Phasing Out
Unabated Coal
Current status and three case studies

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Phasing Out Unabated Coal: Current Status and Three Case Studies

Abstract

Abstract
Reducing global carbon dioxide (CO2) emissions to net zero by 2050 is necessary
to limit the long‐term increase in average global temperatures to 1.5 °C. Today,
coal-fired power generation is the largest single source of CO2 emissions.
Therefore, tackling emissions from this sector is critical to achieving our goal.
National governments, subnational jurisdictions, coalitions and many large
corporations have announced coal phase-out pledges and net zero targets. Ahead
of COP 26 in November 2021, Phasing Out Unabated Coal: Current Status andThree Case Studies gathers all known national commitments to eventually stopusing unabated coal-fired power generation announced to date and assesses theirimpact in terms of reducing emissions. In addition, the report analyses three
jurisdictions in detail to extract recommendation. First, an early example of coalphase-out commitment and execution from the Canadian province of Ontario.
Second, the case of the United Kingdom, where the industrial revolution started
but which was one of the first countries to decide to phase out coal. Finally,
Germany, where phasing out is particularly complex because it is the largest
coal-fired power generator among those committing to a phase-out and has
thousands of jobs that rely on lignite mining. This paper acknowledges that eachcountry must tailor its approach based on its own specific circumstances, but thatnonetheless there are instructive experiences from other jurisdictions undertaking

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similar measures.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Acknowledgements

Acknowledgements
This report was prepared by the Gas, Coal and Power Market Division (GCP) in
the Directorate of Energy Markets and Security (EMS) in co-operation with theEnergy Environment Division (EED) in the Directorate of Sustainability,
Technology and Outlooks (STO). Peter Fraser, Head of GCP, designed the report,
together with Carlos Fernández Alvarez, who also co-ordinated the work andis the lead author together with Kieran McNamara and Gabriel Saive. Tom
Howes, Head of EED, provided support throughout the project. Keisuke Sadamori,Director of EMS, was pivotal to produce the report through his guidance,suggestions and orientation.
Valuable comments and feedback were provided by senior management andother colleagues within the International Energy Agency (IEA), in particular, Lucila
Arboleya Sarazola, Sylvia Beyer, Tanguy de Bienassis, Aad van Bohemen, Laura
Cozzi, Alejandro Hernández, Samantha McCulloch, Tim Gould, Brian Motherway,
Sara Moarif, Divya Reddy, Peerapat Vithayasrichareon, Michael Waldron, Brent
Wanner, Daniel Wetzel and Mechthild Worsdorfer.
Thanks also to Jad Mouawad, Head of the Communications and Digital Office(CDO), and to CDO colleagues Tanya Dyhin, Astrid Dumond, Isabelle
Nonain-Semelin, Gregory Viscusi and Therese Walsh. Andrew Johnston edited
the report.
Experts from outside of the IEA provided input and reviewed preliminary drafts of
the report. Their comments and suggestions were of great value. They include:
Vladimir Andrascik

Ministry of Economy, Slovak Republic

Tonci Bakovic

International Finance Corporation (IFC)

Ani Balabanyan

The World Bank (WB)

Mick Buffier

Glencore

Yasser Charafi

International Finance Corporation (IFC)

Alison Fleming

Department of Industry, Science, Energy andResources, Australia

Stanislava Frühauf

Permanent Delegation of the Slovak Republic
to the OECD in Paris
Ministry of Economy, Slovak Republic

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IEA All rights reserved.

Miroslav Jarabek

Phasing Out Unabated Coal: Current Status and Three Case Studies

Acknowledgements

Masami Kojima

The World Bank (WB)

Nuru Lama

International Finance Corporation (IFC)

Roland Luebcke

German Association for Hard Coal and PostMining

Manabu Nabeshima

Permanent Delegation of Japan to the OECD

Peter Morris

Minerals Council of Australia

Demetrios Papathanasious

The World Bank (WB)

Rachel Perks

The World Bank (WB)

Joanna Ruszkowska

Federal Ministry for Economic Affairs andEnergy, Germany

Hans-Wilhelm Schiffer

RWE

The individuals and organisations mentioned above are not responsible for any
opinions or judgements it contains. All errors and omissions are solely the
responsibility of the IEA.
Comments and questions are welcome and should be addressed to the leadauthors of the report:
Carlos Fernández Alvarez (Carlos.fernandezalvarez@iea.org)
Kieran McNamara (Kieran.McNamara@iea.org)

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IEA All rights reserved.

Gabriel Saive (Gabriel.Saive@iea.org)

Phasing Out Unabated Coal: Current Status and Three Case Studies

Table of contents

Table of contents
Executive summary .................................................................................................................... 7
Overview ....................................................................................................................................... 9
Introduction ............................................................................................................................... 9
Scope and structure ................................................................................................................ 10
Current state of coal phase-out pledges .................................................................................. 11
Policies and measures to accelerate coal phase-out .............................................................. 14
Air pollution regulation ............................................................................................................. 14
Restrictions on public financing .............................................................................................. 14
Financial agreements with power companies......................................................................... 15
Carbon pricing .......................................................................................................................... 16
Emissions standards ................................................................................................................. 17
Supporting alternative technologies ....................................................................................... 17
Coal and the just transition ...................................................................................................... 18
Conversion of coal power plants ............................................................................................. 18
Case studies: Ontario, the United Kingdom and Germany .................................................... 20
Coal phase-out in Ontario, Canada: Closing government-owned plants ............................. 20
Coal phase-out in the United Kingdom .................................................................................. 22
Coal phase-out in Germany: structural planning and auctions mechanism ......................... 24
Coal plant conversion ............................................................................................................... 27
Carbon capture, utilisation and storage ................................................................................. 27
Gas boilers ............................................................................................................................... 28
Natural gas combined-cycle plants ........................................................................................ 29
Biomass power plants .............................................................................................................. 31
Ammonia-fuelled power plant ................................................................................................ 32
Small modular nuclear reactors .............................................................................................. 33
Thermal energy storage .......................................................................................................... 35

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Synchronous condenser ......................................................................................................... 36

Phasing Out Unabated Coal: Current Status and Three Case Studies

Executive summary

Executive summary
The recently published World Energy Outlook 2021 highlights the need to end
investment in new unabated coal-fired power plants, as well as strategies toretrofit, repurpose or retire existing ones. The Net Zero Emissions by 2050
Scenario (NZE) envisages that by 2030 advanced economies would end all
power generation by unabated coal-fired plant. It also foresees the end of all
unabated sub-critical coal generation in emerging markets and developing
economies. Unabated coal generation would be phased out by 2040. Thisoutlook coincides with commitments by a growing number of jurisdictions tophase out unabated coal in power generation. However, the contributions thatthese pledges will make to reducing global energy-related CO2 emissions fall
far short of what is required in the NZE scenario.
Since the Paris Agreement in 2015, 53 countries and the European Union havepledged to achieve net zero emissions. As of mid-2021, however, only 21
countries using unabated coal for electricity generation have committed to phase
it out, between 2021 (Portugal) and 2040 (Chile). Among them, few countries havealready done so, such as Austria (2020), Belgium (2016) and Sweden (2020).
Collectively, these commitments cover just 4.1% of global coal-fired generationand 1.3% of global energy-related CO₂ emissions.
While the phase-out policies cover only a small share of coal generation capacity,and every country must tailor policies to its own circumstances, the experiencesof jurisdictions in phasing out coal can be instructive for other countries. They canshed light on three main considerations: potential impacts on the local economy,
the price of electricity and the security of electricity supply. These considerations
depend in turn on factors such as the current share of coal in electricity generation;
growth of electricity demand; reserve margin in the grid; availability of alternative
sources of power generation; supporting network infrastructure, includinginterconnections; and whether local coal is supplying the power plants.
Of the 21 countries that have pledged to phase out coal, in 14 countries less than
10% of the electricity supply came from coal. In countries where coal contributes
little to the power supply and there is no domestic coal industry, phasing out coalis likely to be feasible without detriment to the economy, electricity prices or

