Coal is in a slow, uneven decline globally, but the timeline depends heavily on where you look. In wealthy nations, coal power is shrinking fast. In China and parts of Asia, new coal plants are still being built at a massive scale. The result is a fuel source that will remain significant for decades even as alternatives steadily eat into its dominance.
Coal Is Declining in the West, Expanding in Asia
The United States and Europe have been closing coal plants for over a decade. In the U.S., coal generated roughly 50% of electricity in the early 2000s; today it supplies less than 20%. The United Kingdom went from being the birthplace of coal power to operating entire weeks without burning any. Germany, once heavily dependent on lignite, has legislated a coal phase-out. The economics are straightforward: natural gas, wind, and solar now produce cheaper electricity in most Western markets, and aging coal plants can’t compete.
China tells a completely different story. New and reactivated coal power proposals in China surged to 161 gigawatts in 2025, a record high. By the end of 2025, a total of 291 gigawatts of coal capacity remained in China’s pipeline (already permitted or under construction), equivalent to about 23% of the country’s existing coal fleet. India, too, continues building coal capacity to meet surging electricity demand from a growing economy. These two countries alone account for the vast majority of new coal construction worldwide.
This creates a paradox. Global coal capacity is still growing even as the share of electricity from coal falls relative to renewables. China and India are adding solar and wind at record pace, but they’re also adding coal as a backup and to cover the gap while clean energy scales up. Many of these new plants may run at lower capacity than older ones, serving as insurance during heat waves or periods of low renewable output rather than as baseload power.
The Financial Squeeze
Coal’s financial footing is weakening, though not as quickly as climate advocates hoped. Insurance companies have been pulling coverage from coal projects, making them more expensive and risky. Several sovereign wealth funds and pension funds have divested from coal entirely. But the banking sector, which controls the flow of capital to energy projects, has been slower to act.
An analysis of 36 of the world’s largest banks found that none have committed to stop funding new coal capacity. Some banks that previously made net zero pledges have actually weakened their language, replacing firm terms like “commitment” and “target” with softer words like “ambition” and “aspiration.” Disclosures around fossil fuel financing policies have also gotten vaguer. So while the direction of travel is away from coal, the financial system hasn’t closed the door. Projects in developing countries can still find funding, especially from Chinese and Japanese banks.
The cost picture is more decisive than policy. Building new solar or wind is now cheaper than operating existing coal plants in many regions. That economic reality is doing more to retire coal than any divestment campaign. Once a coal plant loses money, keeping it open becomes a political choice rather than a market one.
Steel and Industrial Coal
Most conversations about coal’s future focus on electricity, but roughly a quarter of global coal consumption goes to steelmaking. Coking coal (also called metallurgical coal) is used in blast furnaces to chemically strip oxygen from iron ore, a process that hasn’t changed fundamentally in over a century. This industrial demand is harder to replace than power generation.
The leading alternative is a process that uses green hydrogen instead of coal to reduce iron ore, paired with electric arc furnaces for final steelmaking. Research published in Nature Communications found that this hydrogen-based route is emerging as the most promising low-emission option, with cost-competitiveness on the European market expected starting in 2026. The European Union currently produces about 80 million tonnes of primary steel per year, and replacing its conventional blast furnaces with hydrogen-based alternatives is already underway.
Outside Europe, the transition will take longer. Green hydrogen requires enormous amounts of cheap renewable electricity, and most steelmaking happens in countries where that infrastructure doesn’t yet exist at scale. Coking coal demand will likely persist well into the 2040s globally, even as European and some Asian producers shift to cleaner methods.
Health Costs That Accelerate the Shift
Coal combustion produces fine particulate matter that penetrates deep into the lungs and enters the bloodstream. A landmark study published in Science tracked individual Medicare records representing 650 million person-years of data in the United States and attributed 460,000 deaths to particulate pollution from coal power plants between 1999 and 2020. Before 2009, coal accounted for 25% of all particulate-related deaths among Medicare recipients. After 2012, as plants closed, that share dropped to 7%.
These numbers illustrate something important: the health benefits of retiring coal plants are immediate and measurable. Communities near shuttered plants see reductions in asthma hospitalizations, heart attacks, and premature births within a few years. This public health argument has become one of the strongest drivers of coal retirement, sometimes more politically effective than climate arguments.
What the Next Two Decades Look Like
Coal’s trajectory splits into three distinct timelines. For electricity in wealthy nations, the decline is essentially locked in. Most remaining coal plants in the U.S., Europe, and Australia will close by the mid-2030s, replaced by a mix of renewables, battery storage, and natural gas. Policy is accelerating what economics already dictates.
For electricity in China and India, the picture is murkier. China’s massive new coal pipeline suggests coal will remain a significant part of its energy mix through at least 2040, though utilization rates may fall as renewables take a larger share of generation. India faces similar dynamics, with coal providing grid stability that renewables alone can’t yet guarantee.
For industrial uses, particularly steelmaking, coal will hang on longest. Even optimistic projections don’t see green hydrogen replacing most coking coal globally before 2050. The technology works, but building the renewable energy infrastructure to produce enough cheap hydrogen is a decades-long project.
The overall pattern is clear: coal’s share of global energy will shrink steadily, but the fuel won’t disappear. It will transition from a dominant energy source to a declining one, concentrated in a handful of countries and industrial processes, with each passing year making the alternatives cheaper and the case for coal harder to defend.