Driven by China, Coal Plants Made a Comeback in 2023

Global capacity to generate power from coal, one of the most polluting fossil fuels, grew in 2023, driven by a wave of new plants coming online in China that coincided with a slowing pace of retirements of older plants in the United States and Europe.

The findings came in an annual report by Global Energy Monitor, a nonprofit organization that tracks energy projects around the world. The last time the group found coal capacity to have grown was in 2019.

Coal’s heavy greenhouse gas footprint has prompted calls for it to be rapidly phased out as a source of energy, and all of the world’s countries have broadly agreed to reduce their dependence on coal. But industrializing economies, particularly in Asian countries with inexpensive access to domestic coal reserves, have set longer horizons for their transitions.

China alone accounted for two-thirds of the world’s newly operating coal plants last year. Indonesia, India, Vietnam, Japan, Bangladesh, Pakistan and South Korea also inaugurated new plants, which typically operate for two to three decades.

One silver lining is that new coal plants are generally less polluting than older ones, but scientists, climate researchers and activists agree that moving away from not just coal, but all fossil fuels, has to happen as soon as possible to avoid the most dire consequences of global warming.

“Right now, coal’s future is a two-part story: What do we do about currently operating coal plants, and then, how do we make sure the last coal plant that will ever exist is one that’s already built,” said Flora Champenois, one of the authors of the report. “If it weren’t for the China boom, that’s pretty much where we’d already be.”

China, and, to a lesser extent, India, are still planning to build coal plants many years from now. In 2023, new coal plant construction hit an eight-year high in China. If China were to build all the others it has proposed, it would add the equivalent of one-third of its current operating fleet.

Today, China accounts for around 60 percent of the world’s coal use, followed by India and then the United States. India relies most intensively on coal, with 80 percent of its electricity generation derived from it.

The flip side of the growth in coal is a slowdown in plant retirements in Western economies. Fewer were decommissioned in 2023 than in any year for the past decade. Phasing out all operating coal plants by 2040 would require closing an average of about two coal plants per week.

Analysts said the slowdown in 2023 may have been temporary, as the United States, Britain and European Union countries have set various targets to close all their existing coal plants well before 2040. The International Energy Agency’s modeling suggests that, to align with the goal of limiting global warming to 1.5 degrees Celsius over preindustrial levels, rich countries should phase out coal by 2030 and it should be eliminated everywhere else by 2040.

“We had said that 2024 was the year coal would peak,” said Carlos Torres Diaz, a senior vice president at Rystad Energy. “But right now, I would say it’s not clear we’ll hit that. We’re near it, in any case.”

Western countries relied on coal for well over a century, which is why, in no small part, they account for the majority of historical greenhouse gas emissions.

In an attempt to balance financial responsibility for the energy transition, richer countries have pooled tens of billions of dollars in loans to some coal-reliant developing countries like Indonesia, Vietnam and South Africa to help them build out renewable energy so as to transition more quickly away from coal. For now, however, much of that money remains undisbursed as stakeholders iron out disagreements.

For many developing countries, coal has one major advantage: It’s cheap. It’s price has also proved less volatile than oil and gas, the other major fossil fuels used in electricity production.

Bangladesh, for instance, had been building up its gas capacity. But fluctuations in price and availability, stemming largely from shocks related to the war in Ukraine, have prompted a rethink and a reinvestment in coal.

The same dynamic is, to some extent, true in China, analysts said. The pandemic’s toll on China’s economy has made its utilities more likely to opt for the cheapest fuel: coal.

China also leads the world in renewable energy expansion. That growth far outpaces coal’s growth, and in some cases is tied to it. China’s government says that much of the coal it uses or plans to use would serve as a fallback for times when renewable production dips and the grid requires more energy.

“While the data isn’t totally clear from China, it is possible that while there may be more coal plants there could also be lower utilization of them,” Mr. Diaz said. “But when it comes to coal, given that China is such an overwhelming part, whatever happens there really defines the global trend.”