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Shutting fossil fuel power plants may cost less than expected

Decarbonising US electricity production will require both construction of renewable energy sources and retirement of power plants now operated by fossil fuels, according to new research.

Meeting a 2035 deadline for decarbonising US electricity production, as proposed by the incoming Biden administration, would eliminate just 15 per cent of the capacity years left in plants powered by fossil fuels, according to research conducted at the Georgia Institute of Technology.

Plant retirements are already under way, with 126 gigawatts (GW) of fossil generator capacity already taken out of production between 2009 and 2018, including 33GW in 2017 and 2018 alone.

Writing in the December issue of the journal Science ('Fossil electricity retirement deadlines for a just transition'), Emily Grubert, an assistant professor in Georgia Tech's School of Civil and Environmental Engineering, described a generator-level model and suggests that most fossil-fuel power plants could complete normal lifespans and still close by 2035 because so many facilities are nearing the end of their operational lives.

"Creating an electricity system that does not contribute to climate change is actually two processes: building carbon-free infrastructure like solar plants and closing carbon-based infrastructure like coal plants," said Grubert.

"My work shows that because a lot of US fossil fuel plants are already pretty old, the target of decarbonisation by 2035 would not require us to shut most of these plants down earlier than their typical lifespans."

Of US fossil fuel-fired generation capacity, 73 per cent (630GW out of 840GW) will reach the end of its typical lifespan by 2035. That percentage would reach 96 per cent by 2050, Grubert said. About 13 per cent of US fossil-fuel-fired generation capacity (110GW) operating in 2018 had already exceeded its typical lifespan.

As typical lifespans are averages, some generators operate for longer than expected. Allowing facilities to run until they retire is thus likely to be insufficient for a 2035 decarbonisation deadline, according to Grubert's article. Closure deadlines that strand assets relative to reasonable lifespan expectations, however, could create financial liability for debts and other costs. The research found that a 2035 deadline for completely retiring fossil-based electricity generators would only strand about 15 per cent (1,700 gigawatt-years) of fossil-fuel-fired capacity life, along with about 20 per cent (380,000 job-years) of direct power plant and fuel-extraction jobs that existed in 2018.

Map showing the locations of electricity-generating facilities with projected lifespans that extend beyond 2035

Image credit: Emily Grubert, Georgia Tech

In 2018, fossil-fuel facilities operated in 1,248 of 3,141 counties, directly employing about 157,000 people at generators and fuel-extraction facilities. Plant closure deadlines can improve outcomes for workers and host communities by providing additional certainty, for example, by enabling specific advance planning for things like remediation, retraining for displaced workers and revenue replacements.

"Closing large industrial facilities like power plants can be really disruptive for the people that work there and live in the surrounding communities," Grubert said. "We don't want to repeat the damage we saw with the collapse of the steel industry in the 70s and 80s, where people lost jobs, pensions, and stability without warning. We already know where the plants are, and who might be affected: using the 2035 decarbonisation deadline to guide explicit, community grounded planning for what to do next can help, even without a lot of financial support."

Planning ahead will also help avoid creating new capital investment where that may not be needed long-term. "We shouldn't build new fossil-fuel power plants that would still be young in 2035, and we need to have explicit plans for closures both to ensure the system keeps working and to limit disruption for host communities," Grubert said.

Underlying policies governing the retirement of fossil-fuel-powered facilities is the concept of a 'just transition' that ensures material wellbeing and distributional justice for individuals and communities affected by a transition from fossil to non-fossil electricity systems.

Determining which assets are 'stranded', or required to close earlier than expected, is vital for managing compensation for remaining debt and/or lost revenue, Grubert said.

The use of coal to produce electricity is falling in many countries around the world, although it still has a major presence in many Eastern European countries as well as in China, which has been building multiple new coal-fired power plants in recent years.

Renewable energy sources have been making record gains year on year at the expense of coal, with solar and wind power officially recorded as having produced 10 per cent of global power in 2019.

A surprising acknowledgement that the writing is on the wall for fossil fuels came from oil giant BP in September this year, when it published a report stating that the worldwide demand for oil has almost certainly peaked and that the fossil fuel industry now faces an inevitable slow decline over the coming decades. Oil - along with coal and gas - will be replaced by clean electricity.

 

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