Global market consensus suggests that coal, regarded as the dirtiest of fossil fuels, has to go out first, and fastest, from the world’s power mix for a meaningful energy transition to a low-to-zero carbon future.
In tandem, Asia’s burgeoning power sector is seen as the cornerstone of the transition in many climate change mitigation models. But on both counts, the continent’s two big powerhouses – China and India – continue to deliver a sobering reality check.
Market data points to both nations still incrementally motoring on coal. Despite their visible overtures on renewable energy, both saw a rise in their coal-fired power plant capacity by several gigawatts last year.
According to the International Energy Agency, China approved almost 100GW of new coal-fired plants in 2024, and India a further 15GW. It meant that approvals for such plants hit their highest level since 2015.
“Nearly all of the growth in coal investments in 2024 came from China and India to meet domestic demand,” the IEA noted further.
Furthermore, investments in coal supply continue to tick upward with another 4% increase expected in 2025, albeit a slight slowdown compared with a 6% annual average growth seen over the last five years.
No Shortage Of Finance
Aggregated data, including government figures, on China indicates that over 300 coal power plants are currently under construction in the country. This equates to nearly 80% of all such construction around the world. Meanwhile, 46 are under construction in India, according to the country’s Central Electricity Authority.
Financing does not appear to be a problem either. According to Urgewald, global banks provided finance for more than $385 billion to the coal power industry over the past three years, with annual inflows increasing last year.
Unsurprisingly, Chinese banks are the leading providers of coal financing having allocated almost $250 billion to the industry between 2022 and 2024, the non-profit firm’s data suggests.
Meanwhile, president Donald Trump’s return to the White House has further buoyed the coal industry. After having won the Powder River Basin states of Montana and Wyoming — home of the largest coal mines in the U.S. — on his way to the White House, Trump made his stance on coal abundantly clear to the world.
On January 23, speaking at the World Economic Forum just days into his second presidential stint, Trump said: “Nothing can destroy coal — not the weather, not a bomb — nothing. And we have more coal than anybody.”
Less than three months on from those remarks, on April 8, Trump issued an executive order “reinvigorating America’s beautiful clean coal industry.”
Ahead of signing the order, the president said: “Pound for pound, coal is the single most reliable, durable, secure and powerful form of energy. It’s cheap, incredibly efficient, high density, and it’s almost indestructible.”
U.S. banks, already the second-largest lenders to the coal industry, having lent around $50 billion to it over the last three years, also took their cue from the changing American political climate.
Ahead of Trump’s inauguration in January, Bank of America, JPMorgan and Citi – who were among the biggest coal financiers stateside – quit the Net Zero Banking Alliance, considered the financial sector’s low-to-zero carbon target-setting group. Goldman Sachs, Morgan Stanley and Wells Fargo also joined them.
Neighboring Canada’s big six banks – Royal Bank of Canada, Toronto-Dominion, Bank of Nova Scotia, Bank of Montreal, National Bank of Canada, and Canadian Imperial Bank of Commerce – also announced their departure in February.
Ironically, the UN-sponsored initiative was set up in 2021 by former Bank of Canada Governor, and current Canadian prime minister Mark Carney to encourage financial institutions to push toward achieving net zero emissions by 2050.
Australia’s Macquarie bank quit the NZBA in February, and Japan’s Nomura and Sumitomo Mitsui followed suit in March. U.K.’s HSBC became the latest to ditch the NZBA this month. It indicates nothing short of a full-blown exodus from the UN initiative.
Sobering Reality Check
But it also attests to the point that many banks now accept financing fossil fuels, including the dirtiest one, isn’t going to end anytime soon. And if the world’s three leading economies – U.S., China and India – aren’t giving up on coal just yet, why should they jump the gun.
Of course, that’s despite repeated assertions by the International Renewable Energy Agency that the majority of new renewables projects coming online these days are now cheaper than fossil fuels alternatives, including, and especially coal.
In 2024, solar photovoltaics were, on average, 41% cheaper than the lowest-cost fossil fuel alternatives, while onshore wind projects were 53% cheaper, it noted in its latest global market assessment.
These market realities are not necessarily being ignored. Both China and India are investing heavily in renewables. Yet, they find themselves unable to ditch coal, along with several peers in Asia due to a number of reasons.
To quote research and consulting outfit Wood Mackenzie: “A confluence of factors, from a rapidly electrifying global economy to energy security priorities rising from geopolitical and cost shocks to Asia’s young and evolving coal fleet, could extend coal’s role as a vital power source well into the next decade and beyond.”
That’s nothing short of a major check on the global energy transition and a carbon heavy weight on its trajectory to a potential net zero emissions future.