Governments around the world are keen to return their economies to growth after the COVID-19 pandemic has run its course. But they need to make sure that, in their rush to ramp up production, they do not lock in uneconomic and climate unfriendly coal power for decades to come, a new report warns.
Financial think tank Carbon Tracker warns that if nations such as China build new capacity to stimulate their economies in the wake of the COVID-19 pandemic, they may not only produce more pollution but spend valuable taxpayers’ money keeping them open as well. The report finds that 46% of global coal plants will be running at a loss in 2020, a figure that will rise to 52% by the end of the decade.
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.
Global coal use in electricity generation must fall by 80% below 2010 levels by 2030 to limit global warming to 1.5°C, according to analysis of recent research from the UN’s Intergovernmental Panel on Climate Change.
At the same time, decarbonisation of the global energy system can grow the global economy and create up to 28 million jobs by 2050, according to IRENA, the International Renewable Energy Agency.
Yet, although renewables and gas are outcompeting coal worldwide, government subsidies are propping up coal power and driving plans to build nearly 500GW of new coal capacity, the report, Political Decisions, Economic Realities, found.
China, which produces and consumes about half the world’s coal, may be planning to build more coal plants to stimulate its economy in the wake of COVID-19. The country’s National Energy Administration recently announced it was ready to relax rules on coal power investment.
Globally governments are propping up expensive coal plants: 90% 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 – 90% in Germany and 82% in the UK in 2019.