From pledges to practice: Santa Marta and the structural decline of coal

The summit where climate diplomacy gets practical

For years, climate summits have revolved around language—phase-down vs. phase-out, abated vs. unabated. The Santa Marta talks in Colombia marked a purposeful break with that script. Roughly 60 governments met not simply to restate ambition, but to work through the mechanics of transitioning away from coal, oil and gas in ways that are bankable, equitable and fast enough to matter. The agenda centered on implementation: retiring coal fleets without blackouts, rewiring grids for variable renewables, cushioning fossil-dependent regions, and aligning public finance with decommissioning timelines.

This pivot builds on the COP28 decision to “transition away from fossil fuels” and echoes the G7’s commitment to end unabated coal power in the first half of the 2030s. But Santa Marta broadened the tent, bringing in countries at different development stages and grappling openly with the operational details—from debt restructuring and securitization tools to power-market reforms and worker protections. That shift from pledges to practice helps explain why coal’s future looks less like a rebound and more like a structural decline.

Why a coal comeback keeps failing—even in crisis years

Geopolitics keeps testing the power sector’s resilience. Yet the expected coal resurgence keeps not arriving. Carbon Brief’s assessment this week concluded the world is unlikely to see a significant return to coal in 2026, despite oil and regional security shocks linked to the Iran crisis. The reasons are structural, not cyclical:

• Record clean-energy additions. China alone added over 200 GW of solar and more than 70 GW of wind in 2023—figures that permanently displace fossil generation during peak sun and wind hours and depress coal plant utilization factors.
• Demand growth decoupling. Efficiency gains and electrification technologies (LEDs, heat pumps, digital controls) flatten demand growth in advanced economies, while emerging markets absorb growth increasingly with renewables.
• Fuel diversification and LNG flexibility. Post-2022, Europe expanded LNG import capacity and ramped renewables, reducing the impulse to fall back on coal during gas price spikes.
• Policy lock-in. Air-pollution and climate standards, emissions trading systems, and procurement mandates create predictable headwinds for coal irrespective of short-term fuel-price movements.

The data reflect these dynamics. EU coal generation fell by roughly 26% year-on-year in 2023, returning to pre-crisis trajectories as solar, wind and hydro rebounded. In the United States, coal’s share of electricity dropped to about 16% in 2023—its lowest on record—while retirements accelerated as utilities updated resource plans. The International Energy Agency has projected that global coal demand will peak and begin declining mid-decade as clean capacity growth outpaces demand.

The economics have flipped

If coal is losing on physics and policy, it is collapsing on economics. Three numbers illustrate the point:

• New-build costs: Lazard’s 2023 Levelized Cost of Energy analysis shows utility-scale solar and onshore wind as the cheapest new sources of bulk electricity in most regions, even before subsidies. Battery costs continue to fall, extending renewables’ dispatchable hours.
• Existing vs. new: A 2024 analysis by Energy Innovation found that 99% of U.S. coal plants are more expensive to run than building new local wind or solar, a staggering inversion of the status quo just a decade ago.
• System savings: Indiana utility NIPSCO concluded in its integrated resource planning that retiring coal early and replacing it with renewables and storage would save customers roughly $4 billion over the plan period compared to keeping coal online. Similar conclusions are emerging across regulated utilities in the Midwest and Southeast as fuel and maintenance bills mount.

For emerging markets, the cost case is reinforced by risk. Coal plants tie utilities to volatile seaborne fuel prices and dollar-denominated debt. Solar and wind, by contrast, provide a largely domestic, zero-fuel-cost hedge. This is why auction tariffs from India to Brazil continue to clear at or below the cost of operating legacy thermal plants—and why blended finance facilities that address currency and offtaker risks can unlock rapid coal-to-clean shifts without raising tariffs.

Public health is the quiet accelerant

The economic story is powerful, but the public-health ledger is becoming politically decisive. The Sierra Club’s updated tool estimates around 6,500 premature deaths in the United States each year from illnesses linked to coal-fired air pollution, with impacts traceable by county, plant and utility. By translating emissions into local hospitalizations and deaths, these tools arm regulators, public utility commissions and community leaders with evidence that elevates health benefits in resource-planning and permitting decisions.

