https://cleantechnica.com/2019/08/24/is-the-coal-collapse-imminent/
["Coal generation already had declined 30% from 2012 to 2018."
For context, Germany was also still shutting down nuclear generation
during this period, so the decline in coal-fired generation is even more
dramatic than the 30% number would suggest in a world where all else was
equal. In 2010, Germany got about 25% of its electricity from nuclear;
today it is about 12%. It plans to move that number to zero by 2022 -
just 3 years from now. (data from World Nuclear Association)
Coal fired generation remains an easy target, not because we actually
care about carbon emissions, but because so many other off-the-shelf
options are available at lower cost: natural gas; conservation and
demand management; wind power; photovoltaics; biomass; and, increasingly
lower cost storage via multiple battery technologies. If carbon pricing
was set at effective levels, coal generation would disappear in a matter
of months.
links and images in online article]
Is The Coal Collapse Imminent?
August 24th, 2019 by Carolyn Fortuna
The news on reductions in coal-burning in Europe is getting better all
the time. Coal generation in the European Union (EU) fell by 19% in the
first half of 2019, with decreases in almost every coal-burning country.
The coal collapse, long forecast, is finally beginning to take shape.
Half of coal’s fall was replaced by wind and solar, and half was
replaced by switching to fossil gas. If this trend continues for the
rest of the year, it will lessen CO2 emissions by 65 million tons
compared to last year and shrink EU’s greenhouse gas (GHG) by 1.5%.
Coal generation already had declined 30% from 2012 to 2018.
Let it be said, however, that even if these plunges continue in 2019,
coal generation is still likely to account for 12% of the EU’s 2019 GHG
emissions.
Since 2015, Sandbag: Smarter Climate Policies, a group which influences
leaders to deliver carbon pricing and emission reductions, has published
an update on its series, “Europe’s Power Transition.” Now they’ve added
a 6-month mini-review to help explain the extent and reasoning of the
huge fall in Europe’s coal generation in 2019. Sandbag curated 20
gigabytes of power operator data from ENTSO-E, and then condensed the
most important data to a handy 2MB excel sheet.
Titled “The Great Coal Collapse of 2019,” the report has some
interesting findings. Here are highlights.
All western European countries saw big percentage falls, from 22%
in Germany to 79% in Ireland.
Germany saw by far the biggest coal fall in absolute terms.
The falls in eastern European countries were much smaller due to
near-zero deployment of wind and solar.
Phil MacDonald, COO of Sandbag, offered this exclusive comment for
CleanTechnica:
“The decline in European coal power in the first half of 2019 is
unprecedented. Accelerating wind and solar deployment – plus the spike
in the EU carbon price – has destroyed coal utility profitability. If
these trends continue, and we expect they will, we’d expect to see
western Europe coal-free well before 2030.
However, central and eastern European countries have been slower to
build renewables, and so we’re seeing smaller declines in coal there.
We’d need to see a big step up in wind and solar deployment for
countries like Romania, Greece, and Poland to follow the same track
towards coal phase-out.”
Carbon Pricing at the Core of the Coal Collapse
Carbon pricing is one cost-effective way to reduce greenhouse gas
emissions, as it gives a clear economic incentive to reduce emissions at
a cost below the carbon price. Carbon price, depending on its level,
helps drive investment in low carbon technologies and power generation.
Carbon pricing broadly takes two forms: a carbon tax and a cap-and-trade
approach where emitters have to buy permits to be able to emit. Hybrids
or mixtures of these approaches are often used in practice.
In Europe there is a mixture of carbon pricing measures in place or
being developed:
the EU Emissions Trading System (ETS)
a Europe-wide cap-and-trade scheme
national carbon prices, usually in the form of a tax, in a number
of countries, including the France, the UK, and Scandinavian countries
Wind & Solar is Replacing Coal
Half of Europe’s fall in coal was due to increased wind and solar
generation. The rise in wind and solar of 32 TWh in the first half of
2019 compared to 2018 was slightly above average for this decade, which
the report indicates is no surprise, as there were record wind
installations and a pick-up in solar installations.
Of the 32T Wh rise in wind and solar generation, four-fifths was wind
and only one fifth was solar. Solar continues to make a small
contribution to falling coal generation but is far off its potential.
Biomass generation was unchanged in 2019, as policy “correctly shifts
away from biomass subsidies,” so wind and solar are having to work
harder to keep up the overall growth of sum renewables.
The countries that built the most wind and solar capacity saw the
biggest fall in coal generation. 95% of the overall wind and solar
installed in 2018 was in western European countries, which is where the
biggest falls in coal generation were. Germany saw the biggest
deployment of renewables and the biggest absolute fall in coal generation.
