Exit strategies could risk locking in coal

As the world contemplates strategies after reopening, China and other nations might be trapped into uneconomic and climate unfriendly coal power for decades as the attempt to rapidly build capacity to stimulate their economies, Carbon Tracker warns in a new report today.

Carbon Tracker estimates that 46 per cent of global coal plants will be running at a loss in 2020, rising to 52 per cent by 2030 in its report Political Decisions, Economic Realities. However, China, which produces and consumes about half the world’s coal, appears to be considering be planning to build more coal plants to stimulate its economy, noting that its National Energy Administration recently announced it was ready to relax rules on coal power investment.

Globally governments are propping up expensive coal plants: 90 per cent of coal capacity which is operating, in construction or planned is in countries with regulated or semi-regulated markets where coal power generators are implicitly or explicitly subsidised. By contrast, in deregulated markets most coal power is already unprofitable on an underlying basis of 82 per cent in Germany and 90 per cent in the UK in 2019, where coal is already less than 2 per cent of the energy mix and declining.

Carbon Tracker revealed last month that it is already cheaper to generate electricity from new renewables than new coal plants in all major markets. By 2030 at the latest it will be cheaper to build new wind or solar capacity than continue operating coal worldwide.

“Governments and investors have a responsibility to navigate a transition away from coal in an orderly way to ensure consumers receive low-cost energy and investors plan for premature closures,” says the report.

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