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security of electricity supply.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Executive summary

In three of the 21 countries, by contrast, coal represents more than 20% of theelectricity supply. Seven countries also have a domestic mining industry that
supplies coal for power generation. In such countries, phasing out coal will belonger and more complex. This short report analyses the phase-out experiencesof the Canadian province of Ontario, the United Kingdom and Germany. Based on
their experiences, we present six recommendations:
1. Allow sufficient time for consultation and implementation. Phasing out coal
may be a long and complex process. It may face political challenges and havenumerous effects on communities, electricity prices, security of electricity supply andbeyond. All these impacts need to be properly assessed and communicated to the
public, together with the benefits involved.
2. Provide support for affected workers and communities. When coal plants andcoal mines close, communities lose jobs and revenue. As a result, workers needcompensation and reskilling, and both workers and capital need to be redeployed aspart of comprehensive strategies.
3. Ensure that security of electricity supply is a cornerstone of phase-out
policies. Security of electricity supply should be paramount. Plant closures should
only proceed if security of electricity supply can be maintained by combining supply,
demand and storage technologies with interconnections to reliable sources.
4. Implement carbon pricing: In many regions, a key way of reducing coal generation
is to establish a CO₂ price or a similar instrument, such as a carbon tax, thatencourages power plant operators to reduce the amount of CO₂ they emit. CO₂ prices
can affect business competitiveness and affordability of energy supplies, so these
economic impacts need to be considered.
5. Improve the climate for investment in clean electricity and the necessary
infrastructure. If there is to be a smooth transition away from coal-fired power
generation, investment in energy efficiency, low-carbon generation and electricity
transmission and distribution networks needs to accelerate. Mobilisation of investment
in electricity networks is likely to be challenging. Long approval processes and frequentdelays, often linked to public opposition concerns, can present major obstacles todevelopment.

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6. Consider conversion of coal generation assets. Converting coal-fired plants to
low-carbon uses not only helps to phase out coal but also reduces the need for new
transmission investments. Plants can be retrofitted to enable carbon capture,utilisation and storage (CCUS) or to use low-carbon fuels such as biomass orammonia. They can also be converted to provide the ancillary services necessary tosupport electricity transmission from generators to consumers, such as frequency
control. This can be a useful means to obtain an adequate return from existing assets
and reduce emissions while keeping jobs and wealth in local communities.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Overview

Overview
Introduction
Coal-fired power generation accounted for 37% of global electricity output in 2019,72% of CO2 emissions from the power sector and 30% of global energy-related
CO2 emissions. The IEA Stated Policies Scenario – which reflects the impact ofexisting policy frameworks and today’s announced policy intentions – projects that
global power plant construction will shift from coal towards solar PV and wind overthe coming decade. Construction of new coal-fired power plants will slow
dramatically while solar PV and wind deployment continues and increases.

40
35
30
25

All fuels

20

Other
Oil

15

Natural gas
Coal

10
5
0

All

Power sector

IEA. All rights reserved.

In the IEA Stated Policies Scenario, existing and planned regulatory or market
measures are expected to contribute to over 430 GW of coal-fired capacity
retirements by 2030 (20% of the 2020 global coal capacity). This includes close to
140 GW in the United States and 95 GW in the European Union, where 16
member states are committed or considering to phase out all unabated coal, outof the 18 with significant coal use in power today. In the United States, an ageing
fleet of coal plants faces challenging market conditions as wind and solar PV
capacity expands and low gas prices make gas-fired power plants very
competitive. In July 2020, Japan announced that it intended to phase out lessefficient coal-fired power plants by 2030. Since then, it has announced more
ambitious climate targets. Despite these measures, global retirements of coalplants will be nearly offset by additions of new plants through to 2025. More than

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GtCO2

Global energy-related CO2 emissions from fuel combustion in 2019

Phasing Out Unabated Coal: Current Status and Three Case Studies

Overview

200 GW of capacity is under construction, mostly in People’s Republic of China(“China” hereafter), India and Southeast Asia.
The recent IEA publication Net Zero by 2050 Roadmap emphasised that if we areto achieve net zero emissions by 2050, no final investment decisions should betaken for new unabated coal plants, the least efficient coal plants must be phasedout by 2030, and the remaining coal plants still in use by 2040 should either close
down or be retrofitted to become low-emission plants. Since the Paris Agreement
was adopted, 21 countries have pledged to fully phase out unabated coal use in
the power sector.

Scope and structure
Many countries, companies, investors and other stakeholders have announced
climate-related goals regarding emissions and use of fossil fuels. However, it isdifficult to know how much these commitments will contribute to achieving the
global climate goals.
As the 2021 United Nations Climate Change Conference (COP26) approaches,
this report assesses the global impact of countries’ pledges and policies that aim
to phase out the use of coal in power generation. Phase-out experiences in three
jurisdictions have been analysed in greater depth to extract some wider lessons.
The report, which deals with a complex topic, is intentionally brief. It focuses onnational coal phase-outs that have already been agreed and excludes related
aspects relevant to the energy-climate debate, such as construction of new coal
units or use of coal in the non-power sectors. It does not cover in detail policies
such as carbon pricing, air pollution regulation or the revitalisation of impacted
communities.
The report details countries’ coal phase-out pledges and how much they will
reduce global CO2 emissions. It describes policies and other instruments designed
to reduce and eventually phase out coal in power generation.
The report also analyses the phase-out process in three jurisdictions – theCanadian province of Ontario, the United Kingdom and Germany – from whichsome recommendations can be extracted. Ontario, despite being a subnational
entity, has been selected as it was the world’s first jurisdiction to decide andimplement a phase-out policy.
Lastly, examples are given of ways in which of coal power plants may be

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converted.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Current state of coal phase-out pledges

Current state of coal phase-out
pledges
Since the Paris Agreement entered into force in November 2016, 21 countries
have made a commitment to fully phase out coal within a fixed timeframe. Of the21, all but Chile, Israel and New Zealand are members of the G20 group ofcountries or the European Union. EU climate policies have been instrumental in
reducing coal’s share of power generation, which has accelerated the transition
from coal in the region.
Among G20 member countries, only five have a full coal phase-out target:
Canada, France, Germany, Italy and the United Kingdom. Emissions from thecoal-fired power sectors of these five countries represent less than 0.8% of global
emissions, and the share of coal in national emissions ranges from 3.3% in the
United Kingdom to 28% in Germany. In these countries, coal use has been in
decline for some time. In the United Kingdom, for example, coal-fired power
dropped from 65% of generation output in 1990 to 34% in 2005 and 2.0% in 2020.
By August 2021, only three countries had completed their phase-outs: Austria(2020), Belgium (2016) and Sweden (2020). Seven large countries with a net zero
emissions (NZE) target remain without a coal phase-out plan: Brazil, China,
Japan, Korea, South Africa and the United States. (The US Executive Order on
Tackling the Climate Crisis at Home and Abroad, 27 January 2021, proposes net
zero emissions, economy-wide, by no later than 2050.) Other countries from theG20 group, most notably, India and the Russian Federation, do not have a NZEtarget yet. Several countries made announcements in 2021 to retire their coal

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power plant fleet ahead of time, notably Chile, Hungary and the United Kingdom.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Current state of coal phase-out pledges

Share of coal in the power mix (%)

Share of coal in the power mix (%)
60%
50%

Emerging market anddeveloping economies

40%
30%
20%

Advanced economies

10%
0%
1990

1995

2000

2005

2010

2015

2020

IEA. All rights reserved.
Note: Countries qualified as advanced economies are OECD regional grouping and Bulgaria, Croatia, Cyprus 1, Malta andRomania. Emerging market and developing economies are all other countries not included in the advanced economies
regional grouping.