The countries that built the least wind and solar capacity saw the
smallest fall in coal generation. Only 5% of wind and solar installed in
2018 was in eastern countries. The lignite-burning countries did
particularly badly.
Out of 17,000 MW installed across Europe last year, Poland
installed just 39 MW, Czechia 26MW, Romania 5MW and Bulgaria 3MW.
This is reflected in the their much-smaller falls in coal generation.
Lignite generation in Czechia and Bulgaria actually increased slightly.
Fossil Gas Replaces Coal as Carbon Pricing Begins to Work
Half of Europe’s fall in coal was due to a rise in fossil gas as a
short-term replacement for coal to meet the EU’s carbon pricing. The
largest pick-ups in gas were in Germany, Spain, Italy, and France.
The UK was not impacted much by the higher EU carbon pricing, since the
top-up UK carbon tax had already ensured there was full coal-gas
switching in place. It is unlikely the coal-gas switch will lead to more
gas plants being built, though, as only one gas plant came online in the
whole of Europe in 2018: Plock in Poland.
In 2018, a high gas price and low carbon price meant hard coal ran
before gas, but the economics switched at the end of 2018 when gas
prices plummeted and carbon prices rose.
Lignite plant profitability disintegrated in 2019. The rise in carbon
price has worsened those economics dramatically. Because lignite plants
have large fixed costs to cover, not only are the lignite plants more
expensive to maintain than hard coal plants, but their adjacent mines
also have huge fixed costs. Sandbag estimates that very few lignite
plants – if any – will have covered all their fixed costs in the first
half of 2019, perhaps for the first time ever.
That means in the longer term the impact of carbon pricing lignite may
be more impacted than hard coal. Governments and investors now have to
decide how long they will continue to support these loss-making utilities.
Coal Plant Closures
Many EU countries proclaimed over the past few years that they would be
phasing out coal plants, yet only 3% of coal plants closed in 2018. Most
of these closures were limited to the UK and Germany.
That means the rate of closures elsewhere in Europe was near-zero.
The only mandated plants closed were German lignite units at
Niederaussem and Jaenschwalde, which led to a large reduction of 4 TWh
of inefficient lignite generation. The remaining plants closed due to
what many countries broadly complained was “poor economics.”
Hey, doesn’t government policy play a critical part in power plant
economics? For example, all the following are likely to have played a
role in the UK’s Eggborough’s plant closure in 2018:
Knowing retrofit isn’t a viable option because of the UK’s 2025
coal phase-out date
Reduced running due to more wind and solar
A higher carbon price
Tighter power plant emissions standards
Lower capacity payments as new batteries outbid coal in the
capacity mechanism
Outlook
Realistically, 2019’s coal collapse will not become the new norm unless
there is a strong policy push at the highest levels.
What’s Policy Got to Do with It?
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. Sandbag has several
recommendations for policy makers.
Governments, they say, need to tilt the markets away from coal by
tightening air pollution limits, embracing higher carbon pricing, and
refusing to subsidize coal through capacity payments. Unsustainable
coal-to-biomass conversions continue to be a threat in the future;
inefficient coal plants need to be closed rather than 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.
Wind and solar deployment, Sandbag argues, is not fast enough in key
lignite countries such as Poland, Czechia, Romania, Bulgaria, and
Greece. These countries 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, Sandbag sees big progress 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.
Sandbag calls for many additional preparations. These include finding a
way for all stakeholders to work together to ensure a just transition
and a speedy transition. Moreover, if compensation must be paid to close
coal plants it should recognize that these coal plants are unlikely to
be profitable today, and likely to be even more-so tomorrow.
What is Sandbag?
Sandbag’s focus is on:
exposing the shortcomings of the EU ETS, which continues to be
affected by a large ongoing surplus of allowances
advocacy related to the development and improvement of national
carbon pricing, particularly focusing on the UK, France, and Germany
advocacy related to the need for a sufficient carbon price to drive
coal phase out in Europe
Sandbag’s recent reports have looked at:
rebasing the cap to reflect actual emissions at the end of each phase
retirement of allowances from the Market Stability Reserve (MSR)
how to focus assistance to industry to prevent carbon leakage on
those that need it most
the value of additional actions beyond carbon pricing in reducing
emissions
They work to influence the European Commission, European Parliament, key
member states, and other major stakeholders and to raise public
awareness of and engagement in the policy making process.
--
Darryl McMahon
Freelance Project Manager (sustainable systems)
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