Coal is well and truly on its way out in Europe. Over half of the EU’s coal power plants are now operating at a loss, according to a new report, as stricter air pollution rules and higher carbon prices start to come into force, coupled with the plummeting cost of renewables.
By looking at the profitability of all 619 operating coal plants within the EU, the analysis at Carbon Tracker discovered that 54 percent of them were no longer profitable, and were instead losing money. With the current phase-out plan, this will lead to a total loss of €22 billion ($25.8 billion) by 2030, if the EU sticks to its most recent climate change targets.
“The changing economics of renewables, as well as air pollution policy and rising carbon prices, has put EU coal power in a death spiral,” said Matt Gray, who co-authored the report. “Utilities can’t do much to stop this other than drop coal or lobby governments and hope they will bail them out.”
As the prices of renewables continue to fall as expected, and rules and regulations on carbon emissions grow in the coming decade, Carbon Tracker predicts that by 2030, around 97 percent of all coal power plants in the EU will be making a loss.
They believe that the plants will be replaced by cheaper alternatives, namely onshore wind and solar PV farms, which they expect will be outcompeting existing coal power plants in terms of how much they cost to operate by 2024 and 2027, respectively.
It turns out that energy companies are continuing to run coal power plants even though they are making a loss, because they are hoping that their competitors will go bust first, giving them a larger share of the market. Some are also banking on the fact that if they are the last coal plants standing, governments will pay them more or increase subsidies in order to guarantee power. The EU is now trying to ban these government pay-outs.
The coal power plant operators are still arguing that there needs to be some coal plants operating to prevent blackouts due to the unreliable nature of renewables. But this is ignoring the fact that there have been no blackouts so far even though the proportion of renewables entering the grind has massively increased. Not to mention that since 2012, the UK has cut the amount of coal burned for electricity from 40 percent to just 2 percent, with no negative outcomes.
Yet it's not only the EU that's expected to slash the use of coal. Even in the Asian market, the use of the fuel has dropped significantly. So while the US might still be trying desperately to breathe life back into it, the industry is well and truly dying.