Countries

Targetdate

IEA NetZero by
2050 target

Coal’s sharein the national
power supply(2020)

Austria*
Belgium*
CanadaChile
Denmark
FinlandFranceGermany
GreeceHungary
IrelandIsraelItaly
The Netherlands

2020
2017
2030
2040
2028
2029
2022
2038
2028
2025
2025
2030
2025
2029

2050
No
2050
2050
2050
2035
2050
2045
No
2050
2050
No
2050
2050

3%
3%
5%
31%
11%
8%
1%
26%
13%
11%
5%
28%
5%
8%

Share of coalin national
CO2emissions(2019)

8.6%
5.8%
7.2%
32.9%
11.2%
27.6%
3.6%
28.0%
22.8%
11.9%
7.5%
32.2%
7.1%
13.4%

Most power
generation coalfrom domestic
mines

No
No
Yes
No
No
No
No
Yes
Yes
Yes
No
No
No
No

Note by Turkey: The information in this document with reference to “Cyprus” relates to the southern part of the Island.
There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish
Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations,
Turkey shall preserve its position concerning the “Cyprus issue”.
Note by all the European Union member states of the OECD and the European Union: The Republic of Cyprus is recognisedby all members of the United Nations with the exception of Turkey. The information in this document relates to the area
under the effective control of the Government of the Republic of Cyprus.

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1

Phasing Out Unabated Coal: Current Status and Three Case Studies

Countries

Targetdate

IEA NetZero by
2050 target

Coal’s sharein the national
power supply(2020)New ZealandPortugal
Romania
Slovak Republic
Spain
Sweden*United Kingdom

2030
2021
2032
2030
2030
2020
2024

2050
2050
No
2050
2050
2045
2050

5%
5%
17%
7%
2%
1%
2%

Current state of coal phase-out pledges

Share of coalin national
CO2emissions(2019)

Most power
generation coalfrom domestic
mines

8.9%
11.6%
25.3%
11.5%
6.2%
8.0%
3.3%

Yes
No
Yes
Yes
No
No
No

*Austria, Belgium and Sweden have completed their phase-outs except a few small boilers
Note: CO2 emissions are from coal, peat and shale oil products used in the power sector only.

50

2000

45

1800

40

1600

35

1400

30

1200

25

1000

20

800

15

600

10

400

5

200

0

0

Remaining coal apacity - World (GW)

Remaining coal capacity (GW)

Remaining coal capacity distribution by age of plants still in operation (2021, GW)

More than 50 years

31 to 50 years

11 to 30 years

Less than 10 years

IEA. All rights reserved.
Source: S&P Global Market Intelligence LLC 2021.

The countries listed in the table accounted for 4.1% of global coal power
generation in 2019, of which Germany weighed for 45%. In addition, the following
countries have joined the Powering Past Coal Alliance, whose members havecommitted to accelerate the transition from coal in power generation: Albania,
Angola, Costa Rica, Croatia, El Salvador, Ethiopia, Fiji, Latvia, Liechtenstein,
Lithuania, Luxembourg, Marshall Islands, Mexico, Niue, the Republic of North
Macedonia (“North Macedonia” hereafter), Peru, Senegal, Switzerland, Tuvalu,
Uruguay and Vanuatu. Among them, only Croatia, Mexico, North Macedonia, Peru
and Senegal generate some electricity from coal. Poland has signed up to the EU
climate law and is working to reduce its reliance on coal. In April 2021 thegovernment of Poland and mining unions signed an agreement with the coal

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mining industry to phase out coal production by 2049.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Policies and measures to acceleratecoal phase out

Policies and measures toaccelerate coal phase-out
Coal has long been a low-cost source of baseload power. Its share of power
generation has been declining, however, particularly in developed economies.
Burning coal leads to greenhouse gas emissions, air pollution, and land and watercontamination. At the same time, alternative generating technologies haveemerged.
Regulators and governments have a variety of tools to phase out use of unabatedcoal. One way would be to remove subsidies for coal and accelerate electricity
sector reforms to allow competition among generation sources. In many coalintensive emerging and developing economies, competitive electricity markets do
not exist. Electricity sector liberalisation and reform would go a long way towards
accelerating a coal phase-out. The choice of policy mechanisms depends on thecircumstances and policy landscape of each country.

Air pollution regulation
Emissions from fossil fuel combustion, notably coal, are major contributors to air
pollution. Introducing air pollution regulations targeting coarse particulate matter,fine particulate matter, nitrogen oxides (NOx) and sulphur oxides (SOx) – and toa lesser extent mercury – has a significant impact on investments, costs andoperation of coal-fired power plants. Air pollution regulations have affected coal
power plants in very different ways across the world. In the European Union andthe United States, more stringent standards combined with other factors – mainly
climate policies in the European Union and cheap gas in the United States – haveresulted in massive retirement of coal-fired plants. In China, by contrast, most coal
power plants have been retrofitted to reduce air pollutant emissions by orders ofmagnitude and only small, old units have been retired. India and South Africa havedelayed enforcing air pollution standards because utilities have encountereddifficulties in retrofitting their plants and closure of coal plants would jeopardise
the supply of electricity.

Restrictions on public financing
In some regions, coal-fired power plants receive government subsidies to maintain

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their viability, in order to support workforces and communities or to guarantee thePhasing Out Unabated Coal: Current Status and Three Case Studies

Policies and measures to acceleratecoal phase out

power supply. Some public finance and development institutions also support
construction of coal power plants overseas. Countries have adopted contrasting
approaches to coal power subsidies. France and Italy have banned domestic andinternational support for coal and Germany has introduced restrictions according
to efficiency standards. Australia, on the other hand, still provides direct supportand subsidies to its coal power generation companies and China finances coal
power plants projects internationally. More recently, in May 2021, the G7 group(Canada, France, Germany, Italy, Japan, the United Kingdom and theUnited States) agreed to stop investment in unabated coal and support foroverseas coal projects. In September 2021, President Xi pledged that China would
not build more coal power plants abroad.
Over the past decade international organisations have announced a wave ofrestrictions on financing coal power. In 2013, the World Bank affirmed that it would“only in rare circumstances” provide financial support for new greenfield coal
power generation projects, such as “meeting basic energy needs in countries withno feasible alternatives”. In 2016, OECD member countries introduced stricter
terms and conditions that encourage both exporters and buyers of coal-fired power
plants to move towards higher-efficiency technologies by limiting export credit
support for coal-fired power plants. In December 2018, the European Bank for
Reconstruction and Development confirmed that it would no longer finance newmining for thermal coal or coal-fired electricity generation, while in 2019 theEuropean Investment Bank announced that it would finance no new fossil fuelenergy projects after 2021. In the same year, the African Development Bank
announced it would no longer finance coal projects. The Asian Development Bank
stated in May 2021 that it would no longer finance new coal power plants. Also in
2021, the US government committed to “identify steps through which the UnitedStates can promote ending international financing of carbon-intensive fossil fuelbased energy while simultaneously advancing sustainable development and agreen recovery”.

