The decline in coal supply investment comes as the price of internationally traded coal has hit a five-year high, which historically would have stimulated investment.

• Instead, coal production investment has fallen each year since its last peak in 2012, betraying the diminished faith that markets have in future coal growth or profitability. 
• Clean energy investment, in contrast, reached $334 billion in global investment — nearly 1.5 times that of coal — in 2017.

Beyond limiting access to capital, this trend has raised the industry's costs and reduced its attractiveness to investors. Goldman Sachs believes divestment has been a key driver of the 60% price drop coal stocks have suffered over the past five years. At the same time, over $6.2 trillion in AUM have some form of fossil fuel divestment restrictions, which has driven sell-offs of the stocks and bonds in coal companies and commitments not to purchase them in the future.

Yes, but: Globally, there's still $420 billion in proposed coal plants in the pipeline, with construction finance in Southeast Asia, the last frontier for new coal expansion, coming largely from public institutions in South Korea, Japan and China. The current cohort of plants under construction represents $231 billion of investment committed in recent years.

• Whether those East Asian countries will further limit available investment and favorable terms will be an important test of restriction policies.

The bottom line: Global investors have siphoned capital from the coal industry through a combination of policy restrictions, divestment, public resistance to new plants, and the shifting economics of coal and clean energy. Expect that trend to continue as more global financial institutions turn away from the economic and reputational costs of coal.

Justin Guay directs global climate strategy at the Sunrise Project and advises the ClimateWorks Foundation.

What they're saying: In an opinion piece published earlier this week, Eskom non-executive director Rod Crompton admitted the plants are behind schedule, over budget and dysfunctional, calling them "probably the single largest disaster in South Africa’s economic history.”

Why it matters: These plants, funded in large part by foreign financiers including the World Bank, U.S. Export-Import Bank and China Development Bank, were justified primarily on development grounds after a controversial battle with environmental opponents.

• They were approved despite environmental concerns because coal was considered the cheapest option at the time of construction for achieving energy access and powering the economy.
• Instead, the plants have contributed to blackouts, debt crises and now systemic financial risk after becoming stranded assets.

The big picture: Researchers at Oxford's Smith School are increasingly concerned that other developing countries beyond South Africa are putting their economies at risk by supporting coal plants that could become stranded assets down the road.

• Developing countries still often require foreign finance, but they have grown more wary of the potential risks, including balance of payment crises.
• This fear is perhaps most alive in Southeast Asia, where China is financing a string of new coal plants under its Belt and Road Initiative.

What to watch: Just as they did a decade ago, analysts and advocates are warning that these coal plants could inflict major economic damage. The question now is whether the financial crisis brewing in South Africa will be a big enough deterrent to dissuade Southeast Asian governments from falling victim to economic crises of their own.

Justin Guay directs global climate strategy at the Sunrise Project and advises the ClimateWorks Foundation.

Given that Germany is considered the industrial powerhouse of Europe, this announcement could send a powerful signal to other countries about the urgency to transition to renewable energy. Germany is also symbolically important because the "Energiewende," its plan to transition off nuclear power, has become a model that many nations around the world have followed, leading them to phase out nuclear first without addressing the more pressing problem of coal. The move will likely make an impression across Asia, which is currently undergoing the last bouts of coal expansion.

Yes, but: Germany is nonetheless well behind the 2030 deadline set by the IPCC. Its timeline has also been criticized for being too slow; the U.K., the birthplace of the Industrial Revolution, now regularly runs for days at a time without any coal power.

• While NGOs in Germany's commission welcomed the decision, they have vowed to push for the earliest possible deadline and to limit the compensation provided to coal plant owners, which they view as a dangerous precedent that could slow future closures.

What to watch: The commission's successful negotiations are promising, but the findings must still be translated into law. This will require an act of parliament, setting up a crucial phase in the German energy transition that will play out in the months to come.

Justin Guay directs global climate strategy at the Sunrise Project and advises the ClimateWorks Foundation.