Despite dramatic gains in renewable energy, India dropped 13 places to 23rd in the Climate Change Performance Index released during COP30 in Brazil in November 2025. The main reason is the lack of progress to phase out coal.
Coal presents a conundrum of the worst kind because its phaseout presents a loss of jobs and the supply of low-cost electricity in some States, while the current trajectory means the loss of lives and livelihoods from runaway global warming and air pollution. This trade-off draws attention to Chile’s experience in tackling it.
A comparison The big Indian picture is that coal, as a source of the use of all energy, makes up over half while renewables (solar, wind, hydro, nuclear) are still a minority share. At the same time, the good news is that India doubled clean energy capacity during 2021-25. Now, the share of renewables in total installed power capacity is one half, although only one-fifth of electricity was actually generated using them in 2024, with coal contributing 75% of electricity generation.
What is more, India is increasing domestic production of coal. In comparison, coal’s share of Chile’s electricity generation fell from 43. 6% to 17.
5% during 2016-24. Today, renewables (especially wind and solar) make up over 60% of the country’s power mix. This shift was driven by decisive government actions, first by a 2014 tax of $5 a tonne of carbon emissions.
The government imposed stringent emission standards on coal plants, raising construction and compliance costs by 30%. Competitive auctions for wind and solar power helped push renewables.
Chile has also aggressively built out energy storage systems to stabilise the grid, and committed to phase out all coal by 2040. All this makes the case that even economies with coal dependence can accelerate a transition. That said, coal occupies a smaller share of Chile’s energy when compared to India, giving it fewer plants to shut down and a smaller dependent workforce.
The transition was also enabled by a political environment that allowed swift, market reforms following privatisation of key sectors. Crucially, Chile had already begun developing alternative industries, particularly in renewables, creating pathways to absorb displaced workers and capital.
In contrast, India’s far deeper coal dependence and limited economic alternatives in coal regions make its transition more complex. Many districts in Jharkhand, Chhattisgarh, Odisha and West Bengal could face social risks from abrupt closures.
But it is worth remembering that coal phaseout constitutes a “no regrets” policy. That is to say it is part of averting the damage from climate change.
One estimate is that by 2100, climate change would sap 3%-10% of India’s GDP through heat stress and declining labour productivity. It is also part of stopping massive health damage: by one estimate, a one GW increase in coal-fired capacity corresponds to a 14% increase in infant mortality rates in districts near the plant site.
Focus on decarbonisation Considering this socio-ecological calculus, the eye needs to be squarely on decarbonisation which calls for a systematic removal of the oldest and most polluting plants, cancellation of new coal approvals, and replacement of coal output with firm renewable power backed by storage. It is important to have timelines for plant retirements and closures. TERI has suggested that India could phase out coal power entirely by 2050 to meet its net zero goals.
In the transition to this target, there could be an incremental scaling down of coal, improved efficiency and decommissioning. Three sets of action aid this central thrust of a coal phaseout.
First, the more the limitations of renewables are tackled, the better for the moving out of coal. The effort would also be aided by a drive to electrify transport, industry and households.
Second, underpinning this physical transition would be the reform of markets and regulation to disincentivise coal, for example through carbon pricing, removal of coal subsidies, clean dispatch rules and power procurement contracts that favour renewables. Third, Chile’s experience also speaks to providing robust support for workers through reskilling and alternative livelihoods. A dedicated transition fund is essential, such as the “Green Energy Transition India Fund” proposed by the Inter-Ministerial Committee.
The issue of finance Financing the transition will benefit from a blended model of public and private capital, where government support is directed toward community welfare and workforce reskilling, while private investors lead the expansion of clean energy infrastructure. The District Mineral Foundation corpus can be strategically used to foster entrepreneurship and economic diversification in coal-dependent regions.
Considering the high stakes, a phaseout of coal needs to become a top political priority. Renewable energy gains show tremendous promise, but without an actionable plan to replace coal, climate ambitions would remain hollow.
The time has come for a coal exit road map, one that enshrines delivery timelines, financing of social protection, market reform, and learning from peers such as Chile. Mansi Dhingra is former Consultant, Asian Development Bank. Vinod Thomas is Distinguished Fellow, Asian Institute of Management.