Strengthening air-quality standards compounds this effect. Tighter limits on fine particulates (PM2.5), sulfur dioxide and nitrogen oxides increase the required capital spend on aging coal units just to stay compliant—costs utilities increasingly prefer to avoid by retiring plants. When combined with transparent health data and community transition funding, these rules help align social outcomes with system economics.

Santa Marta’s implementation lens: the levers that actually work

What makes the Santa Marta talks different is their focus on instruments that move electrons and balance sheets, not just statements. Six levers stood out from country interventions and side workshops:

1. Coal retirement finance that lowers bills. Securitization (issuing low-cost bonds to refinance unrecovered coal plant value) and “coal-to-clean” tenders can retire units early and replace them with renewables and storage, with savings shared between ratepayers and investors. Similar structures underpin early-retirement pilots in Indonesia and the Philippines, and utility balance-sheet cleanups in parts of the U.S.

2. Market design for firm clean capacity. Capacity mechanisms that value availability, clean portfolios that bundle renewables with storage and demand response, and long-duration storage procurement help ensure reliability without defaulting to coal. Clear eligibility criteria prevent backdoor subsidies for unabated fossil plants.

3. Grids first. Transmission expansion and interconnection reform are the difference between targets on paper and real projects. Queue reforms, proactive transmission planning, and standardized grid codes can cut project delays by years and reduce curtailment that otherwise props up coal utilization.

4. Just transition compacts. Regions built around mines and power plants need predictable funding for wage support, retraining, small-business development and land remediation. South Africa’s experience shows that without visible local benefits, national-level finance commitments face social and political friction; with them, permitting and closure schedules move faster.

5. International finance aligned with phase-out timelines. Multilateral development banks and export credit agencies can anchor blended finance for grid and storage, offer guarantees that de-risk corporate PPAs, and apply “do no harm” rules that steer public money away from new unabated coal. The post-2021 restrictions on overseas coal finance by major public lenders have already canceled dozens of projects; extending similar guardrails to gas lock-in is now on the table.

6. Fossil subsidy reform and demand-side action. The IMF estimated total explicit and implicit fossil-fuel subsidies at about $7 trillion in 2022. Even partial reallocation—paired with lifeline tariffs and targeted cash transfers—can fund clean cooking, heat pumps, and industrial efficiency that erode coal demand at the meter.

What about oil and gas?

Santa Marta did not sidestep oil and gas. Ministers and technical teams discussed methane abatement—cheap, rapid and material for near-term warming—and the risk of locking in new LNG infrastructure whose economics may sour as global demand for gas in power flattens. Electrification of heat and transport remains the biggest structural threat to oil and gas demand growth. The common thread with coal: practicality—standards that bite, finance that lowers customer costs, and transition plans that win consent.

The near-term outlook: disorderly in places, but directionally down

None of this guarantees a smooth glide path. Coal use can tick up in specific regions during droughts or fuel disruptions, and some countries continue to permit new plants as “insurance.” China’s recent coal permitting surge reflects grid-integration challenges, not a reversal of its clean power build; utilization rates for new plants are likely to remain structurally constrained as renewables flood the daytime and windy-night hours.

Still, the macro picture is hard to ignore. Even amid geopolitical stress, analysts do not foresee a significant global coal rebound in 2026. Markets have priced in cheaper clean power; regulators are tightening air and climate rules; and public-health evidence is moving courts and commissions. Santa Marta’s contribution is to turn that momentum into project pipelines, retirement schedules and community deals that can be monitored, financed and delivered.

Bottom line

If the last decade was about getting fossil-fuel language into communiqués, the next two years are about making exits feasible grid by grid and town by town. Coal’s decline is being written in auction results, utility balance sheets and public-health maps as much as in diplomatic texts. Santa Marta mattered because it treated the fossil-fuel transition as an engineering, finance and public-health challenge—not a rhetorical one. That is how phase-out pledges become power-plant closures and how the politics of climate action survive the next crisis.