Two-fifths of the world’s coal power plants are already running at a loss, a study by Carbon Tracker has found, with the number expected to rise to almost three-quarters by 2040.
The financial think tank said high fuel costs were causing the coal plants to lose money, with carbon pricing and air pollution regulations set to exacerbate this over the next two decades.
It forecasts new wind and solar power to be cheaper to operate than 96% of today’s existing and planned coal stations by 2030, with countries that fail to make the transition risking billions.
The findings are derived from a two-year modelling exercise that involved analysis of 6,685 coal plants, representing 95% of all operating capacity, and 90% of that under construction.
“The narrative is quickly changing from how much do we invest in new coal capacity, to how do we shut down existing capacity that minimises losses,” Carbon Tracker head of power and utilities, Matt Gray, said.
China is forecast to save $389bn (£305bn) if it closes its coal plants in line with the Paris Agreement, while the EU could save $89bn, the US 78$bn and Russia $20bn.
However, the researchers warn that this will come at a huge cost to the coal industry, which is currently being propped up by government subsidies and ultimately taxpayers.
If coal plants are closed in line with the Paris Agreement, the industry is forecast to lose $92bn in South Korea, $76bn in India, and $51bn in South Africa, compared with “business as usual supported by the state”.
Carbon Tracker said governments should ban investment in coal power when it is cheaper to build renewable energy and gas infrastructure – a point that has already been reached in Europe, the US, India and parts of Latin America.
And when it is cheaper to build new renewable energy capacity, and gas costs less than running existing coal plants, the researchers argue government’s should implement a coal phase-out.
“Our analysis shows a least-cost power system without coal should be seen as an economic inevitability rather than a clean and green nicety,” Carbon Tracker energy analyst, Sebastian Ljungwaldh concluded.
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