Enable economic competition between renewables and fossil fuels

Alongside boosting the share of clean energy on the grid, phasing out fossil-fuel-fired generating capacity will be central to decarbonizing the global economy. Under BNEF’s Net Zero Scenario, the world must retire 979GW of coal-fired generating capacity over 2025-2030. However, fossil-fuel power-generating capacity grew by more than 1.2TW over 2010-2023, with coal accounting for over half the total. While the number of government pledges to shut down coal plants is rising, significant additional effort from policymakers, utilities and investors will be needed to ensure follow-through.

The first step to phasing out carbon-intensive activities in the power sector is to enable economic competition between renewables and fossil fuels, as well as promote grid-enhancing technologies (for more on technologies, see Pillar 2: Power and grids). A priority to achieve this should be to reform fossil-fuel subsidies, starting with aid targeted at producers and utilities (See Pillar 3: Crosscutting).