Europe’s ‘Coal Renaissance’ Masks Industry Downfall
All told, since 2010 there has been a net closure of coal capacity in the EU of about 10GW. So what has the EU been building? Lots and lots of Gas, Wind, and Solar.
But wait – you are a liar! I hear the Germans are building new coal to replace all that nuclear. Nope. Twenty four new coal plant proposals have been abandoned in Germany since 2008. A small number of announced projects remain but it is widely expected none of these will in the end be permitted and some remain just on paper.
The increased coal burn that has occurred (and it has) comes from existing units. But this is due to short term economic factors, not a long term revival of coal’s economics (which are terrible). In the EU coal use has been growing since 2009 (after a steep drop in the preceding two years) but it is still below 2007 levels and well below increases in renewable energy generation.
There are many reasons for this short term bump including. The most important are 1) Strict new air pollution rules that ensure a huge amount of coal-fired capacity will be retired or constrained by 2016 2) Rock bottom carbon prices and 3) National level coal policies. But some of these same factors will conspire to have the exact opposite effect in the long run.Let’s look at the effect of the new air pollution rules first. These rules allow operators to use their coal plants at higher rates today because they will be forced to shut down tomorrow (thus the bump in coal use). The problem is this won’t last forever. Ten percent of existing operators will close by 2015 because of existing air rules (20 GW). In 2016 new rules enter into force, and only 40% of coal-fired capacity will be able to comply. The rest will either close or undergo costly retrofits, with lots of operators expected to opt for closure. This means beyond the 20GW of capacity about to close there will be a further wave of coal capacity closure.
Click here to read more
By posting your comment, you agree to abide by our Posting rules