Four out of five European Union coal-fired power stations are unprofitable and plants across the continent are set to have racked up huge losses through the course of 2019, according to an analysis published by the influential think tank.
EU coal generators were “haemorrhaging cash”, with the potential for €6.6 billion of losses in total for their owners this year, because they cannot compete with cheap renewable energy and gas, said Matt Gray, head of power and utilities at Carbon Tracker and co-author of the report.
The report warned that investors and policymakers should “prepare for a complete phase-out of coal by 2030, because without heavy subsidies the industry will not survive sustained competition from ever lower cost wind and solar power and temporarily cheap gas”.
Many EU nations, such as France, Germany and the United Kingdom, have already pledged to close or significantly reduce coal-fired power generation in the coming decade.
The move comes as EU member states aim to cut greenhouse emissions by at least 40 per cent below 1990 levels by 2030 and to boost renewable energy such as wind and solar.
Coal-fired power has been hit by the rising price of EU carbon credits, allowances that industries must buy if their carbon dioxide (CO2) emissions are above a certain level.
The cost of these credits has tripled since 2017 to more than €25 per tonne of CO2.
Of the EU’s 154.4GW of coal capacity, 45 per cent is already scheduled to shut down by 2030, with 13 member states committed to a complete phasing out by then, according to lobby group Beyond Coal Europe.
Seven countries have made no commitment at all on coal-fired power.
With coal-fired power stations losing money, policymakers will face “intractable problems” if they support them in the long-term, the report said, because: “Governments will have to choose whether to: pass costs to the utilities and destroy shareholder value; pass costs to consumers and push bills up; or fund them from debt or taxes.”
Germany, Europe’s largest coal consumer, looks most vulnerable to losses, the report found, forecasting that power company RWE would lose €975m from its coal-fired power stations this year.
Utilities in Spain and Czech Republic are also exposed.
In the UK, which has set a 2025 deadline, its remaining coal plants will lose €732m.
Meanwhile, it said, “the coal plants which remain profitable include: those in Poland which receive relatively high subsidies; efficient units in Germany and the Netherlands; and plants in Italy, the Czech Republic and Slovenia which benefit from high wholesale power prices”.
Renewable energy and cheap gas are not the only factors undermining the economics of coal, it said.
“Utilities will have to install expensive technologies in the majority of coal plants to meet stricter EU air quality standards from 2021, and rising carbon prices could also increase costs.
Carbon Tracker said governments and investors “should now focus on planning to phase-out coal in ways that benefit consumers, investors, workers and local communities, and this can be done quickly and cheaply”.
This would see government loaning money to fund the closure of coal power plants on condition that utilities used the money to build renewable energy and then repaid the loan from sales of power.
“Utilities could hire the local workforce to build renewable power and use a portion of profits to help communities transition away from coal,” it added.