TODAY’S STUDY: See Coal Collapsing
Europe’s great coal collapse of 2019
Dave Jones, August 2019 (Sandbag)
Every January since 2015, Sandbag has published an update on “Europe’s Power Transition”, and for the first time, we provide a 6-month mini-review to help explain the extent and reasoning of the huge fall in Europe’s coal generation in 2019. To do this, Sandbag curated 20 gigabytes of power operator data from ENTSO-E, and then condensed the most important data to a handy 2MB excel to download from our website so you can also analyse it yourself - please let us know what you find.
Coal generation in the EU collapsed by 19% in the first half of this year, with falls in almost every coal-burning country. Half of coal’s fall was replaced by wind and solar, and half was replaced by switching to fossil gas. If this continues for the rest of the year it will reduce CO2 emissions by 65 million tonnes compared to last year, and reduce EU’s GHG by 1.5%. Coal generation already had fallen 30% from 2012 to 2018. Even if these falls continued in 2019, coal generation is still likely to account for 12% of the EU’s 2019 greenhouse gas emissions.
Dave Jones, Electricity Analyst at Sandbag, commented: “2019 may mark the beginning of the end for coal power in Europe. The biggest falls are by those countries encouraging wind and solar and planning for a coal phaseout. Now that carbon pricing is finally working with price approaching €30 per tonne, the economics have already shifted not only from coal to gas generation, but also from coal to clean generation. And now the economics have changed, policy-makers will now find it much easier to support wind and solar, and to plan for a full transition from coal to clean. Every country could achieve a 2030 coal phaseout, if they put their mind to it.”
Where did coal collapse?
All western European countries saw big percentage falls, from 22% in Germany to 79% in Ireland. There were times of zero or near-zero coal generation in many western European countries: coal was less than 2% of the electricity mix in Ireland, France and the UK, and only 6% in Spain and Italy, in the first half of 2019. The UK had two weeks in May with all its coal plants switched off for the first time since the Industrial Revolution began. Europe’s coal phase-out is truly underway, although the rate of closures is quite slow…
Why did coal collapse?
There were three primary drivers: 1. Wind and solar replaced coal 2. Fossil gas replaced coal as carbon pricing begins to work 3. Coal plant closures…
OUTLOOK: Unfortunately, 2019’s coal collapse is not the “new norm”, unless there is a strong policy push:
Coal-gas switching has most likely reached its peak. 2019 has likely already seen full coal-gas switching for hard coal, so the economics could only reverse back to more coal again. The biggest concern is that the carbon price is robust to the collapse in coal generation: 35% of EU ETS emissions were from coal power plants in 2018, so more ETS tweaks might be needed to keep carbon price from falling. Having said that, lignite-gas switching hasn’t reached its full potential yet in Germany, so a continued rising carbon price would result in a speedier lignite phase-out.
Wind and solar deployment is not fast enough in key lignite countries. The key lignite countries of Poland, Czechia, Romania, Bulgaria and Greece will not see falling generation unless they speed up wind and solar deployment. Additionally, as electricity consumption begins to rise from electric cars and other electrification, renewables will need to be deployed at double-speed in all countries, to ensure that coal falls at the same historical rate.
Coal plants need to close faster. Only 3% of coal plants closed in 2018. However, big progress is being made behind the scenes in many countries in planning for a coal phase-out. All countries in western Europe have a date by which to phase-out coal, and this is needed also for eastern countries. But many other preparations are also needed:
• All stakeholders must work together with workers to ensure a just transition and a speedy transition. If compensation must be paid to close coal plants, it should recognise that these coal plants are unlikely to be profitable today, and likely to be even more-so tomorrow.
• Governments need to tilt the playing field away from coal, by tightening air pollution limits, embracing higher carbon pricing, and not subsidising coal through capacity payments. Unsustainable coal-to-biomass conversions continue to be a threat in the future; inefficient coal plants need to be closed not converted to burning trees.
• Governments must encourage investment not only into wind and solar, but also electricity storage, interconnectors and demand response, and engage grid operators to speed the phase-out of coal. So will governments embrace the swing in economics from coal to clean, and accelerate their coal to clean revolution?...