This report brings together the main insights from the Coal Transitions project. Coal Transitions was an international research consortium seeking to support fact-based dialogue on the future of coal. The research side of the project included three work streams:
- Analysis of past coal and industrial transitionsy
- Case studies on pathways to implement coal transitions compatible with the “well below 2°C” objective in six major coal-using economies, i.e. China, India, South Africa, Poland, Germany, and Australiay
- Analysis of the impacts of coal transitions on the global coal trade.
The national case studies cited in this report were developed by national experts on the coal sector, as well as on energy systems, labour markets and industrial policy in the respective countries. The case studies aim to suggest concrete options for implementing national coal transitions that are consistent with the “well below 2°C” aim of the Paris Agreement, while being fair and just, and respecting national differences. However, they are not necessarily compatible with the Paris Agreement aspirational goal to limit temperature increases to 1.5°C. Further information on the methodology used for the research can be found in the introduction to the report and in the specific reports this study draws from.
1. Coal transitions are already happening. Due to both climate and non-climate policy factors, global coal consumption could go into reverse by the early 2020s, if it has not done so already. In this context, it is incumbent upon governments and responsible stakeholders to prepare for a managed coal transition. 36 governments and 28 companies around the world have already committed to phasing out coal from the power sector by 2030. Governments are beginning to put in place new exploratory initiatives, just transition task forces, coal transition commissions and stakeholder consultation platforms to explore options for the end of coal use. Momentum is also building in major coal-consuming economies. In large developing economies like China, India and South Africa, policies have been introduced recently or are being discussed to curb and/or reduce coal consumption over the coming decade. A debate is now emerging on when coal use should begin to either peak (India) or decline (China, South Africa). This is generating discussion on when and how to manage coal transitions in these countries, a process that is both demonstrated and supported by the Coal Transitions project.
2. Coal transitions are technically feasible and affordable. The analysis of the techno-economic scenario required to stay below 2°C for all six countries showed that by 2040-2050 coal can be replaced with a portfolio of alternative energy sources, including solar, wind, hydro, biomass, nuclear, and natural gas. Even in scenarios with CCS, coal remains a minor part of the power mix in 2050, due to its cost and feasibility challenges.Because of the growing competitiveness of renewable energy, the transition to these alternatives can occur without significantly higher costs for the electricity system. In some cases, such as South Africa, costs for consumers could be reduced diversifying the power mix. A lower reliance on new coal plants and a greater focus on promoting off-grid solar-plus-battery solutions was also found to provide cheaper and more effective access to electricity for off-grid communities in places like India. Governments can avoid stranded assets in the coal sector by avoiding overbuilding new plants, retiring old amortised ones, and ensuring maximum operational lifetime policies for remaining coal plants.
3. A “just transition” for coal workers and communities is possible. While there is no universal blueprint for implementing a just transition, the Coal Transitions project identified a large number of specific policy solutions. Many of them have been tried and tested during past coal transitions. The design of such programmes matters greatly to their effectiveness, as does the meaningful consultation and participation of stakeholders early on in the decision-making process. However, early anticipation and preparation of the transition is vital to achieve the best results. Tailored workforce transition programmes and the building of local economic resilience require time, preparation and learning by doing.
4. Coal transitions can strengthen global climate action and deliver other social and economic objectives. The project found, for instance, that in India a lower reliance on coal-fired power plants (which require water for cooling) would help reduce conflicts between water and electricity access in water-stressed regions. In China and India, reducing coal use would help eliminate one of the major contributors of SO2, NOx and PM2.5 particles that adversely affect human health. In Africa and India, energy access could be cheaper and more effective with micro-grids than new coal plants.In South Africa, diversification from coal in the power sector would help reduce the cost of supplying electricity, while limiting the risk of cross-subsidisation of the power sector by the coal export sector. In Poland, implementing a managed transition for lignite mining would help prepare for the exhaustion of lignite mines expected within the next 10-20 years. In Australia, coal transitions are also about prudent planning for the decline of export markets.In many cases, coal mining regions are already facing significant social and economic challenges. In these communities, coal transitions can become a useful “excuse” to create an inclusive dialogue and strategy for the future generation. “Just transition” therefore needs to be not only about mitigating the unwanted impacts of phasing down coal.In the countries examined in this report, stakeholders in the coal sector often acknowledge that the days of coal are numbered and there is a need to prepare the transition. Doing so, however, requires governments to take ownership of the problem. This means establishing a dedicated policy framework to support a fair and managed transition for all affected parties. This report and the research upon which it is based provide a number of options that policy makers may wish to consider for coal transitions. It also highlights areas where further research on coal transitions is needed.