by David Fickling

Fossil-fuel advocates have a favorite rejoinder to those who predict a global shift to renewable energy: Coal has never been more popular.It’s a decent argument because it happens to be true. While coal-fired power has declined by nearly a quarter in Europe and almost 40 percent in North America over the past decade, the change has been overwhelmed by a 63 percent increase in Asia.That makes ambitions to prevent more than 1.5 degrees Celsius of global warming seem all but out of reach. Making matters worse, there’s a further 236 gigawatts of plants under construction worldwide, according to the Global Coal Plant Tracker, an online database operated by climate activist groups. Put together, that’s enough to add another quarter to the current fleet of turbines.The tide may finally be turning, though. Final investment decisions, or FIDs , for coal plants have fallen by about three-quarters over the past three years, from about 88GW over the course of 2015 to around 22GW in 2018, according to the International Energy Agency’s latest world investment report released this week.The full significance of that figure isn’t apparent until you compare it to the pace at which plants are shutting down. Some 30GW of generators were retired last year, so more capacity was closed in 2018 than was approved – almost certainly the first time this has happened in a generation, and possibly the first time since the 19th century. When FIDs drop to zero, the 140-year era of coal plant construction will finally be over.It will take a few years for that to work its way through the system, since plants typically take about four years to build after reaching FID. Still, the peak in global plant capacity could be just months away.“This is a sneak preview of where we’ll be in three to four years time,” said Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis, a research group that favors energy transition. “If closures stay where they are, we’re at peak by 2021.”Of course, there’s still 236GW of projects under construction – but announced retirement plans already offset almost all of that:Even China – which accounts for more than half of the construction pipeline, with 129GW underway – is slowing down. It shutters between 5GW and 10GW of coal every year, and added just 4GW of net capacity last year, according to BloombergNEF.Peak coal capacity doesn’t definitively mean peak demand. Plant utilization is at low levels in most of the world’s major coal markets because over-investment and inroads being made by renewables and gas are forcing generators to switch off furnaces for longer and longer stretches. The U.K., for instance, just went without coal-fired electricity for a week. In countries like India and China where over-investment is the main problem and electricity consumption is still increasing, it’s just possible that overall coal-fired generation could rise as energy demand climbs to align with the supply that’s already built.Still, that’s not the way that financial decisions are pointing. The top line of the IEA report is that energy investment in general is falling short – renewables spending, for instance, needs to double by 2025 to get the world on track below 2 degrees of warming. But the deeper story is of an energy industry whose bean counters seem to be betting on a sharp decline in fossil fuel use, even as policymakers track a less ambitious path.Annual FIDs for coal-fired power are already below where the IEA expects them to be seven years from now under its New Policies Scenario, which envisages countries making somewhat more ambitious emissions cuts than are currently in place. That suggests spending is likely to wind up closer to its Sustainable Development Scenario or SDS, an alternative model that would target global temperature increases below 2 degrees.Indeed, to judge by the slow pace of recent investments in gas-fired power and new oil and gas production, it looks like energy companies are treating the SDS as their central case. That would be an extraordinary outcome, suggesting that a mere continuation of current trends in fossil-fuel investment would be enough to hit the IEA’s most ambitious major climate target.It’s always possible that a fresh investment boom is waiting in the wings to reverse that pattern. The resources industry is notoriously cyclical, and has spent years returning cash to shareholders to atone for the mountains of capital wasted during its last splurge. Still, at some point you have to ask if the low rate of current investment is a temporary cyclical low, or the harbinger of structural decline.The end of coal – and oil, and gas – isn’t quite here yet. But the energy industry appears to be betting that it’s coming soon.