February 2, 2026 - According to BloombergNEF, 75% of Australia’s long-dominant fleet of coal power plants are expected to retire by 2035, with fears growing around replacement capacity.

The nation’s coal fleet, which makes up 45% of the total power generation, has long formed the backbone of Australia’s power system. However, old age, intensifying competition from low-cost renewable energy, and government decarbonisation targets are driving many coal plants to an early retirement. 

BloombergNEF (BNEF) Australia senior associate Sahaj Sood says the exodus of coal needs to happen fast for Australia to achieve its decarbonisation goals. 

“The country’s clean power transition is now a delicate balancing act: moving too quickly could compromise energy security, but moving too slowly could mean failing to achieve its newly updated Nationally Determined Contribution (NDC) to reduce emissions between 62% and 70% on 2005 levels by 2035,” Sood says. 

In recognition of Clean Energy Day (26 January), this news service noted that many countries including Australia are showing declines in fossil fuel carbon emissions within the past 10 years. 

As Mining.com.au reported in December 2025, the Commonwealth Scientific and Industrial Research Organisation’s (CSIRO) global snapshot of carbon dioxide emissions and carbon sinks shows at least 35 countries have a plan to decarbonise. 

Other economies, however, are continuing to grow. China’s emissions have been growing at a much slower pace than recent trends and might even be flat by year’s end. 

CSIRO reports that global CO2 emissions from the use of fossil fuels continue to increase and are set to rise by 1.1% in 2025. Emissions from natural gas rose 1.3%, followed by oil (1%), and coal (0.8%). 

Propping Up Plants 

Australia’s buildout of renewable energy capacity has resulted in some state governments financially supporting struggling coal plants to ensure energy security. 

Across the sector, renewable power is steadily replacing diesel and coal at operating mine sites. In New South Wales, the state government recently released its Renewable Fuel Strategy to accelerate the production and use of renewable fuels in the state, to drive down emissions, and underpin industrial activity. 

In August 2023, the Victoria Government and AGL Energy entered into an agreement that subsidises the operations of the Loy Yang A power station until its retirement in 2035. 

Meanwhile, in May 2024, the New South Wales Government agreed with Origin Energy to underwrite the operations of the Eraring coal plant until 2027. The plant had previously been slated to close in 2025. 

The Queensland Government has gone further than any other state in its support for coal, as BNEF reports that the state government intends to continue operating its state-owned coal plants – which makes up 70% of Queensland’s coal fleet – well into the 2040s. 

Sood notes that maintaining Queensland’s coal fleet will not be cheap and casts doubt over the economic rationale for extending the lives of these plants. 

“The government has allocated a whopping $1.6 billion toward the upkeep of its state-owned generation assets, mainly to financially prop up coal plants facing growing competition from low-cost renewables, especially rooftop solar,” he says. 

“These rooftop solar systems, together with utility-scale renewables, are outcompeting coal in the system at midday. Further moves by state governments to extend the lives of coal plants will increasingly come at the expense of renewable energy, and the value of solar on households.”

Coal is a high-density energy source, providing more than one-third of global electricity and serving as an essential raw material for steel and cement production. 

The International Energy Agency (IEA) reports global coal demand rose to a new all-time high of 8.8 billion tonnes in 2025. This increase comes as consumption rises in countries such as China, India, and Indonesia.

China accounts for 56% of global coal consumption, almost 30% more than the rest of the world combined. One of every three tonnes of coal consumed globally is used in Chinese power plants, making China and its power sector the largest single driver of global coal demand, as reported by IEA. 

BloombergNEF is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy.