Power plants fuelled by coal and gas continue to dominate the global electricity sector – they account for almost two-thirds of power generation, a share that has remained relatively unchanged since 2000 despite the advent of low-cost variable renewable sources. In absolute terms, power generated from fossil fuels has increased by 70% since 2000, reflecting the steady rise in global demand for power.

Coal remains by far the largest fuel source for power generation, at 38%, followed by gas at about 20%. In the world’s fastest-growing economies, such as the People’s Republic of China (hereafter, “China”) and India, the coal-fired share of total generation is higher than 60%. While we see a temporary dent in coal generation and higher shares for variable renewables due to the Covid‑19 pandemic, these shares could return to historic trends as electricity demand recovers.

Power is the largest carbon emitter in the energy sector, creating almost 40% of global energy-related emissions. Despite the pressing need to confront the major causes of climate change, emissions in 2019 from the power sector were only slightly below their 2018 all time high at 13.6 GtCO₂. 

The Paris Agreement’s goal is to keep the increase in global average temperature to well below 2°C above pre-industrial levels and, in doing so, to pursue efforts to limit the increase to 1.5°C. This has been incorporated into the critical energy-related UN Sustainable Development Goals, which seek in addition to widen access to clean, affordable energy.

The global power sector is therefore expected to meet rising demand as access to electricity grows and to provide for a low-carbon future where end-use activities are increasingly electrified.

Despite the rapid expansion of renewable energy generation, the sheer scale of current power sector emissions and the vital role of electrification mean that countries must urgently tackle their emissions from power to meet these global climate goals. In effect, the power sector has to dramatically reduce its carbon intensity. 

To meet climate goals, policy makers need to address emissions from existing coal-fired power plants and those being built today. Yet, under current policies stated by governments, while CO₂ emissions from the existing coal-fired fleet would decline by approximately 40%, annual emissions would still amount to 6 GtCO₂ per year in 2040. Significant additions to coal-fired capacity were still under construction at the start of 2020, highlighting the challenge ahead.

Meeting long-term climate goals without applying carbon capture, utilisation and storage technologies at scale in the power sector requires the virtual elimination of coal-fired power generation and, eventually, that of gas-fired generation as well, with significant early retirements and potential for stranded assets.

The young age of the global fleet of fossil-fuelled power plants means that about one-quarter of the existing fleet would be retired before reaching the typical 50-year lifespan. Almost one-third of all coal-fired capacity is less than ten years old, the vast majority of which is in Asia. Those kept in operation would likely see substantially reduced operating hours.

The IEA Sustainable Development Scenario outlines a major transformation of the global energy system, showing how the world can deliver the three main energy-related Sustainable Development Goals simultaneously. Under this scenario, carbon capture technologies play an important role in providing dispatchable, low-carbon electricity – in 2040, plants with these technologies generate 5% of global power. CCUS-equipped coal and gas plants become increasingly important for secure, sustainable and affordable power systems in the IEA Sustainable Development Scenario.

Meeting climate goals also means creating an extremely flexible power system that can manage high shares of variable renewable power sources. Coal- and gas-fired power plants have been a major source of system flexibility, providing benefits essential to the operation of the electricity grid, such as inertia and frequency control. Carbon capture, storage and utilisation allows these plants to continue providing these benefits and meet long-term flexibility requirements, such as annual seasonality.

An emphasis on supporting system flexibility could see some CCUS-equipped coal and gas plants operating at relatively low load factors. However, the unique ability to achieve negative emissions through bioenergy with carbon capture and storage may mean that these plants run at high capacity factors, even in a power system with high renewable shares. This could come at the expense of a reduced contribution to system flexibility but would support economics of scale in CO₂ transport and storage infrastructure and maximise climate benefits.

Including carbon capture, utilisation and storage in the portfolio of technology options can reduce the total cost of power system transformation. Carbon capture technologies become more competitive in the power system when their flexibility, reliability and carbon intensity are fully valued.