Whisk together the flour, baking powder and salt and set aside.
Using an electric mixer on medium speed, beat the butter, sugar and coconut until light and fluffy. Add the eggs, one at a time, mixing well after each addition. Add the key lime juice, coconut extract and half of the lime zest. Beat on medium-high speed for about 1 minute, scraping down the bowl with a spatula if needed.
Reduce mixer speed to low. Gradually add the flour mixture, mixing just until combined.
Refrigerate dough for about 20 minutes.
Preheat oven to 350 degrees F. Line baking sheets with silicone liners or parchment paper. Place the confectioners’ sugar and the other half of the lime zest in a shallow bowl. Whisk the sugar and lime zest together to blend.
Using a small cookie scoop (about 1 1/2 tablespoon capacity), roll the chilled cookie dough into balls. Then roll each in the powdered sugar and lime zest mixture, making sure to coat completely.
Place cookies on the prepared pans, leaving about 2 inches between the cookies. Bake for 12 - 15 minutes, until cookies are puffed and starting to flatten and feel firm on the edges to touch.
Cool the cookies on the pans for 5 minutes. Then transfer them to a wire rack to cool completely.