42 per cent of coal power stations found to be running at a loss
Two-fifths of the world’s coal power stations are already running at a loss according to a new report from London-based think tank Carbon Tracker.
The study’s findings challenge the need for new coal generation and it also claims that new wind and solar will be cheaper than 96 per cent of existing coal power by 2030.
The financial think tank carried out a global analysis of the profitability of 6,685 coal plants worldwide, representing 95 per cent (1900GW) of all operating capacity and 90 per cent (220GW) of capacity under construction.
It found that 42 per cent of global coal capacity is already unprofitable because of high fuel costs; by 2040 that could reach 72 per cent as existing carbon pricing and air pollution regulations drive up costs.
Carbon Tracker said that using coal to generate electricity would become increasingly unappealing especially as the cost of offshore wind and solar energy drop dramatically.
The UN’s Intergovernmental Panel on Climate Change says at least 59 per cent of coal power worldwide must be retired by 2030 to limit global warming to 1.5°C and many countries have set phase-out dates.
Carbon Tracker said that China could save $389bn (£306bn) by closing plants in line with the Paris Climate Agreement instead of pursuing business-as-usual plans; the EU could save $89bn; the US could save $78bn; and Russia could save $20bn.
Matt Gray, head of power and utilities at Carbon Tracker and co-author of the report, said: “The narrative is quickly changing from how much do we invest in new coal capacity to how do we shut down existing capacity in a way that minimises losses. This analysis provides a blueprint for policymakers, investors and civil society.”
Sebastian Ljungwaldh, Carbon Tracker energy analyst and co-author, said: “Our analysis shows a least-cost power system without coal should be seen as an economic inevitability rather than a clean and green nicety.”
While energy produced from coal may soon become more expensive than renewables on average, plants using the fuel can provide baseload power to ensure an uninterrupted flow during times when renewables cannot generate.
This, combined with strong enthusiasm from the Trump administration for ramping up US exports of the fuel, could see coal maintaining a presence in the global energy mix for some time to come.