal and other fossil fuels. At the end of 2023, those pledges covered more than 85% of global energy sector emissions. Some countries have made specific commitments to phase down or out the use of unabated coal, usually in the power sector. At the end of 2023, 80 countries had agreed to phase out coal or to develop no new unabated coal power, collectively accounting for 30% of current coal‐fired generation, up from less than 20% in 2022.
  •  The nature and size of the effects of transitioning away from coal in power generation vary widely across and within countries, mainly according to indigenous resource endowments, the share of coal in the fuel mix, the structure of the economy, and labour markets. National exposure to coal is highest in Indonesia, followed by Mongolia, China, Viet Nam, India and South Africa.
  • The potential impact of falling coal production depends on the overall level of economic development, which affects opportunities for alternative activities and employment. Today, many coal regions in emerging and developing economies are not diversified. Transition policies have the dual task of cushioning the impact of the declining jobs while also supporting economic development in coal communities.
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