Coal investment is down, but not out: IEA

Global investment in coal-fired power generation has dropped in recent years amid rising renewable penetration, although investment in coal supply is still expected to tick upwards this year, the IEA said today.

In 2020, final investment decisions (FIDs) on coal-fired power projects rose on the year for the first time since 2015, accounting for 20GW of capacity, although this was 80pc lower than five years earlier, according to the IEA'S World Energy Investment 2021 report.

The increase was largely driven by a 45pc rise in FIDs in China, to 13GW, while nearly three times more capacity than in 2019 received approval for construction as the government lowered restrictions on building new plants.

Coal-fired FIDs in Cambodia, Indonesia and Pakistan also increased last year, with around 5GW approved in total.

India's coal-fired FIDs in 2020 fell to their lowest in a decade at less than 1GW, below 5pc of the level in 2010.

Global FIDs for gas-fired power plants also edged lower in 2020, driven by a sharp reduction in the US.

Supply side

Investment in coal supply fell by nearly 9pc in 2020 but is expected to rise in 2021. Spending in this area is largely driven by state-owned power companies in Asia, notably in China and India, as most coal produced in Asia is for consumption in its country of origin, the report said.

Chinese coal supply investment is targeted at modernising mines by shutting down small inefficient sites, while in India the focus is on reducing coal imports.

Overall, coal supply investment accounted for around 14.5pc of total 2020 fuel supply investment, compared with around a 1.3pc share for low-carbon fuels. This level of investment appears to be "neither strong enough to satisfy current fossil fuel consumption trends, nor diversified enough to meet tomorrow's clean energy goals", the IEA said.

By Evelyn Lee