The dirtiest fossil fuel is on the back foot
Time to topple it for good
ESCALANTE, A coalfired power station north of New Mexico’s Zuñi mountains, is designed to produce some 250MW of electricity. Since August, however, it has produced none. Nor will it ever do so again.
The economic slump brought on by the covid-19 pandemic hit electricity demand around the world; non-renewable generators of all sorts reduced their output. But in many places the owners of coal-fired plants went further. Britain shut a third of its remaining coal-fired generating capacity in the first half of the year. In June Spain closed seven coal-fired stations from A Coruña to Córdoba, halving the country’s coal capacity. Even in India, where coal generates nearly three-quarters of all electricity, the crown slipped a tiny bit: 300MW of Indian coalfired power was retired in the first half of the year, according to Global Energy Monitor, a nonprofit, and no new coal plants were built.
Consumption of coal has been on a slightly downward-sloping plateau for some years. But the capacity to burn it continued to increase, suggesting that things might change. Now the world’s capacity to generate electricity from coal, too, has begun to drop (see chart 1). It is a significant milestone in the fight against climate change.
For the world to meet the ambitions it set itself at the Paris climate summit five years ago, that milestone needs to quickly vanish in the rear-view mirror: coal’s decline needs to be made both steep and terminal. Coal-fired generation typically emits a third of a tonne of carbon dioxide for every megawatt-hour of electricity generated, around twice the emissions from a natural-gas plant. And although coal is used directly in some industrial processes, such as steelmaking, two-thirds of the stuff is burned to generate electricity—a role that many other technologies can fulfil more cleanly and even more cheaply.
Eliminating coal-fired electricity generation is thus a big but doable deal. Failing to get that deal done will see the world blaze past the Paris agreement’s goal of keeping global warming since the Industrial Revolution “well below” 2°C.
A tale of three continents
The global peak in coal-fired capacity masks divergent stories in different countries. In the West, countries whose economic ascent was powered by coal and colonialism have been reducing their coal use for years and are shedding capacity with gusto. In South America and Africa—south Africa apart—coal has never been a big part of the energy mix. But Asia’s largest countries depend overwhemingly on coal for the electricity their economies need, and they are still adding capacity.
Merely using the capacity they already have in place could easily push the world past the Paris limits. According to Dan Tong, a researcher at UC Irvine, coal plants operating and proposed in 2019 would, if operated to the end of their lives, emit 360bn tonnes of carbon dioxide—a total dominated by Asia.
The Intergovernmental Panel on Climate Change (IPCC) calculates that if the world is to have a decent chance of keeping warming below 1.5°C—the Paris agreement’s stretch goal—it has to keep all future emissions of carbon dioxide and other greenhouse gases down to the equivalent of 420bn-580bn tonnes of carbon dioxide. Today’s coal plants could use up 60-85% of that budget on their own. The 2°C budget is more generous: 1,170bn1,500bn tonnes of carbon dioxide. But if existing coal plants use up between a quarter to a third of that allowance, the chances of staying within the bounds are slim.
Coal’s decline in the West has been made possible by three mutually reinforcing developments: government policy, cheaper alternatives and restricted access to capital.
A growing number of governments have adopted policies designed to support clean energy and/or to eliminate coal. In 2013 Britain imposed a “carbon-price floor” on emissions by electricity generators which made coal a more expensive fuel. In 2015, in the runup to Paris, the country mandated that coal-fired power in England, Wales and Scotland be phased out within a decade. Sixteen countries in the European Union either have a plan to phase out coal or are mulling one; even in those that do not, the carbon prices imposed by the EU’S Emissions Trading Scheme have made burning coal more expensive in recent years. Some owners of coal-fired stations have chosen to shut them rather than make the investments necessary to comply with new environmental standards which enter into force next year.
They can do so because of the increasing availability of other sorts of power. In America the alternative which started coal’s rout was a glut of gas created by the country’s fracking boom. But at both federal and state level America has also supported renewables, as has Europe. And as those policies have increased the scale at which renewables operate, their costs have plunged. Bloombergnef, a data group, calculates that better technology and cheap capital mean that, if you divide the amount of energy that can be expected over the lifetime of a new solar farm in Germany by the cost of building and operating that farm, the “levelised cost of electricity” (LCOE) you get is lower than the marginal cost of electricity from a German coal plant. The same is true for onshore wind in Britain; Bloombergnef expects new American wind and solar to pass the threshold next year.
Banks have tightened finance for coal, too, wary of stricter regulation, stranded assets and continued pressure from green investors. In all, more than 100 financial institutions, from Crédit Agricole to Sumitomi Mitsui, have set limits on the financing of coal projects, according to the Institute for Environmental Economics and Financial Analysis.
The effects have been impressive. In Britain the share of electricity generated by coal fell from 40% in 2013 to 2% in the first half of this year; the country now burns less coal than it did when the first coal-fired power station was built in 1882. In the EU coal-fired power generation nearly halved between 2012 and 2019. In America President Donald Trump’s promise that he would save the nation’s “beautiful” coal industry proved as worthless as it was misguided. Coal-fired electricity generation was 20% lower in 2019 than in 2016, when he was elected. Peabody Energy, an American company that digs more coal than any other listed firm, warned in November that it might file for bankruptcy for the second time in five years.
This displacement needs to be speeded up and prolonged. The unique circumstances of 2020 have seen a 7% drop in coal consumption. According to a report published this week by the UN and an international coalition of climate researchers, hitting the 2°C Paris target would require coal consumption to drop by the same amount every year for a decade. To hit the 1.5°C limit would require cuts of 11% year on year. Prevaricate not
Those reductions would need to be even steeper were it not for the report’s assumption that, by 2030, a billion tonnes of carbon dioxide produced in power stations and industrial plants will be captured on site and sequestered away underground, a process known as carbon capture and storage, or CCS. At the moment the world’s CCS capacity is 4% of that. The technology could definitely be useful in steelworks and the like. Adding it to coal-fired electricity plants, though, is a pricey undertaking in which companies have very little experience. What is more, CCS has a long history as what Duncan Mcclaren of Lancaster University calls a “technology of prevarication”. Holding the possibility of emissions-free coal open but not realising it simply prolongs the status quo. Easier, cheaper and more definitive just to generate electricity by other means, such as renewables and nuclear.
Analysis like this has led Antonio Gutteres, the UN secretarygeneral, to call for coal-fired electricity to be eliminated worldwide by 2040; he says the OECD, a club of rich countries, should get to zero by 2030. That would require a huge increase in effort. Japan currently envisages getting 26% of its electricity from coal in 2030. Germany plans to go on using coal until 2038. Though American coal use has fallen, its outright abolition will be staunchly opposed by some.
That said, the fall so far has been deeper and faster than most expected. Portugal, which had planned to be coal free by 2030, now looks like hitting that target in 2021. Perhaps political pressure, industrial momentum and business opportunity can speed things up elsewhere, too.