Two-fifths of the world's coal power stations, including in India, were already running at a loss, financial think-tank Carbon Tracker said in a first-of-its-kind study on Friday.
Two-fifths of the world’s coal power stations, including in India, were already running at a loss, financial think-tank Carbon Tracker said in a first-of-its-kind study on Friday. It challenges the need for new coal generation and shows that it makes economic sense to close plants in line with the 2015 Paris Climate Change Agreement. It has analysed 6,685 coal power plants worldwide to study its financial condition and to understand its profitability.
Carbon Tracker finds that 42 per cent of global coal capacity is already unprofitable because of high fuel costs and by 2040 that could reach 72 per cent as existing carbon pricing and air pollution regulations drive up costs. It costs more to run 62 per cent of India’s coal capacity than to build new renewable generation and by 2030 that will increase to 100 per cent.
New renewables can already supply power more cheaply than new coal plants in India. It adds phasing out coal power would benefit consumers and taxpayers because India is a regulated market where state support keeps uneconomic plants profitable. Carbon Tracker has carried out the first global analysis of the profitability of the coal plants worldwide, representing 95 per cent (1,900 GW) of all operating capacity and 90 per cent (220 GW) of capacity under construction and has published the results in a new coal power economics portal.
The unique, free-to-use online tool will be updated regularly, helping investers, policymakers and civil society developing economically rational plans to close coal plants and to understand the financial risk if they continue to operate. The UN’s Intergovernmental Panel on Climate Change has said that at least 59 per cent of coal power worldwide must be retired by 2030 to limit global warming to 1.5 degrees Celsius and many countries have set phase-out dates.
However, the price of onshore wind and solar power continues to fall and any future regulation would make coal power still more unprofitable. It costs more to run 35 per cent of coal power plants than to build new renewable generation and by 2030 building new renewables will be cheaper than continuing to operate 96 per cent of today’s existing and planned coal plants, it said.
China could save $389 billion by closing plants in line with the Paris agreement instead of pursuing business as usual plans, while the European Union could save $89 billion; the US could save $78 billion; and Russia could save $20 billion.
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 shutdown existing capacity in a way that minimises losses. “This analysis provides a blueprint for policymakers, investors and civil society.”