Financial agreements with power companies
Some governments compensate power companies for closing coal power plants
before the end of their economic or technical life to comply with the new objectivesof the government. Support can take the form of payments with agreed dates forclosure, as is the case with lignite in Germany, or auctions in which power plant
operators can compete for compensation for closing their plants early, as with hard

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coal in Germany.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Policies and measures to acceleratecoal phase out

In some markets, a capacity mechanism rewards power plants for the MWsavailable to produce if needed rather than the MWhs they actually generate.
Another option is mothballing coal plants to use later in exceptional circumstances.
Subsidies and other fiscal and regulatory mechanisms can also be used to help
companies switch from coal to other sources. In the United Kingdom, for example,
some units at the Drax coal-fired power plant retain contracts to provide capacity
until the end of the 2021-2022 winter, while four units have been converted to burnbiomass, supported by a contract for difference (CfD) for renewable electricity.
Many of these options may not be available in emerging markets and developing
economies, however, for a variety of reasons, including budget constraints andthe need for energy for development. If such measures were to be implemented,
support from OECD countries might be required.

Carbon pricing
Pricing carbon – obliging operators to pay according to the amount of CO2 theirpower plants emit – can lead to substitution of coal-fired power by less carbonintensive sources of power and sometimes to lower demand for electricity. In the
short term, carbon pricing raises the marginal cost of coal-fired powered plants,
so it can induce a shift in the merit order, prioritising dispatchable sources withlower CO2 emissions over coal. In the long term, as coal becomes less competitiveand less financially attractive than lower-carbon energy sources, carbon pricing
sends investors a signal to move from coal to natural gas or to low-carbon energy
sources, such as solar and wind power.
Nonetheless, care must be taken to ensure carbon pricing is effective indecarbonising the power sector and to apply it across the fuel supply chain.
Otherwise, the carbon pricing regime may penalise coal plants compared to gas
plants if, for example, methane leakages are not taken into account. Where market
structure and regulation allow, electricity producers will pass on the increase inproduction costs resulting from carbon prices to consumers of electricity, in theform of higher electricity prices.
More broadly, the stability, predictability and level of the carbon price – and theavailability of substitutes for the energy source – determine by how much carbon
prices reduce emissions. Larger price increases usually lead to larger emissions
reductions. Where alternatives are expensive or not available, emissions may only
be reduced when carbon prices are higher. Where substitutes are available atsmall additional cost, emissions reductions can be substantial, even when carbon

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prices are low. Many jurisdictions have introduced either a carbon tax or anPhasing Out Unabated Coal: Current Status and Three Case Studies

Policies and measures to acceleratecoal phase out

emissions trading system (ETS) for the power sector. Examples include the EU
ETS, Korea-ETS, Canadian Framework and China, which has launched theworld’s largest ETS for its power sector – with prices ranging from USD 2.6/tCO2
in Japan to USD 62/tCO2 in the United Kingdom in Spring 2021. In May
2021, the EU CO2 price surpassed USD 50/tCO₂ ahead of the launch of the
EU Fit-for-55 Package, which includes a significant ETS reform to meet higher
emissions reductions of 55% by 2030 compared with 1990 levels.
Carbon pricing levels on coal in selected countries (USD/tCO2, 2021 average levels)
Japan
MexicoCarbon prices(lowest)China*South Africa
Korea

Carbon prices(highest)

United States
CanadaEuropean Union-27
United Kingdom
0

10

20

30

40

50

60

70

Carbon prices (April 2021, USD/tCO2)

IEA. All rights reserved.
* Results of the first auction of the China National ETS held in July 2021.
Note: Highest and lowest carbon prices are provided to give an overview of the range in prices where different pricing
schemes are present.
Source: Data extracted from emissions trading systems and carbon taxes covering emissions from coal power plants. The
prices can be found in the World Bank Carbon Pricing Dashboard and the ICAP Allowance Price Explorer.

Emissions standards
Some jurisdictions have established CO2 emissions standards for new or existing
generation plants as a way to reduce CO2 emissions by reducing coal power
generation. Given that emissions from the most efficient coal plants are over
0.75 tCO2/MWh, any standard well below that level makes it impossible to operatecoal power plants, unless they use bioenergy co-firing, CCUS or other technology
to reduce emissions. Emissions standards are less flexible than CO2 pricing andonly countries under specific circumstances can impose such standards, inparticular for plants in operation.

Supporting alternative technologies
Supporting clean energy technologies as an alternative to coal power is another

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policy option to reduce reliance on coal for electricity supply before coal is phasedPhasing Out Unabated Coal: Current Status and Three Case Studies

Policies and measures to acceleratecoal phase out

out. Declining costs of wind and solar are helping their deployment, but incountries where electricity demand is growing, such as China, India or Indonesia,
deployment of clean energies rarely reduces dependency on coal. In emerging
markets and developing economies, therefore, near-zero emissions capacity
additions will require financial support such as low interest and concessional loans
and blended finance, as well as contributions by advanced economies to funds
that support such projects. Support for clean energy technologies is essential,
therefore, to reduce and eventually phase out unabated coal power generation.
Several clean energy technologies have very low operating costs, which give thema competitive advantage in electricity dispatching based on merit order.

Coal and the just transition
As countries seek to shift from fossil fuels to clean energy technologies, thesuccess of these efforts also rests on enabling citizens to benefit from
opportunities and navigate changes. Any reduction in domestic coal use or of coalexports is likely to have a significant social and economic effect on thecommunities where coal mines and plants are located, including losses of jobs
and tax revenues. The impact will be larger in coal-producing regions, as coalproduction is labour intensive. Overall, about 140 thousands jobs are expected to
be lost through the listed coal phase-out plans (IEA estimates).
Managing the expected job losses during the energy transition presents a policy
challenge. Many coal-producing and/or coal-consuming regions will need torestructure and/or diversify their economies, maintain social cohesion, and retrain
the affected workers and job seekers to prepare them for future jobs. As with theother coal reduction policies and measures highlighted here, there is considerable
international experience in targeting economic restructuring aid to coal regions.
There is no silver bullet to avoid the impact of coal phase-out on communities,
however. On 26 January 2021, the IEA established a high-level Global
Commission on People-Centred Clean Energy Transitions, which will produce
recommendations ahead of COP26.

Conversion of coal power plants
The conversion of coal power plants should be seriously considered before theirclosure is planned, as it enables the owner to retain some of the value of theexisting assets and the community to maintain a source of jobs and taxes.

