Coal will be overtaken by gas and solar within two decades, the International Energy Agency predicts.
The agency’s World Energy Outlook released on Tuesday uses existing policy and its predicted effects to model the sector’s future.
Thermal coal is slated for long-term decline although carbon dioxide emissions are increasing from energy sources despite global commitments to the Paris targets, the report says.
IEA predicts thermal coal trade will decline 3.7 per cent a year and its contribution to the global power sector will drop by 80 per cent by 2040.
‘Coal’s long goodbye has well and truly begun,’ IEA’s Tim Buckley says.
‘It’s time to plan for a transition.
‘We don’t believe global coal consumption will ever regain the 2014 peak and given relative pricing trends we can expect to see more coal forecast downgrades in the 2019 report.’
The modelling predicts financial institutions will increasingly turn away from insuring coal assets, following the lead of two global financiers, Standard Chartered and Marubeni Corporation, which are stepping away from the resource.
India’s coal market is expected to have the biggest growth but Mr Buckley says the nation’s banks have lent $US100 billion of ‘non-performing loans’ to thermal power plants.
Solar costs will decline by 3.75 per cent annually, IEA also predicts, built on costs halving in two years in India, the United Arab Emirates, Mexico and Australia.
The agency admits it’s difficult to create modelling based on technological disruption, leading to conservative projections.