The pandemic is accelerating coal’s demise By | April 28, 2020, 6:34 a.m. | Share:
You can add coal to the list of global commodities struggling during the pandemic. Prices haven’t yet turned negative (like oil), but coronavirus is accelerating the demise of the dirtiest fossil fuel. Social distancing measures mean energy demand has fallen across the board. Some of the smallest declines, however, are in the electricity sector. That should have been good news for coal. But it hasn’t turned out that way. In much of the world coal power is currently more expensive than gas and renewables, which explains why its share in the electricity mix has fallen in Europe, India, China, and parts of the U.S. The power markets in these four regions are large and varied. That makes the uniformity of coal’s decline even more surprising. But perhaps it shouldn’t be. Policymakers and activists have spent years trying to reveal the true costs of coal’s environmental impacts, with the aim of making the fuel economically less attractive. Nearly half the world’s coal power plants are now running at a loss, according to the think tank Carbon Tracker. Europe is a prime example of how to manage coal’s exit systematically. In the past two weeks, Austria and Sweden announced that they have shut their last coal-fired power plants. They’ve now joined Albania, Belgium, Estonia, Latvia, Lithuania and Norway as countries without coal in their electricity mix. Today, the U.K.’s grid operator posted a new record—nearly 19 continuous days—of not using coal for electricity. Kathrin Gutmann, campaign director for Europe Beyond Coal, walked me through the lessons Europe can teach the world. At a federal level, three policies have proven to be most effective: pollution regulation on power plants to lower emissions of sulfur, nitrogen oxides and particulate matter (coal produces more of all these than gas); a tax or price on carbon dioxide emissions (coal emits double the carbon per unit of energy compared to gas); and mandates to increase the share of renewables in the electricity mix. But that’s not enough. Difficulties at the local level also need to be addressed. Unlike solar and wind, coal power can be turned on and off when needed. That means grid operators need to figure out alternatives for when the use of coal ends — be it converting the power plants to using gas, installing batteries, or finding ways of importing clean electricity from other regions whenever needed. The local challenges are bigger for countries and regions that mine coal and provide well-paying jobs for thousands of people. The end has to come with a plan to transition coal-dependent livelihoods. For instance, Germany is looking at a package worth $55 billion as compensation for regions and companies that rely on coal. Similarly, the European Union is working on a “just transition fund” that could invest as much as $111 billion in even more coal-reliant countries like Poland. Two further policies are needed to ensure that coal’s demise doesn’t just happen but comes fast enough. First, deadlines to phase out coal need to based on climate science. France, Sweden, Slovakia, Portugal, U.K., Ireland and Italy plan on exiting coal by 2025, which is in line with the science. Not everyone is getting it right. Germany plans to exit coal by 2038, which is too late for meeting Paris climate agreement goals, said Gutmann. Even 2030, the phase-out date of choice for the Netherlands, is likely the latest possible date for a European country if global warming is to be kept under 1.5 degrees Celsius. Second, setting those deadlines in stone through some form of legislation goes a long way to ensure that short-term political thinking doesn’t get in the way. The U.K. and France have been praised for setting regulation goals tied to emissions efficiency, which leaves coal power with few loopholes. If nothing else works, be prepared to get sued. Environmental group Urgenda won a case against the Dutch government, forcing the country to cut its 2020 emissions by 25 per cent compared to 1990 levels. On Friday, the government announced it will curtail coal power plants to meet those goals. After years of tinkering, there are now many strategies to end the dominance of coal for good. The job has become easier because technological forces have made alternatives cheaper. Coal’s end is inevitable, and it may happen sooner than many think. © 2020 Bloomberg L.P.