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Conversion can also aid the smooth functioning of the electricity system. Policy

Phasing Out Unabated Coal: Current Status and Three Case Studies

Policies and measures to acceleratecoal phase out

makers, regulators and other stakeholders should be aware of that potential andset up the legal and social framework necessary to extract ongoing value fromexisting coal power plants.
A coal power plant includes many assets that could continue to be used togenerate power, such as the boiler, the water/steam system, the cooling systemand the turbine/generator, as well as equipment for handling materials. The
physical space where the plant is located and the grid connection are also valuableassets. Other less tangible but equally valuable assets are the plant’s group ofskilled workers, auxiliary industry and services developed around the plant, andthe licence to operate, including the ‘’social licence’’, or support of the community.
The grid connection, the physical space and the water availability make coal plantsites valuable for many electricity uses or even industrial uses. The United States,
where the world’s largest amount of coal capacity has been closed during the last
decade, offers useful experiences on conversion, mostly to gas power plants. Lowcarbon conversion options will become more frequent. The last section of this

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IEA All rights reserved.

report presents some examples of coal power plant conversion.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Case studies: Ontario, the United Kingdom
and Germany

Case studies: Ontario, the United
Kingdom and Germany
Many different approaches have been adopted to reduce the use of coal andfacilitate its removal from the power sector. This section summarises threecontrasting approaches adopted in Ontario, the United Kingdom and Germany.

Coal capacity (GW)

Installed capacity in coal: from the announcement of the phase-out to its completion
40
35
30
Germany

25

UnitedKingdom

20
15

Ontario

10
5
0

Y-18

Y-16

Y-14

Y-12

Y-10

Y-8

Y-6

Y-4

Y-2

Y

IEA. All rights reserved.
Note: For Germany, 2038 is assumed as the completion date, but completion could occur earlier.
Sources: German Federal Network Agency, Independent Electricity System Operator, UK Government.

Coal phase-out in Ontario, Canada: Closing governmentowned plants
In 2003, the government of Ontario pledged to close all the coal power plants inthe province by 2007. When technical challenges were encountered in replacing
generation capacity and upgrading the grid, the deadline was pushed back to
2009. In 2007, the province passed legislation calling for the cessation of coal use
by 2014, which was the year the last unit closed.
In 2003, coal represented a quarter of Ontario's generating capacity (7 560 MW)
and of its electricity supply (36.6 TWh). Most of the existing coal capacity had been
built in the 1960s and 1970s and had an economic life of about 40 years. Phasingout coal was a major structural policy reform that required a set of complementary

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IEA All rights reserved.

policies to soften the detrimental effects of the transition and provide alternativePhasing Out Unabated Coal: Current Status and Three Case Studies

Case studies: Ontario, the United Kingdom
and Germany

energy solutions. Grid planning was necessary to accommodate capacity
replacement, as well as provision of ancillary services.
The elimination of coal-fired electricity was a shared effort by the provincial
government, Ontario Power Generation (the largest power generator), and theIndependent Electricity System Operator (IESO), the Crown corporation
responsible for operating the electricity market and directing the operation of thebulk electrical system in Ontario. The province adopted a phased approach withcapacity reduced in stages between 2003 and 2014 to maintain system reliability
and operational efficiency. The Cessation of Coal Use Regulation (2007), which
set an end date of 31 December 2014, was the key legal instrument for the laterstages of the phase-out.
Timing of coal-fired plant closures in Ontario, 2003-2014
Remaining
capacity
(MW)

2003

2005

2010

2011

2012

2013

2014

Lakeview

1 150

-

-

-

-

-

-

Nanticoke

3 940

3 940

2 960

1 980

1 980

-

-

Lambton

1 980

1 980

1 010

1 010

1 010

-

-

Thunder
Bay

306

306

306

306

306

306

(April)Atikokan

211

211

211

211

-

-

-

Total

7 587

6 437

4 487

3 507

3 296

306

0

Source: Ontario state government (2021), The end of coal.

Thunder Bay and Atikokan plants were converted to run on biomass. Owing tohigh costs, Thunder Bay was subsequently closed. Atikokan operates as apeaking plant and uses locally supplied biomass. The other three plants wereclosed and demolished. The site of the largest, Nanticoke, which now has a solar
farm, has a good transmission link and is being considered for a connection to theUnited States that passes under Lake Erie (Lake Erie Connector).

Framework strategy
Several gas-fired power plants were built to replace most of the coal capacity thatwas being retired. Before the system operator (IESO) would allowed the controlled
shutdown of the coal-fired generating fleet, these gas plants had to demonstrateconsistent, reliable performance. There was substantial investment in new nonhydro renewables, mainly wind and solar power. Coal-fired electricity was
replaced by a mix of baseload, shoulder and peaking capacity, with a strong

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conservation and demand management approach:Phasing Out Unabated Coal: Current Status and Three Case Studies

Case studies: Ontario, the United Kingdom
and Germany



Nuclear: Two units at Bruce Power were refurbished and returned to service in2012, adding 1 500 MW.

Natural gas: New combined-cycle facilities, a peaking plant and combined heatand power facilities together added 5 500 MW.



Non-hydro renewables: Added generation under procurements came to
5 500 MW.

By 2019, 94% of the electricity generated in Ontario was low-carbon.
Output by generation technology in Ontario, 2003 and 2014

% of total generation
2003% of total generation in2014

Nuclear

42%

60%

Gas

11%

9%

Hydro

23%

24%

Coal

25%

0%

Non-hydro renewables

0%7%Energy source

Source: IESO (2021), Transmission Connected Generation.

The provincial government passed on the cost of the phase-out to customers asa charge on the bill (part of what is known as “global adjustment”) whiletransmission upgrades were included in regulated transmission rates. There wasalso an additional charge on customers during the transition to compensate
Ontario Power Generation for above-market costs of the larger coal plants as
output from the plants was curtailed (also recovered by means of the global
adjustment).
Although costs were significant, several factors made the phase-out simpler toachieve. As Ontario was not a coal producer, few jobs were lost. The falling costof natural gas also made coal generation more expensive than gas generation. By
the time phase-out was completed, it had ceased to be politically controversial.

Coal phase-out in the United Kingdom
In the United Kingdom, coal generation’s share of electricity output fell from 65%
in 1990 to 34% in 2005, 23% in 2015 and 2% in 2020. The complete phase-out ofcoal is expected by 1 October 2024.
In November 2015, the government announced that it intended to consult on
proposals to end unabated coal generation in Great Britain (England, Scotland
and Wales, excluding Northern Ireland) by 2025. The date was chosen to balance

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IEA All rights reserved.

the demands of affordability, security of energy supply and decarbonisation. The

Phasing Out Unabated Coal: Current Status and Three Case Studies

Case studies: Ontario, the United Kingdom
and Germany

overall objectives of the phase-out were not only to reduce emissions of CO2 andother harmful pollutants from the power sector but also to increase revenue
certainty for investment in new lower-carbon, flexible generation capacity.
As of mid-2017, the government estimated that 2 500 to 3 000 people were
employed in coal mining and coal-fired power generation and that most would be
able to find other jobs when plants closed. The government also estimated thatcoal plants would lose around GBP 250 million in profits by closing early. Profits
would increase for other forms of power generation, however, which in somecases would be owned by the same companies that own coal plants. In otherwords, much of the resulting change in profitability would amount to a transfer
between businesses.

