As a major coal exporter, Colombia is developing strategies to tackle the challenges posed by ongoing shifts in global coal markets—in particular, the declining demand for thermal coal in traditional markets (such as Europe and the United States) and the increasing competition with exporters in the Asian market.

Given Colombia’s reliance on coal production and seaborne exports, the country, and more specifically the department of La Guajira, could be significantly impacted by the global coal phase-out. However, the current government is taking a new approach to dealing with these challenges; it is putting just transition at the core of its energy policy and looking for international support with implementing its post-fossil vision. Colombia’s strategic approach focuses on accelerating its domestic energy transition, diversifying its exports, and preparing coal-dependent regions for a broader economic and energy transition.

Ongoing shifts across global coal markets

Globally, the use of thermal coal for energy generation has stagnated and is likely to decline, with many countries, especially members of the Organization for Economic Cooperation and Development (OECD), adopting targets and plans for phasing out this electricity source. Despite the short-term increase in thermal coal demand and prices caused by the global energy crisis that followed Russia’s invasion of Ukraine, key market indicators indicate that international thermal coal markets have entered a stage of structural decline. These indicators include the Levelized Cost of Electricity—the average net present cost of electricity generation for a generator over its lifetime—of coal power plants versus renewable energy, as well as the intention of China and India to become self-sufficient.

Although demand for thermal coal is rising in parts of Asia (in particular East, South, and South-East Asia), Colombia faces geographical and economic limitations to competing in these markets due to the high transportation costs and the competition from dominant suppliers like Australia, Indonesia, and Russia. As a result, Colombia’s coal exports, which account for over 90% of its coal production, are still primarily directed at Europe, Central America, and South America—regions where demand is expected to decrease the fastest, with the risk of coal exports declining equally fast. This makes Colombia one of the most vulnerable, if not the most vulnerable, coal exporters to the global coal phase-out.

Transition risk in coal-dependent regions

The department (region) of La Guajira is central to Colombia’s coal industry, accounting for 30–40% of national coal production. Moreover, La Guajira is home to El Cerrejón, the largest open-pit coal mine on the American continent, and coal mining contributes nearly half of the department’s GDP. The region’s coal production peaked in 2012 but has since declined, with significant drops during the COVID-19 pandemic and no recovery to pre-2019 levels. The economic significance of coal heightens the department’s vulnerability to external market shocks and global energy trends, with the prospects for coal mining after the planned closure of the El Cerrejón mine in 2034 unclear but potentially very negative.

An unplanned transition away from coal could have disastrous economic, environmental, and social implications for the producing regions, as Colombia learned painfully with the unexpected stranding of two large coal mines—representing one fifth of total national production in 2021—in its other main coal-producing region, Cesar.

Government approach to the transition

Having recognised these challenges, the Colombian government is promoting measures to mitigate the economic risks, nationally and in coal-producing regions, to facilitate a just transition away from coal. The measures, whose origins lie in the national just transition roadmap, include the following:

• Economic diversification: The emphasis here is to reduce reliance on coal by incorporating ), adding value to minerals, and increasing productivity. Lessons from the neighbouring department of Cesar underscore the importance of early planning to sudden stranding of assets.
• Strategic planning and governance: The government aims to establish “mining districts for life and peace,” which, rather than being anti-mining, will seek to responsibly manage mining activities as a foundation for diversification. This diversification is key in regions endowed with resources like critical minerals.
• Dialogue and preventive logic: These efforts include engaging stakeholders in anticipating and addressing challenges, ensuring that transitions enhance community well-being rather than dismantling existing industries.

Next steps for international cooperation

Like other fossil fuel producers and exporters in the Global South, Colombia is highly vulnerable to the global energy transition. However, increasingly aware of this fact, it is proactively taking measures to reduce its vulnerability and to align its policies with global trends around the transition away from fossil fuels. To succeed in this endeavour, it will require international support, including with finance, capacity building, technology transfer, and broader knowledge exchange.

International initiatives to support Global South countries in their transition efforts, such as the Just Energy Transition Partnerships for South Africa and Indonesia, have provided lessons in good practice as well as shortcomings. Drawing on these lessons, Colombia has drafted its own USD 40 billion energy transition investment plan, for which it is seeking USD 10 billion from international partners. Announced by the environment ministry, the plan allocates USD 36.5 billion across key areas: renewable energy expansion (USD 14.5 billion); nature tourism (USD 4 billion); sustainable agriculture (USD 3.5 billion); climate change adaptation (USD 4 billion); ecosystem restoration and conservation (USD 8.5 billion); and strengthening institutional capacity (USD 1 billion).

While the exact details remain under wraps, the plan marks an important step for Colombia as it seeks to align its national needs and priorities with global trends and to balance its economic, environmental, and social priorities. As this initiative and the transition roadmap are implemented reality, Colombia will require increased knowledge exchange with other countries pursuing similar transition strategies to ensure that coal communities are not left behind.

Paola Andrea Yanguas served as academic coordinator of the Transnational Centre for Just Transitions in Energy, Climate & Sustainability (TRAJECTS) until 2023 and joined IISD as a policy advisor in the Energy team in 2024.