According to reports, China and India jointly gutted a keenly anticipated global agreement to phase out coal at the COP26 United Nations climate summit last month.
The reality was however messier than many headlines suggested. Arguably there had never been the prospect of a global agreement to begin with – not when the world’s three biggest coal consumers, China, India, and – notably – the U.S., were not prepared to take the plunge.
However, there are good reasons why it is difficult for China and India to wean themselves off coal. Coal remains the largest single fuel in the energy mix in both China and India according to the International Energy Agency (IEA). In addition to generating electricity to power factories and homes, coal is also vital to both countries’ heavy industries, such as iron and steel production. For both countries, moreover, coal is more than an engine of economic development: It also represents energy security and sovereignty, given that they both have some of the world’s largest coal reserves.
Yet the counter-argument could hardly be clearer. Coal continues to be the single largest contributor to energy-related carbon dioxide emissions worldwide, accounting for around 44 percent of such emissions in 2018, according to the IEA. China and India’s reliance on coal is not merely one of the biggest obstacles to their pursuit of decarbonization, but presents a global challenge.Expert assessment of a recent Intergovernmental Panel on Climate Change (IPCC) report found that a global coal phase-out by 2040 is essential if the world is to stay within 1.5 degrees Celsius of heating above pre-industrial levels and avoid the most catastrophic climate change impacts.
So how can we move beyond despair and take meaningful steps to make coal history?
First, developed economies must exit coal much faster. The fact that China and India cannot at present commit to phasing out coal should not be an excuse for other nations, especially those that are less reliant on coal or are wealthy enough to undertake significant transformation of their energy sectors without delay. As of mid-2021, 21 developed economies had coal phase-out commitments, but this represents only 4 percent of the world’s coal-fired generation. More countries came on board during COP26, but some of the world’s biggest coal producers, such as the U.S. and Australia, remain silent. Jointly these two countries produced over 14 percent of the coal mined worldwide in 2020 (China and India produced close to 60 percent). The OECD countries – mostly wealthy countries including the U.S. and Australia – will all need to phase out coal by 2031 to keep the global temperature rise below 1.5 degrees C, according to the before mentioned assessment of the IPCC report .
Besides such government action, financial institutions should also end investment in companies involved in coal supply chains that have made no commitment to transition away from coal and/or have taken no meaningful steps toward doing so. It is hard to imagine a future without coal if global financial institutions keep bankrolling coal companies, but that is precisely what is happening. An investigation into the financing of the global coal industry published in February found that institutional investors held investments totaling $1.03 trillion (about the total GDP of Spain) in companies operating along the coal value chain, with U.S. investment giants Vanguard and Blackrock holding 17 percent of the total. Commercial banks around the world provided more money to the coal industry in 2020 than they did in 2016.
Ultimately, how fast China and India exit coal depends on how soon they acknowledge that it is in their interest to do so. We need professionals and experts worldwide, including diplomats, scientists, journalists, activists, educators, and others, to keep talking about the true cost of coal. For example, China and India have been suffering severe air and water pollution, often associated with burning coal. In 2019 air pollution was one of the biggest factors driving death and disability in China and India. Motivated by the need to tackle air pollution, China has taken measures since 2013 to reduce its coal consumption, but India has lagged behind in implementing such measures. Crucially, both countries should be encouraged to make time-bound commitments to move beyond simply making coal more efficient and cleaner, which can only be a temporary solution.
In fact, coal is no longer a cheap source of power compared with solar and wind, thanks in part to policies in China and India that have significantly driven down the price of renewable energy. The balance could tip further in favor of renewables. Research from India finds that by 2030, the country could leapfrog to an energy sector as clean as Japan’s is today, without the public or businesses facing an electricity price hike. Meanwhile a group of experts in China has called for the removal of state subsidies to coal industries, which would make coal even less competitive.
We need a much more ambitious global partnership on the phasing out of coal – one that thinks and acts beyond what is perceived as being feasible today. A future energy system free not only from coal but from all fossil fuels is an achievable goal. A recent joint study by researchers in China and the U.K. found that such a transition is likely to be cheaper than commonly assumed and may not require any reduction in economic growth.
As more countries take steps to exit coal, their experiences will help address hesitancy of others and such learning needs to be made available and communicated effectively. The joint China–U.K. research mentioned above challenged the common perception that renewable power sources such as solar and wind are intermittent. Tested examples of how renewables can provide a steady and secure energy supply will provide important input for engineers and policymakers elsewhere. Though contexts are different, Germany’s experience in reducing and repurposing coal reliant jobs will also provide invaluable lessons for China and India.
No doubt, the biggest challenge to the phase-out of coal is people. Though jobs in the coal sector have been declining in China and India, millions of people still work in the coal industries and related supply chains. However, to keep on burning coal threatens everyone’s livelihoods as climate change raises sea levels, reduces crop yields, jeopardizes fresh water supplies, and increases the severity of tropical storms. Swiss Re, an insurance giant, has estimated that climate change could shrink the world’s economy by $23 trillion in 2050 compared with growth levels without climate change. Rather than protecting coal jobs regardless of the consequences, a just transition requires governments to take decisive steps now toward economic diversification and creation of green jobs, especially in coal-reliant regions.