Four out of five coal power plants in Europe are unprofitable and should be completely phased out in the next decade, according to a new report released by Carbon Tracker.
The Carbon Tracker Initiative, a not-for-profit financial think tank, is urging policymakers and investors to prepare for a complete phase-out of coal by 2030, as the industry will not survive competition from wind and solar power and temporarily cheap gas, without relying on heavy subsidies.
The industry is forecast to lose €6.6 billion this year, with 79 per cent of coal plants running at a loss across the EU.
Matt Gray, co-author of the ‘Apocoalypse Now’ report and head of Power & Utilities at Carbon Tracker, said: “EU coal generators are haemorrhaging cash because they cannot compete with ever-cheaper renewables and gas and this will only get worse.
“Policymakers and investors should prepare to phase out coal by 2030 at the latest.”
Carbon Tracker, which promotes a climate-secure global energy market, analysed the operating economics of every coal plant in the EU and the losses they face in 2019, which revealed that the UK – with a deadline of 2025 - will lose €732 million through its remaining coal plants.
It also calculated that 84 per cent of lignite (low-heat soft brown coal) generation and 76 per cent of hard coal generation in Europe is unprofitable overall, facing 2019 losses of €3.54 billion and €3.03 billion respectively.
Utilities are lobbying governments to secure out-of-market and closure payments, but the report questions the legalities under current market conditions.
Carbon Tracker believes governments and investors should focus on planning to phase-out coal in ways that benefit consumers, investors, workers and local communities. It identifies a financially sustainable solution which takes advantage of the fact that governments can borrow money at lower cost than utilities.
Governments could loan money to fund coal power plant closures on condition that utilities used the money to build renewables and then repaid the loan from sales of power. Utilities could build renewable power by hiring the local workforce and use some of the profits to help communities transition from coal.
Mr Gray added: “Getting off coal is cheap and can be a win-win for consumers and shareholders, providing governments and investors work with local communities.”
