A new report has revealed that new renewable energy (RE) is already cheaper than continuing to operate coal plants in much of the world.
A new report has revealed that new renewable energy (RE) is already cheaper than continuing to operate coal plants in much of the world. The report “How to Retire Early: Making Accelerated Coal Phase-Out Feasible and Just” by the Rocky Mountain Institute, Carbon Tracker Initiative, and Sierra Club, lays out specific financial strategies that utilities and policy-makers can use to engineer a faster phase-out of coal in various regions of the world.
This new analysis shows that new renewable energy is not only cheaper than new coal plants virtually everywhere, but that it is already cheaper to build new renewable energy capacity including battery storage than to continue operating 39 percent of the world’s existing coal capacity. The share of uncompetitive coal plants worldwide will increase rapidly to 60 percent in 2022 and to 73 percent in 2025. Replacing the entire global coal fleet with clean energy can be done at net savings to society as early as 2022.
“A faster transition from coal to clean energy is within our grasp, and we show how to engineer that transition in ways that will save money for electricity customers around the world while aiding a just transition for workers and communities,” said Paul Bodnar, Managing Director at Rocky Mountain Institute.”
The authors estimate that replacing the entire fleet of global coal plants with clean energy plus battery storage could be done at net annual savings as early as 2022. The rapidly declining costs of renewables push net annual savings to USD 105 billion in 2025. All this, the report states, is before considering coal’s dire health, climate, and environmental impacts, or accounting for the social and environmental benefits of reducing pollutants. Currently, coal phaseout hasn’t kept pace with eroding economics. To keep the Paris Agreement’s temperature targets within reach, global coal use must decline by 80 percent below 2010 levels by 2030, requiring rapid transition in OECD countries over the next decade and phase-out in the rest of the world by 2040.
“Coal power is quickly facing economic obsolescence, independent of carbon pricing and air pollution policies. Closing coal capacity and replacing it with lower-cost alternatives will not only save consumers and taxpayers money but could also play a major role in the upcoming economic recovery,” said Matt Gray, Managing Director, Co-Head of Power and Utilities at the Carbon Tracker Initiative.
The report lays out options for governments and public finance institutions to accelerate coal phase-out. The authors offer an integrated three-part approach:
1) refinancing to fund the coal transition and save customers money on day one,
2) reinvesting in clean energy, and
3) providing transition financing for workers and communities.
In 2020, US policymakers could help customers save up to USD 10 billion annually using the three-part approach to phase out the 79 percent of the 236 GW coal fleet that is uncompetitive today.
Meanwhile, outside the United States, a third of the global coal fleet is already more costly to continue operating than building new renewables with storage today. By 2025, that number will reach nearly 80 percent globally with several regions and countries seeing next to no competitive coal. In the European Union, 81 percent of the coal fleet is uncompetitive today and that percentage will reach 100 percent by 2025. In China, 43 percent of the coal fleet is uncompetitive today, and that number will reach nearly 100 percent by 2025. In India, 17 percent of the coal fleet is uncompetitive today, and that number will reach 85 percent in 2025.
“Given the long lead times for electricity system planning and decision-making as well as the size of the opportunity,” said Jules Kortenhorst, CEO of Rocky Mountain Institute, “now is the time to start structuring accelerated coal phase-out in all regions.”