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European power sector to shut down all coal investment by 2020

Coal power plants are facing a bleak future in Europe after Eurelectric, which represents 3,500 companies in the electricity sector, announced that investment would end after 2020.

With a combined turnover of €200bn (£170bn) for companies within Eurelectric, the decision deals a blow to the already struggling fossil fuel. In addition, the group said it was planning to make the continent’s power supplies carbon neutral by 2050.

Britain has already pledged to end the use of coal by 2025, with many plants having already been shuttered, a policy that some have said could lead to country-wide blackouts. 

Last September, data from the UK Department of Business and Energy showed that only six per cent of electrical energy used in the UK the spring before was generated using coal. 

Only Poland, where more than four-fifths of power comes from coal, and Greece have not agreed to stop new coal plants after the end of the decade.

Eurelectric said its commitment to cut the carbon emissions from power generation, along with switching key sectors to electricity such as heating and transport, would make a major contribution to Europe meeting its climate change targets.

Eurelectric president and chief executive of Portuguese energy group EDP, Antonio Mexia, said: “The power sector is determined to lead the energy transition and back our commitment to the low carbon economy with concrete action.

“With power supply becoming increasingly clean, electric technologies are an obvious choice for replacing fossil fuel-based systems, for instance in the transport sector to reduce greenhouse gas emissions.”

The sector is calling for a coherent regulatory framework to support the power sector transition and says market-based mechanisms such as carbon markets are the most effective tool for cutting greenhouse gas emissions

In a statement, Eurelectric said an effectively reformed EU emissions trading scheme and improved EU electricity market design were needed to create a price on carbon that would drive investment in clean technology.

Across the pond, the kickback against coal isn’t faring so well.

US President Donald Trump signed an executive order last week to sweep away Obama-era climate change regulations saying it would end America’s “war on coal” in an attempt to usher in a new era of energy production and put miners back to work.

However, despite Trump’s actions, a recent survey conducted by Reuters suggests that the energy markets hunger for coal is getting weaker regardless of Government policy.

32 utilities were surveyed which ran operations in the 26 states that sued former President Barack Obama’s administration to block its Clean Power Plan - the main target of Trump’s executive order. The bulk of them have no plans to alter their multi-billion dollar, years-long shift away from coal, suggesting demand for the fuel will keep falling despite Trump’s efforts.

The utilities gave many reasons, mainly economic: natural gas - coal’s top competitor - is cheap and abundant; solar and wind power costs are falling; state environmental laws remain in place and Trump’s regulatory rollback may not survive legal challenges.

Meanwhile, big investors aligned with the global push to fight climate change – such as the Norwegian Sovereign Wealth Fund – have been pressuring US utilities in which they own a stake to cut coal use.

“I’m not going to build new coal plants in today’s environment,” said Ben Fowke, CEO of Xcel Energy, which operates in eight states and uses coal for about 36 per cent of its electricity production. “And if I’m not going to build new ones, eventually there won’t be any.”

Of the 32 utilities contacted by Reuters, 20 said Trump’s order would have no impact on their investment plans; five said they were reviewing the implications of the order; six gave no response. Just one said it would prolong the life of some of its older coal-fired power units.

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