Framework strategy
Several policies introduced after 2006 constrained the outlook for coal well before
the government announced in 2015 its intention to phase out unabated coal.
These policies included the introduction of a carbon price floor in 2013, theRenewables Obligation, the Emissions Performance Standard, along with the
Climate Change Act, carbon budgets and EU pollution control regulations. As aresult, the economics of coal-fired power deteriorated significantly. Falling gas
prices, cheaper renewables and higher carbon taxes combined to leave coal
generators facing increasing losses.
The government decided that the best way to ensure the phasing out of unabatedcoal by 2025 was to set a new emissions intensity limit of 450 gCO2 per kWh ofelectricity generated. This level, broadly equivalent to the emissions intensity ofan unabated gas-fired plant, was in line with the existing Emissions PerformanceStandard for new fossil fuel-fired power plants. This limit was to be applied on aunit-by-unit basis. Units could achieve this standard by investing in technologies
that would reduce CO2 emissions significantly.
By 2019, only three coal-fired plants remained on the system in Great Britain:
Drax, Ratcliffe and West Burton. (One plant, in Kilroot, remained on the Northern
Ireland system, which is part of the all-island Single Electricity Market in Ireland. It
plans to convert to natural gas by 2023.) Drax units were over 30 years old andthe rest over 40 years old. Since then, Drax has announced that its coal-fired units
would close after September 2022. West Burton announced plans to close its
remaining coal units in 2022 while the final remaining plant at Radcliffe recently

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IEA All rights reserved.

secured a capacity contract for one unit for the winter of 2021/22.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Case studies: Ontario, the United Kingdom
and Germany

Coal phase-out in Germany: structural planning andauctions mechanism
Coal phase-out in Germany is part of the Energiewende, a major government
policy shift from nuclear power and fossil fuels to renewables. Coal-fired power
accounts for just over a quarter of Germany’s electricity output. In 2019, thecoal-fired generation fleet accounted for around 28% of total emissions and morethan 75% of emissions from the power sector. Unlike Ontario or the United
Kingdom, in Germany coal mining and generation is a major employer, notably inCentral Germany, Lusatia and the Rhineland. These regions are expected toreceive billions of euros in economic support to adapt to the phase-out of coal. A
major challenge identified before the coal phase-out was a slowdown in thedevelopment of power grids in the face of strong public resistance, in particular
the north-to-south power corridor bringing electricity from renewables producing
to consuming regions. Some authorities, such as the Court of Auditors, havewarned that security of energy supply could be jeopardised.

Framework strategy
In 2020, the Act to Reduce and End Coal-Powered Energy and Amend Other Laws
came into force. Known as the Coal Phase-Out Act, it aims to gradually reducecoal-fired power and end its use by 2038 at the latest to “reduce emissions andprovide the public with a safe, a cost-effective, an efficient, and a climatecompatible energy supply”. Some more recent developments, like Germany’s
adoption of the objective of reaching net zero emissions by 2045, the newEuropean Commission climate package or G7 agreement have raised
expectations that there might be an earlier phase-out.
The Coal Phase-Out Act provides that no new coal power plants will be built inGermany. It also determines that coal generation capacity will be reduced to
30 GW by 2022 (15 GW from hard coal and 15 GW from lignite) and to 17 GW by
2030 (8 GW from hard coal and 9 GW from lignite), with reduction of the remaining
capacity by 2038 at the latest.
The Act treats hard coal and large lignite power plants differently. A closing
schedule has been agreed between the government and companies owning thelignite power plants and open pit mines to phase out large lignite power plants
progressively. Mechanisms for the early retirement of power plants before 2030
have also been introduced to compensate companies for the potential losses they
may face. In addition, older workers losing their jobs as a result of the closure of

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IEA All rights reserved.

the plant will receive compensation payments.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Case studies: Ontario, the United Kingdom
and Germany

A separate auction mechanism was adopted for hard coal and small lignite-fired
power plants. A shutdown premium was awarded by means of a competitive
tender process: the coal plant operators receive a “hard coal premium” for thecapacity they take offline. The most cost-efficient bids are the first ones to be
selected. Bids are ranked through an index dividing the bid value (EUR/MW) withthe average annual historical emissions of CO₂ per megawatt of net nominal
output of the hard coal plant in the three years before the auction takes place. For
rounds two to seven (2021-2026), this index incorporates a “grid factor”, whichtakes into account the maintenance costs that might arise if there is a need tokeep the plant in the network for energy security reasons; it is added to the bidding
price before obtaining the ratio.
The bids are ranked so that the lowest number of the index comes first and thehighest number comes last. The bids are awarded in the order in which they areplaced until the tender volume is reached (Federal Network Agency, 2020).
Price bids are to be submitted by power plant operators in euros per megawatt
capacity; this equals the compensation payment for winning bids (pay-as-bid). The
highest price is regulated, decreasing from the first auction (EUR 165 000/MW) tothe last (EUR 89 000/MW). For the award decision, however, bids were not ranked
directly by the bid parameter. Instead, the bids were converted into euros per
tonne of CO₂, based on the average annual CO2 emissions per MWh observedfor each plant over the previous three years. As the modern power plant units are
more efficient (and emit less CO₂ per megawatt hour of electricity generated), they
were operated more frequently than older and less efficient units. As aconsequence, the bids of younger units were divided by a higher total amount ofCO₂, which moved them up the bid ranking compared with older units. This allows
more coal power generation to be reduced from the same capacity than without
the conversion to euros per tonne of CO2.

Compensation mechanisms
To compensate lignite power plant companies, EUR 4.35 billion will be awarded toplants in order to compensate them for their earlier investments and to close down
the plants. RWE Power AG is entitled to compensation of EUR 2.6 billion, to be paidin 15 annual instalments from 2020, for its lignite plants in the Rhineland. Lausitz
Energie Kraft-werk AG is entitled to compensation of EUR 1.75 billion, to be paid in
15 annual instalments from 2025, for its lignite plants in Lusatia. The compensation
is currently audited by the European Commission.
As amended in the combined heat and power (CHP) law, plant operators that

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IEA All rights reserved.

replace a CHP (cogeneration) plant that generates electricity from lignite or hardPhasing Out Unabated Coal: Current Status and Three Case Studies

Case studies: Ontario, the United Kingdom
and Germany

coal with one that generates electricity from waste, waste heat, biomass or
gaseous or liquid fuels will receive a one-off payment of EUR 5 to EUR 390 per
kilowatt of capacity, depending on their operational start date.
The government aims to reduce hard coal generation capacity by 7 GW by 2022
and by a further 7 GW by 2030. To reach these levels, the first auction round in
December 2020 targeted a reduction of 4 GW by January 2021. The law settled amaximum auctioning price of EUR 165 000 (Federal Network Agency, 2021).
Overall, 11 bids for a total value of 4 788 MW were accepted, including bids from
Vattenfall and RWE. The values of the successful bids range from EUR 6 047/MW
to EUR 150 000/MW. The total amount resulting from the bids is around
EUR 317 million. From 1 January 2021, the plants that were awarded the contract
may no longer market their power output.
The most recent bid, settled in July 2021, aimed to close down 2.5 GW of coalinstallations. For the first time, the auction was undersubscribed. Eleven bidders
won awards for 2.1 GW at an average price of EUR 102 799/MW, with bids
ranging from EUR 0 (meaning no compensation was asked from the power plantclosure) to EUR 155 000/MW. The undersubscription and the fairly higher pricepaid may indicate that the plants most eager to close early were selected during
the first two tenders and that closing the remaining plants will require a higher levelof funding. Different auction designs and sizing might increase competition for
funding and yield more optimal results than the current single bid format.
The next tender will aim to close 433 MW of hard coal-fired generation capacity in
2023, with a bid deadline of 1 October 2021.
Timeline and objectives of the auctioning mechanism

TendervolumeActualtradedvolumeMax. bid
price (EUR)

01-09-2020

4 GW

4.788 GW

165 000

04-01-2021
30-04-2021
01-10-2021
01-03-2022
01-08-2022
01-06-2023
03-06-2024

1.5 GW
2.481 GW
0.433 GW
n.a
n.a
n.a
n.a

1.514 GW
2.133 GW
n.a
n.a
n.a
n.a
n.a

155 000
155 000
116 000
107 000
98 00089 00089 000PAGE | 26

Lowest andhighest bid(EUR)
6 000150 000
0-59 000
0 -155 000
n.a
n.a
n.a
n.a
n.a

Closing
date
01-01-2021
08-12-2021
31-10-2022
2023
2024
2025
2026
2027

IEA All rights reserved.

