Compensating affected parties necessary for rapid coal phase-out but expensive if extended to major emitters

April 2024


Coal power phase-out is critical for climate mitigation, yet it harms workers, companies, and coal-dependent regions. We find that more than half of countries that pledge coal phase-out have “just transition” policies which compensate these actors. Compensation is larger in countries with more ambitious coal phase-out pledges and most commonly directed to national and regional governments or companies, with a small share going directly to workers. Globally, compensation amounts to over $200 billion (uncertainty 163-258), about half of which is funded through international schemes, mostly through Just Energy Transition Partnerships and the European Union Just Transition Fund. If similar transfers are extended to China and India to phase out coal in line with the Paris temperature targets, compensation flows could become larger than current international climate financing. Our findings highlight that the socio-political acceptance of coal phase-out has a tangible economic component which should be factored into assessing the feasibility of achieving climate targets.


  • Department of Space, Earth and Environment, Chalmers University

  • Department of Environmental Science and Policy, Central European University

  • International Institute for Industrial Environmental Economics, Lund University

  • Centre for Climate and Energy Transformations and Geography Department, University of Bergen

  • Advancing Systems Analysis, International Institute for Applied Systems Analysis