Coal-fired power is on track to start shrinking globally by 2022, dimming prospects for exporters of the fossil fuel, including Australia, according to a report by environmental groups.

China and India, which have dominated construction of new power plants for more than a decade, both cut new capacity sharply for the second year in a row in 2017, the annual Boom and Bust report by Greenpeace, Sierra Club and CoalSwarm found.

Taking into account plants that closed, China's net addition in 2017 was its lowest since 2003. For India, last year's newly operating capacity of 9 gigawatts was the smallest since 2009.

"China and India were once seen as countries blocking progress on climate change," Nikola Casule, a Greenpeace climate and energy campaigner, said. "That's clearly no longer the case."

By most measures, world approvals and construction of new coal-fired plants extended declines for a second year. Newly completed power stations were down 41 per cent compared with two years earlier to 60.2 GW, while construction starts were down 73 per cent to 45.9 GW, the report said.