February 2022
The United Nations Climate Change Conference (COP26) was held in Glasgow in November 2021 under the co-presidency of the UK and Italy, with over 190 members participating to take collaborative action on climate change. The main issues discussed at the conference included climate change mitigation, the reduction of greenhouse gases emissions, climate financing for developing countries, and phasing out of coal, among other issues.

With the strong economic recovery in 2021 highlighting the need of reliable sources of electricity generation, the controversial decision was made to phase down coal rather than phasing it out. COP26 represents the first agreement on an explicit plan to reduce the use of coal. The key agreements included the biggest CO2 emitters, the US and China, pledging to increase their cooperation over the next decade. China and India’s late intervention means that there is no particular timeline to end coal use, even though coal accounts for around 40% of the global carbon emissions, with coal-fired power plants being the largest contributor to the rise in emissions in recent years.

Climate goals have been getting more public attention in the last decade, and with coal being the most carbon-intensive fossil fuel, all scenarios that meet these climate targets feature a rapid decline in coal use. However, achieving the move away from coal is not a simple task, especially as coal accounted for over 36% of the global power mix in 2019. In order to meet the objectives of the Paris Agreement, global coal use in electricity generation must fall by 80% from 2010 levels by 2030, all coal-fired power stations must be shut by 2040 at the latest and global coal emissions should have peaked in 2020.

The coal phase-out in the power sector has two main aspects: managing the decline in emissions from current assets and stopping the construction of new plants. Although the second task has proven to be easier than the first and several countries have completely stopped financing and approving new thermal coal projects, including Canada, key producing countries such as Australia, India and China are resisting the global bid to phase out coal.

 

 

At least 23 additional nations have now committed to phasing out coal power, including Indonesia, Vietnam, Poland, South Korea, Egypt, Spain, Nepal, Singapore, Chile and Ukraine. In a new ‘Global Coal to Clean Power Transition Statement’, governments also pledged to scale up clean power and provide new support to help developing countries make the transition to clean energy. Financial institutions also pledged at COP26 to end the funding of unabated coal, with China, Japan and South Korea ending overseas coal financing.

These followed the US$8.5bn deal to support South Africa’s transition to clean energy announced at the World Leaders Summit. South Africa, with 87% of its power generated from coal, is one of the world’s most coal-dependent counties. This is one of the first “tangible” commitments from developed countries to help a country in the global south undertake a just transition away from coal towards clean energy.

 

Phasing Out 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 achievable without damage to the economy, electricity prices or security of the electricity supply. However, for countries with the highest use of coal, highest coal exports or highest planned coal capacity, such as Australia, Indonesia, Japan, South Korea, India, China and South Africa, phasing out coal remains an unattractive challenge.

In November, the UK announced that 190 countries and organisations had pledged to phase out coal power. OECD countries committed to do it in the 2030s and non-OECD countries in the 2040s. However, remarkably absent from the agreement were the world’s top four coal users, China, Japan, India, and the US, which in conjunction account for over 75% of global coal use.

The joint agreement between China and the US reiterated a previous promise to move away from international support for unabated coal power and stated that China will phase down coal consumption between 2021 and 2026. However, the agreement did not include time-specific commitments to actually end coal use.

 

 

India at COP26

India has committed to achieving net-zero emissions by 2070. The authorities stated the country will source 50% of its energy from renewable sources and increase renewable capacity of 500GW by 2030. India expects to cut emissions intensity by around 35% of GDP from 2005 levels by 2030. India has reportedly achieved a 24% reduction in emissions intensity and has announced a green hydrogen mission to cut methane emissions.

Despite these commitments, the global average temperature is expected to rise by 1.8°C from that of the pre-industrial era, under the most optimistic scenario. In addition, experts suggest the most likely outcome is an increase of 2.4°C. This means we need more ambitious actions and execution to face the climate challenge.

 

China and The US at COP26

At the final session of COP26 in Glasgow, China changed the coal power segment of the agreed text at the last minute to replace “phase-out” with “phase-down”. Although China played a critical role in changing the language on coal power, this was not its only contribution in Glasgow as it joined the US in the Declaration of Enhancing Climate Action in the 2020s. The two negotiating teams had been working together for 10 months. The latest joint declaration put forward positions on the fulfilment of a developed world commitment to give developing nations US$100bn per year between 2020 and 2025.

The US has seen coal-fired power generation tumble because of competition from gas and renewables plants. Japan has the largest share of coal-fired generation in its energy mix and will need to take the most action to accomplish the G7's goals. A total of 35.4GW of coal power capacity is located in countries which have announced they will phase out coal by 2030, placing the coal plants in these countries on a route to closure. This represents 21% of Europe’s currently operational coal fleet – 25% in the EU.

 

Australia at COP26

In Glasgow, Australia was criticised for not signing onto the Global Coal to Clean Power Transition Statement promoted by the UK and the Global Methane Pledge led by the US in an attempt to curb methane emissions.

Australia’s plan to reach net zero by 2050 did not include new policies and seemed to rely on voluntary action from business, consumers, and technology development to reach the net zero goal. Cuts in emissions would largely be pushed back until after 2030 and 2040 as the country’s official target, set when Tony Abbott was prime minister six years ago, remains a 26-28% emissions cut compared with 2005 emissions levels.