Bid deadline

Phasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

Coal plant conversion
Converting coal-fired plants to low-carbon not only avoids CO2 emissions, but it
also reduces the need to invest in new transmission infrastructure. Coal power
plants can be modified by reusing the assets of the plant, such as retrofitting themwith carbon capture, utilisation and storage; converting them to use other fuels(natural gas, biomass and ammonia); and reutilising them as small nuclear
reactors, thermal energy storage and synchronous condensers.
Other low-carbon reutilisation options, not examined here, use only the former
coal plant’s physical space and/or connection with the grid. These options include
batteries, solar PV and wind generation facilities, sometimes associated withhydrogen and/or ammonia production.

Carbon capture, utilisation and storage
Retrofitting coal plants with carbon capture, utilisation and storage (CCUS)
preserves existing assets and enables the plants to continue providing
dispatchable electricity, grid stability and energy storage, in the form of coal. In“mine mouth” plants, built close to mines and fuelled with cheap coal, CCUS may
be an attractive option to keep the plant in operation, maintaining mining jobs andhelping the community. In the case of young plants, with a long lifetime ahead,retrofitting with CCUS can be a reasonable compromise to avoid the otherwise
almost full depreciation of the plant. If the capture system allows energy to be
stored (for example by adapting oxygen production to the required power output),the capture retrofit can augment the flexibility of the system, facilitating highpenetration of variable renewable energy.
CCUS technologies for coal power plants include pre-combustion, oxycombustion and post-combustion. A recent development is the Allam cycle, an
oxy-fuelled semi-closed cycle using supercritical CO₂ at high pressure as theworking fluid. Chemical looping, in which a metal acts as an oxygen carrier toproduce CO₂ and water, is under development. Both are promising technologies,
but for plants in operation, in which existing assets are to be preserved, the mostsuitable option is post-combustion, in which the CO₂ contained in the flue gas isadsorbed, or absorbed usually by amines, which are later regenerated. This is theapproach followed by the two coal power plants retrofitted with CCUS atcommercial scale so far in the world: Boundary Dam (Canada) and Petra Nova

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IEA All rights reserved.

(United States). The Saskpower Boundary Dam CCUS facility in Saskatchewan

Phasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

started operation in 2014, capturing around 1 MtCO₂ per year and becoming theworld’s first large-scale CCUS in a coal power plant. It was followed in 2017 by
the Petra Nova facility in Texas, capturing around 1.4 Mt CO₂ per year. The CO₂
captured in those facilities is used for enhanced oil recovery.
A few years ago, expectations were high that CCUS in coal power plants would
make a significant contribution to reducing emissions, but these hopes nevermaterialised. Energy losses in the CCUS process, the capital expenditure required
and lukewarm policy support all played a role. Enhanced policy support in the
United States in 2018 created new momentum, however. Four coal power plants
are considering CCUS.
Coal power plant retrofitted with post-combustion CCUS

IEA. All rights reserved.

Gas boilers
The United States has accumulated much experience on how to deal with retired
coal power plants. From 2011 to 2019, 50 GW of coal capacity was retired, withmost plants modified to burn another fuel. Eighty-six old coal power plants
representing 14.3 GW of capacity converted their boilers to burn natural gas,
driven by more stringent emission standards and lower natural gas prices.
Investments required are small. Each boiler requires different changes, depending
on its physical geometry, materials of construction, steam conditions required forthe turbine and other factors. The plant load factor is another important

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IEA All rights reserved.

consideration. In general, a gas boiler is a retrofit option for coal plants that expectPhasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

low load factors. It is also notable that gas plants require fewer workers than coalplants, which require extra personnel to handle fuel, ash and by-products from fluegas cleaning.
Retrofitting coal plants as gas boilers uses most of the existing infrastructure
downstream and frees up the space that was dedicated to coal supply, but it
requires infrastructure to supply gas through a gas pipeline. If a gas pipeline close
to the site exists, this is straightforward. If no pipeline is close, permits andexpenses from a new gas natural corridor can threaten profitability.
From a climate perspective, a gas boiler emits less CO₂ (just over
500 kgCO₂/MWh) than a comparable coal plant (900 kgCO₂/MWh). Such a
conversion does not represent a real low-carbon alternative to coal, however, justa temporary, low capital option to maintain the electricity supply while further
reutilisation or closure is undertaken.
Coal power plant converted into a gas power plant (boiler)

IEA. All rights reserved.

Natural gas combined-cycle plants
As already mentioned, the United States has led the way in coverting coal power
plants in the 2010s. Between 2011 and 2019, 17 coal power plants with total
capacity of 7.9 GW were converted into combined-cycle gas-fired plants

PAGE | 29

IEA All rights reserved.

(combined-cycle gas turbines [CCGT]) with capacity of 15.3 GW. Major

Phasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

refurbishment was required: the fuel, ash and by-product handling infrastructure,
the boiler and the balance of the plant all need replacement, as do the electricalparts, including generators and transformers. This major transformation andreplacement requires much higher investment than in the case of gas boilers.
The advantage of CCGTs versus gas boilers is the higher efficiency of the cycle,
which is typically over 50% and can be over 60% using advanced turbine
technology. In boilers, by comparison, typical efficiency is 35%. This higher
efficiency significantly reduces both fuel generation costs and CO₂ emissions, bymore than 40% in each case.
The pros and cons mentioned above in converting coal plants to gas boilers arealso relevant for CCGTs. The need for gas receiving infrastructure and associatedpermits can delay construction and increase costs. If investments for a CCGT are
decided, a certain plant load factor is expected and gas supply must be somehow
guaranteed. In terms of jobs, CCGTs like gas boilers use a smaller workforce thana coal plant, as the personnel in charge of coal and ash handling are no longer
required.
CCGTs emit less than 350 kg CO₂/MWh, much less than gas boilers or, even more,coal power plants. Even this level of emissions is unacceptable, however, in a net
zero emissions world. Like gas boilers, CCGTs can only be a transition option.
Coal power plant converted into a CCGT

PAGE | 30

IEA All rights reserved.

IEA. All rights reserved.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

Biomass power plants
Converting a coal power plant to use biomass can become a negative emissions
solution when combined with CCUS.
Some US coal plants have been converted to use biomass, but one global
reference is the Drax power plant (3 960 MW), which was the United Kingdom’s
biggest coal plant and the second-largest in Europe. Since 2013, four out of six
units have been converted to run on biomass, with the remaining two due to beconverted in the coming years. Drax will become the world’s largest biomassfuelled power facility.
Unless the original fuel is lignite, the main changes when converting a coal plant
into biomass are that wood has a lower energy density than coal, because its
moisture content is higher, and the mass of biomass fuel is approximately doublethat of coal. If, as in the case of Drax, wood pellets are imported, the complex
logistics of importing, transporting and storing the pellets need to be managed.
Biomass also generally releases more particulate matter than coal. To avoid
challenges arising from the density difference, a technology under development
can produce pellets that can mimic coal, removing the need to modify the boileror the fuel handling facilities, and therefore improving the economics of plant
conversion.
The sustainability of biomass, including its traceability and accountability, always
needs to be taken into account. “No-regret options” include agricultural andforestry residues that otherwise would be burned without any benefit. Given thesize of typical coal plants, availability of that kind of biomass at the scale required
may be an issue. Emissions in the supply chain (collection, processing and

PAGE | 31

IEA All rights reserved.

transport) and indirect land use change also need to be addressed.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

Coal power plant converted into a biomass power plant

IEA. All rights reserved.

