Coronavirus speeds up Europe’s coal exit

As Austria and Sweden close their last coal-fired power stations, is the corona crisis accelerating Europe’s move beyond coal?

Roberta Arbinolo reports.

The global pandemic is dealing a heavy blow to the most polluting of fossil fuels. While its price hasn’t gone negative, as has happened with oil, the coal market is struggling worldwide.

In Europe, coal’s share of power generation has dropped by 2% since February, Bloomberg reports, while it the US it’s down by 5%. Even in coal-heavy economies like China and India, the market share has shrinked.

The restrictive measures taken by our governments to slow down the spread of the coronavirus have caused a general decline in energy demand across the globe, yet the electricity market is among the least impacted. However, data from the International Energy Agency show that the coal sector is facing the largest decline since the Second World War.

The true cost of coal

Coal comes at an incredibly high price for people and nature. Coal-fired power plants are responsible for enormous amounts of greenhouse gas emissions, as well as a toxic mix of harmful pollutants that contaminate the air the air we breathe.

In Europe, coal burning is the single biggest source of poisonous mercury entering the air, and plays a substantial role in accelerating climate breakdown.

Coal mining and washing, combustion and waste management, are also causing the deterioration of freshwater quantity and quality. This is the true cost of a business whose profitability is falling at an unprecedented pace.

Nearly half the world’s coal power plants are currently running at a loss, while coal profits are collapsing. A study run by Carbon Tracker on the profitability of 95% of coal plants in operation or planned around the world found that 46% will be unprofitable this year, up from 41% in 2019. And as renewable energy sources grow to outcompete coal, that percentage is expected to raise further.

Last year, a report published by climate think tank Sandbag showed how the gross profits of German lignite collapsed by 54% in the first half of 2019, with a loss of €664 million for the sector, and no lignite unit being able to cover their full fixed costs.

As the gap between power price and carbon price keeps narrowing, and new EU pollution limits kick in for lignite plants, Sandbag estimates that so-called ‘brown coal’ will remain loss-making over the medium-term: in other words, ‘the lignite cash cow has stopped giving’.

Time to leave coal behind

As the coronavirus crisis accelerates coal’s already written fate, more and more governments are committing to phase it out and taking concrete steps towards a coal-free future. In the past two weeks, Austria and Sweden shut down their last coal plants and joined Albania, Belgium, Estonia, Latvia, Lithuania and Norway as countries without coal in their electricity mix.

“Against the backdrop of the serious health challenges we are currently facing, leaving coal behind in exchange for renewables is the right decision, and will repay us in kind with improved health, climate protection and more resilient economies,” commented Kathrin Gutmann, campaign director at Europe Beyond Coal.

Yet too many countries are still lagging behind. It is the case of Bulgaria, Poland, Romania, Turkey and the Western Balkans, where governments have not even started to discuss a coal exit.

Germany, the worst greenhouse gas polluter in Europe, is currently only considering a coal phase out by 2038 – almost 10 years later than recommended by the European Parliament and the OECD – while planning to hand multi-billion payouts to coal polluters.

The status and evolution of national phase out plans can be monitored via the Coal Exit Tracker, an interactive map powered by Europe Beyond Coal. Besides tracking coal exits and new coal projects currently under development, the tool also offers data on the technical specifications, contributions to CO2 emissions and modelled health impacts of all coal plants in Europe.

A just transition to a cleaner future

As moving beyond coal becomes as inevitable as necessary, the transition may seem particularly challenging for those countries and regions where coal mining and burning have been and still are a primary source of energy and income for thousands of people. However, a fair transition that leaves no one behind is possible. Governments are developing plans to protect local work forces and affected communities, and at least one plant has already announced it will close without the loss of any jobs.

Back in January, the EU unveiled a multi-billion euro plan, the so-called ‘Just Transition Mechanism’ (JTM), to support communities affected by coal phase-outs.

In the short and medium term, the JTM will support coal-heavy and carbon intensive regions facing socio-economic challenges, by boosting public and private investments in low and zero-carbon sectors and creating new jobs.

As JTM funding should be conditional on the level of climate ambition detailed by governments, the plan could pave the way for higher climate targets and a swift transition beyond fossil fuels. However, campaigners are concerned that the money could end up in the wrong pockets or financing harmful projects if investments in new fossil infrastructure, such as gas pipelines, are not excluded.

Riccardo Nigro, campaign coordinator on coal combustion and mines at the EEB, told META that the Just Transition Mechanism is not a silver bullet, and will be useful only if used in the right way:

“As we emerge from this health emergency, a just and green recovery must be the basis to rebuild our economy. The European Green Deal offers an unparalleled opportunity to boost sustainable investments. We cannot afford to throw public money after polluting fossil fuels that harm our health and the climate; it’s time for a cleaner future.”