External publications

High voltage: financing the path to zero coal

Macaire, Camille / Fabio Grieco / Alain Naef / Ulrich Volz
External Publications (2026)

in: Climate Policy, first published 05.06.2026

DOI: https://doi.org/10.1080/14693062.2026.2675278
Information

The International Energy Agency (IEA)’s Net Zero Emissions (NZE) by 2050 scenario requires a complete phase-out of unabated coal for electricity generation by 2030 for high-income countries, by 2040 globally. If the existing fleet of coal-fired power plants were retired at the end of its life cycle and no new plants were built, global CO2 emissions would only drop by a quarter by 2040. It will be necessary to close 70% of the capacity of the operating global fleet to reach the NZE scenario sectoral target for coal, aligned with the 1.5°C goal. Using plant-level data from the Global Coal Plant Tracker and a prioritization score combining plant and country characteristics, this paper estimates the costs of early coal retirement and low-carbon replacement under IEA scenarios. Replacing coal-fired power generation capacity by equivalent low-carbon capacities (wind, solar, hydro and nuclear) to meet the NZE scenario would cost $8.5tn, including financing costs of $2.8tn. Yet, we also show that an exit from coal brings large net savings, primarily because of CO2 pricing. Such gains cancel out more than half of the costs. For China, these gains represent close to 80% of the costs. These results are obtained with conservative carbon pricing from the IEA. Increasing the cost of CO2 emissions and lowering the cost of capital for developing countries would further strengthen the business case for replacing coal with low-carbon. Under the IEA’s NZE costs scenario, which includes higher carbon pricing, exiting coal could generate $2.9 trillion in global economic gains.

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