Coal-fired power is on track to start shrinking globally by 2022, dimming prospects for exporters of the fossil fuel, including Australia, according to a report by environmental groups.

China and India, which have dominated construction of new power plants for more than a decade, both cut new capacity sharply for the second year in a row in 2017, the annual Boom and Bust report by Greenpeace, Sierra Club and CoalSwarm found.

On current trends, coal plant capacity worldwide could peak by 2022. Credit:AP

Taking into account plants that closed, China's net addition in 2017 was its lowest since 2003. For India, last year's newly operating capacity of 9 gigawatts was the smallest since 2009.

"China and India were once seen as countries blocking progress on climate change," Nikola Casule, a Greenpeace climate and energy campaigner, said. "That's clearly no longer the case."