Falling cost of renewables making coal a financially risky proposition
Coal developers could be wasting $638bn (£502bn) globally developing new plants instead of generating electricity from cheaper renewable sources, the Carbon Tracker think tank has warned.
In its report, Carbon Tracker warned that over 60 per cent of global coal power plants are now generating at a higher cost than renewables and by 2030 green sources will be cheaper than all coal on a global basis.
The UK now only generates 0.6 per cent of its electricity from coal, with a full-fledged ban in place from 2025.
While this is a pattern repeated across many developed nations to some extent, China still generates roughly 1,000GW of electricity from coal with an additional 121GW already under construction.
Worldwide, 499GW of new coal power is planned or already under construction at a cost of $638bn, but Carbon Tracker warns that governments and investors may never recoup their investment because coal plants typically take 15 to 20 years to cover their costs. Around seven out of 10 plants are already costing more to run than building new solar and wind farms.
The report notes that limiting global warming to 1.5°C will require global coal use in electricity generation to fall by 80 per cent from 2010 to 2030. This means one coal plant needs to retire every day until 2040.
Matt Gray, Carbon Tracker co-head of power and utilities and co-author of the report, said: “Renewables are out-competing coal around the world and proposed coal investments risk becoming stranded assets which could lock in high-cost coal power for decades.
“The market is driving the low-carbon energy transition, but governments aren’t listening. It makes economic sense for governments to cancel new coal projects immediately and progressively phase out existing plants.”
In the EU, which has a strong price on carbon pollution and years of investment in renewables, almost all (96 per cent) of its operating coal capacity costs more to run than new renewables.
The report warned that China, whose economy has been hit hard by coronavirus, must avoid costly coal power in any stimulus package the government implements in the wake of the outbreak.
Carbon Tracker urged the country to deploy its stimulus capital “efficiently and avoid investing in coal power which is economically redundant and environmentally disastrous”.
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