COVID-19 coal reductions: Pandemic-induced economic shutdown caused coal plants to suffer downturn

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  Quantumrun Foresight
• March 31, 2022

Insight summary

The COVID-19 pandemic's impact on the coal industry has revealed a rapid shift towards renewable energy, reshaping the global energy landscape and opening doors for cleaner alternatives. This transformation is not only affecting the coal industry but also influencing government policies, job markets, construction industries, and insurance coverage. From the accelerated closure of coal mines to the emergence of new technologies in renewable energy, the decline of coal is creating a complex and multifaceted change in energy consumption.

COVID-19 coal reductions context

The economic shutdown due to the COVID-19 pandemic drastically reduced the demand for coal in 2020. Although the coal industry faces increasing uncertainty as the world transitions towards renewable energy sources, the pandemic may have a lasting impact on the coal industry. Experts have suggested that demand for fossil fuel decreased between 35 and 40 percent from 2019 to 2020. This decline is not only a result of the pandemic but also a reflection of a broader shift towards cleaner energy alternatives.

The pandemic led to a reduction in global energy demands and greenhouse gas emissions in 2020. In Europe, reduced energy demand led to carbon emissions declining by 7 percent across 10 of Europe's wealthiest nations. In the US, coal accounted for only 16.4 percent of electrical power between March and April in 2020, compared to 22.5 percent for the same period in 2019. This trend indicates a significant shift in energy consumption patterns, with renewable energy sources gaining more prominence.

However, it's essential to recognize that the shift away from coal is not uniform across the globe. While some countries are making strides in adopting renewable energy, others continue to rely heavily on coal. The pandemic's impact on the coal industry may be temporary in some regions, and the long-term future of coal will depend on various factors, including government policies, technological advancements in renewable energy, and global economic conditions. 

Disruptive impact

The effect of the pandemic upon the coal industry demonstrated that carbon emissions could be reduced faster than previously thought possible while highlighting the increased risk of investing in the coal industry. The reduced demand for coal, and transition towards renewable energy, may lead to governments creating policies that increasingly favor renewable energy sources. As a result, an increasing number of wind, solar, and hydropower plants may be constructed. This trend can affect the construction industries in the countries where these facilities are being built, creating new opportunities for employment and technological development in the renewable energy sector.

The closure of coal power plants and companies may also lead to coal miners and power plant workers losing their jobs, which may have adverse economic effects in the towns and areas where large concentrations of these workers live. This shift away from coal could necessitate a reevaluation of skill sets and job training programs to help these workers transition into new roles within the renewable energy industry or other sectors. Insurance companies may also reassess the coverage they provide to the industry as market forces move the energy industry towards renewable power sources. This reassessment could lead to changes in premiums and coverage options, reflecting the evolving risk landscape.

Governments, educational institutions, and communities may need to collaborate to ensure that the transition towards renewable energy is smooth and inclusive. Investments in education, infrastructure, and community support can help mitigate the potential negative impacts on regions heavily dependent on coal. By taking a holistic approach, society can harness the benefits of renewable energy while minimizing the disruption to individuals and industries affected by this significant shift in energy consumption.

Implications of coal during COVID-19

Wider implications of coal during COVID-19 may include:

• A reduced future demand for coal, leading to the accelerated closure of coal mines and power plants, which may reshape the energy landscape and open doors for alternative energy sources.


• Reducing investment and financing of new coal projects as countries deploy more renewable energy technologies, such as solar and wind power, leading to a shift in financial strategies and priorities within the energy sector.


• The emergence of new job markets in renewable energy sectors, leading to a need for retraining and education programs to help former coal industry workers adapt to new roles.


• The development of new technologies in energy storage and distribution, leading to more efficient use of renewable energy and potentially lowering energy costs for consumers.


• Changes in insurance policies and risk assessment for energy companies, leading to new considerations for businesses and investors in the energy sector.


• Governments adopting policies that favor renewable energy, leading to potential shifts in international relations and trade agreements as nations align with global sustainability goals.


• The potential decline of towns and communities heavily reliant on coal mining, leading to demographic shifts and the need for economic revitalization strategies in affected regions.


• The integration of renewable energy into existing infrastructure, leading to potential updates in building codes, transportation systems, and urban planning to accommodate new energy sources.

Questions to consider

• Do you think phasing out coal would ultimately increase the price of renewable energy or other fossil-derived fuels such as petroleum and natural gas?


• How should governments and companies support coal workers who lose their jobs as the demand for coal is replaced by renewable sources of energy?