Ammonia-fuelled power plant
There is growing interest in using hydrogen-based ammonia to replace fossil fuelsin some applications. If the hydrogen used is low-carbon – produced either throughelectrolysers from renewable electricity or from fossil fuel hydrogen with CCUS,
ammonia can be considered a low-carbon fuel (or rather, an energy carrier).
Ammonia has a variety of uses, so a distribution network has already been
established. It is a liquid and hence stable for long-term storage andtransportation, a great advantage over hydrogen, the other energy carrier withpotential to become a pivotal player in clean energy transitions.
In Japan, co-firing with ammonia in coal plants has been already demonstrated,using up to 20% ammonia in ultra-supercritical plants, where efficiency is well over
40%. Efficiency is important not only from an economic perspective but also tominimise energy losses across the whole supply chain.
As well as improving the technology to allow higher shares of ammonia until thecomplete substitution of coal, several other issues need to be overcome. Morethan 80% of the ammonia mass is nitrogen, and therefore, NOx emissions have tobe properly addressed if ammonia is going to be used on a large scale. One plantco-firing ammonia at 20% share can consume 500 000 tonnes of ammonia peryear, twice the annual Japanese imports, so extended use of ammonia will pose

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IEA All rights reserved.

logistics challenges. Using ammonia for energy will compete with its use toPhasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

produce fertilisers, which could jeopardise food supply. Other energy uses, suchas shipping fuel, could be more appropriate for ammonia, given that shipping is
considered one of the hard-to-abate sectors. For electricity production, using
ammonia in fuel cells or turbines can offer more efficiency than burning it in aboiler, but bigger investments would be required to use these technologies.
From the health and safety perspective, ammonia is toxic and flammable. It has
been used for many years so there is ample knowledge about how to handle it,but expanding its use to other sectors and regions would increase the risk ofaccidents.
Coal power plant modified to use ammonia as fuelIEA. All rights reserved.

Small modular nuclear reactors
In jurisdictions where nuclear energy is acceptable, transforming a coal power
plant into a nuclear plant can be a way to generate low-carbon electricity, while
making good use of the transmission grid, cooling water, land and other assets.
The nuclear plant can also provide dispatchability and ancillary services for thegrid that are similar to those of other thermal plants. Nuclear power can pose some
additional challenges, however. The pre-existence of a power plant can facilitatesocial acceptance of the new design, but this is not guaranteed in the case of
nuclear power, an especially sensitive matter in most places. Likewise, licensing

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and regulatory aspects can be barriers, as geology, seismic conditions and otherPhasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

factors need to be addressed before a licence for a nuclear facility is awarded.
This can delay permits and approvals, increasing the financial burden and the levelof risk.
Small modular reactors can replace coal power plants of up to 300 MW that lacka nearby gas supply or when the owner wants to eliminate CO₂ emissions rather
than just reduce them. Small modular reactors have some advantages overtraditional nuclear power plants. They generate less waste, have longer discharge
cycles and provide more flexibility than typical nuclear units of 1 000 MW or more.
Small modular reactors do not take advantage of the extensive experiencedeveloped in operating the technologies used in larger reactors, however.
Developing and licensing new designs requires a significant upfront investment
and therefore represents a certain economic risk.
Despite all the challenges, TerraPower and PacifiCorp have announced theconstruction a demonstration plant on the site of a retired coal plant in Wyoming,the largest coal-producing state in the United States. The plant plans to use theNatrium technology, which is a sodium-cooled reactor. It will incorporate thermal
storage to provide more flexibility, enabling the reactor to supply power from345 MW to 500 MW if required.
Coal power plant reutilised as a small modular reactor

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Phasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

Thermal energy storage
The increasing share of weather-dependent renewable generation will requireenergy storage capacity at different scales and response times. Replace coalboilers with thermal energy storage is a way not only to make use of existing
assets but also to reduce job losses in the community when a coal plant closes.
When electricity generated from wind and solar power is abundant and there is anelectricity surplus in the system, some electricity can be sent to a thermal storage
plant where is used to heat a material that will store the energy. When there is anelectricity generation shortage in the system, for example when wind and solar
output decrease, the heat stored is transferred to the water in the steam
generators. Such change enables the existing balance of the plant to be usedwhile the steam turbine and generator provide ancillary services that will be verymuch needed in the future to guarantee grid stability.
Molten salt is a feasible storage material, as there is extensive experience in using
it in thermal solar units to increase its dispatchability. Electric heaters, cold andhot molten salt tanks and steam generators are the elements required. Such atransformation is straightforward and requires low capital expenditure, so its
economic feasibility is reasonable. In addition, it can store significant quantities ofenergy and offer high energy density,
Other materials for thermal energy storage are under development. One promisingtechnology consists of producing a composite made from aluminium and graphite.
As the aluminium has a melting point of 660 C, the latent heat of the phase change
increases the amount of heat stored. This increases the energy density andreduces the materials and space needed, saving money and resources.
Graphite’s melting point is over 3 000ºC, much higher than the working
temperature. In this way, the graphite ensures that the physical structure of the

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storage is maintained throughout the whole cycle of charge and discharge.

Phasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

Coal power plant reutilised as thermal energy storage

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Synchronous condenser
Coal power plants can also be transformed into synchronous condensers,
providing ancillary services that help control the electricity system as well as somereturn to the owner of the plant.
Ancillary services are mostly by-products from the turbines and generators ofconventional thermal plants rotating in synchrony: inertia to stabilise frequency,
reactive power to control voltage, and system strength to manage faults andmaintain voltage stability. Traditionally, they were provided by the generators as
required by the system operator and remuneration was not needed. When
conventional generators are replaced by wind and solar – electricity generatorsconnected through power electronics – these services need to be provided
differently and remunerated accordingly.
A good example is South Australia, where renewable penetration is over 50% andover 100% in some instances. After the market operator warned about a lack ofinertia and system strength, an analysis concluded that synchronous condensers
fitted with flywheels were the most cost-effective way to provide the required
ancillary services. Two synchronous condensers are being put into operation in
the Davenport substation in 2021 and two in the Robertson substation.
As wind and solar PV penetration increase and thermal power plants are retired,
one option to provide the necessary ancillary services is to transform coal power
plants into synchronous condensers by removing the boiler and steam-related

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equipment and leaving the generator spinning free. In this way, the synchronousPhasing Out Unabated Coal: Current Status and Three Case Studies

Coal plant conversion

condenser can add inertia to the system, improving the frequency control; absorb
or inject reactive power, improving the voltage control; and supply fault current tosupport system strength.
Coal power plant reutilised as synchronous condenser

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This publication reﬂects the views of the IEA Secretariat but does not necessarily reﬂect those of individual IEA member
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