When should the EU shut down its 300+ coal plants to meet the Paris Agreement’s long-term temperature limit? Our report outlines a science-based schedule for a coal phase-out in Europe.
By Climate Analytics Team
By signing the Paris Agreement, the European Union has joined the international community in officially committing to the goal of limiting global warming to “well below 2°C and to pursue efforts to limit temperature increases to 1.5°C above pre-industrial levels.”
For the EU to achieve this goal, it will need to rapidly decarbonise its power sector. A significant portion of the EU’s emissions comes from coal, particularly coal-fired power plants, and phasing out coal in the electricity sector is one of the most cost-effective methods to achieve emissions reductions. Reducing coal usage will also provide significant benefits in terms of air quality, health and energy security.
Currently hard coal and lignite jointly provide over a quarter of electricity generated in the EU. While the EU has achieved significant reductions in coal use for other purposes in the last decades, reductions in the use of coal in power plants were more modest at 11% below 2000 levels in 2014.
There is an increasing disparity between EU member states in their approach towards the future role of coal nationally. While some have significantly decreased their power production from coal in recent years and announced phasing out coal completely in the coming 10-15 years (e.g. the UK, Finland, France), others are building or planning to build new coal fired power plants (e.g. Poland, Greece).
As of February 2017, the EU had over 300 power plants with 738 separate generating units. These are not evenly distributed across the individual member states and those most reliant on coal are Poland, Germany, Bulgaria, the Czech Republic and Romania. Germany and Poland alone are jointly responsible for 51% of the EU’s installed coal capacity and 54% of emissions from coal.
This map was made using data from the EU coal-fired power plants database hosted and coordinated by Climate Action Network (CAN) Europe. To view a full page version of the map click the chain icon in the bottom right hand corner or simply click here.
THE TASK AHEAD
Simply put, the continued use of coal for power generation is not compatible with sharply reducing emissions and the EU needs to develop a strategy to phase out coal at a faster rate than it is currently doing. According to modelling completed by Climate Analytics, the EU will exceed its Paris Agreement-compatible emissions budget for coal based electricity generation by 85% in 2050 if all existing coal-fired power plants continue operating to the end of their full life span. If announced and planned plants (as of early 2017) are built in the coming years, this number will rise to almost 100%.
For the EU to remain within its carbon budget, member states must first shelve plans for any additional coal-fired generating capacity and secondly, must start actively shutting down currently operating units at an increased rate. Analysis suggests 25% of currently operating coal-fired power units need to be shut down by 2020, rising to 72% by 2025, before a complete shutdown by 2030.
DEVELOPING A COAL EXIT STRATEGY
Climate Analytics developed a methodology to determine a phase-out schedule for coal power plants in the European Union. The critical question is: which criteria should determine when individual units are switched off? From an Earth’s atmosphere perspective, this choice is irrelevant as long as emissions are being reduced at the pace required. However, from the view of the policy makers, plant owners and other stakeholders, this is a decisive point.
Our report Link suggests two possible strategies for how the EU could achieve a complete phase out of coal use in electricity generation, proposing a shutdown date for each coal-fired power generating units.
Both methods evaluate units on emissions performance and profit generation potential. The first approach, a so-called Regulators Perspective, prioritises shutting down the most carbon intensive plants first, whereas the second approach, the Market Perspective, prioritises shutting down the least valuable plants in terms of revenue generation potential.
TOP 20 POWER PLANT SHUT DOWN YEAR COMPARISON
Below are the top 20 coal-fired power plants by generation capacity and their respective shut down year based on business as usual (BAU), and Paris Agreement compatible Regulator and Market strategies. More detailed information on coal phase out unit by unit is available here.
|Power Plant Details||Final Year of Operation|
|Brindisi Sud||Italy||2640 MW||2044||2028||2028|
|Fiddler’s Ferry||UK||2000 MW||2017||2017||2017|
|Torrevaldaliga Nord||Italy||1980 MW||2061||2030||2029|
|West Burton||UK||1924 MW||2025||2025||2025|
Regardless of the retirement schedule implemented in the European Union, the coal phase out needs to be complemented by measures that increase the predictability and decrease the economic, social and environmental costs of the energy transition. This concerns especially regions heavily dependent on jobs in the coal sector.
A number of developments and policy instruments at both the national and European level could play an important role in facilitating coal phase-out compatible with the target of the Paris Agreement, however, most of them need to be strengthened or scaled up to achieve a fast coal phase-out.
One of the most critical developments in the recent years is the significant decrease in the costs of renewable energy sources, which has decreased the cost of a coal phase-out. Even though wind and solar energy come with their own challenges, a number of options exist to cope with these issues. At the same time renewables come with the benefits of being inexhaustible and scalable thus allowing completely new business models and leading to job creation, including in areas which will be affected by coal-phase out.
Phasing out coal by regulation is an effective way to achieve emissions reduction targets at a lower cost, while providing stakeholders with certainty to ensure a smooth transition to alternative power sources in regions where coal currently plays an important role. Many European countries have announced coal phase-out dates, e.g. the Netherlands and Sweden by 2030, the United Kingdom and Austria by 2025, Denmark and France by 2023, Finland and Portugal in the 2020s. These plans create an environment of certainty for energy sector investors and allow better national planning to avoid strong economic shocks (mostly in terms of regional tax revenue and employment) created by the spontaneous closure of coal power plants due to market forces.
The perspective for the coal industry in the EU has worsened significantly due to the adoption by the European Commission of the new “Best Available Technique (BAT)” conclusions for Large Combustion Plants in July 2017. These new standards, which all coal-fired power plants in the EU need to meet by 2021, are currently exceeded by 82% of the installations and it will cost almost €6 billion to upgrade them to achieve the new standards. Faced with such a cost and increasing competition from renewables, many operators may decide to switch off their installations instead. Whereas some power plants may operate after costly retrofitting, additional investments to meet these directives would increase the value of stranded assets and hence the costs of coal phase-out. A clear phase-out schedule would allow for reducing these costs by switching off the more emissions intensive plants first and consequently avoiding the need for retrofitting.