Coal Phase-Out and the EU Green Deal

The EU is on a mission. They need to decarbonize their power sector and fast. Is Europe heading in the right direction for a carbon-neutral future?

Yes. It is encouraging to see that the EU’s production of hard coal has reduced to 77% (65 million tonnes) compared to that of 1990. The more pressing questions though are how to transition smoothly from coal to gas, the status of coal plant phase-outs, and its site’s transformation.

The Green Deal and the End of a Coal Era

With the EU’s foot firmly rooted in the European Green Deal, the EU member states plan to target its economic sector in order to cut 75% of the EU’s greenhouse gas emissions. And there is a huge policy push to encourage the power sector to adapt to renewable sources of energy rather than coal.

If all goes as planned in the EU green deal, the dependency of hard coal and lignite CCS (Carbon Capture and Storage) would be only 5% of the total power generated as of 2050. From a European economic perspective, it is cheaper (most times) to build additional nuclear capacity in one region and add new transmission capacity, than to build CCS capacities in the regions where nuclear build-up potential is restricted.

The EU has been considering a phased, two-pronged strategy in order to achieve a complete phaseout of coal use in electricity generation. These strategies evaluate both emissions performance and profit generation potential.

Regulators Perspective — which will prioritize shutting down the most carbon-intensive plants first. And,

Market Perspective — which is all about shutting down the plants that are facing a loss.

One big catch — the member states should remain committed to the journey. First, by not adding more coal plants and second, by increasing momentum in shutting down currently operating units. Almost 72% of the current coal-generating units need to be shut by 2025.

Coal Exit Lessons from Germany

Positive policies by member states such as Germany are noteworthy. By giving due diligence to the compensation model (between Germany and the operators), they are well on the way to transition off coal in a sustainable model.

One-quarter of Germany’s electricity has been coal-powered as of 2019, and it is the fifth-largest consumer of coal in the world. That is going to change by 2038, as they plan to shut down all their plants by then. In order to not leave around 20,000 coal workforce in the lurch, the German government has worked some post-coal economic roadmaps.

● With the help of the German Coal Commission, lignite-coal regions with the financial aid of up to €14 billion (about US$11.86 billion) until 2038.

● Hard-coal regions will receive financial aid of up to €1.09 billion and further, they have earmarked €26 billion for infrastructure and other projects that would also create employment.

● The fund also sets aside $16.5 billion for regional investment with a guideline given to pursue any of the nine categories (from tourism to research) that can help a formerly coal region flourish while on its three-stage coal phase-out.

Dr. -Ing Arne Kristoffer Bayer, Head of Asset Development, Uniper Kraftwerke GmbH (Germany) will be part of our “Coal Phase-out & Repurposing 2021” virtual summit organized by Prospero Events, to discuss his company’s vast experience from coal power plant sites in Germany, the UK and the Netherlands.

World Coal Story at a Glance

The US President Joe Biden plans to transform the economies of coal-rich regions by proposing $4 billion in tax credits for new clean energy manufacturing projects set in coal communities.

Canada, France, Italy and the United Kingdom which are part of G20 have been leading the way in coal phase-out with Paris Agreement abiding plans. Though Germany is systematically phasing out coal, critics say that they aren’t following the 1.5°C pathway prescribed in the agreement.

The other G20 countries that record the highest use and export of coal such as Australia, Indonesia, Japan, South Korea and Turkey seem to find it difficult to stick to their trajectories to reduce coal. Yet most of them are working towards joining the “50 percent club”, hoping to reduce their emissions by half as of 2030.

India plans to phase out coal’s share in electricity generation, by 65%, and expunge its dependency by 2050. China also envisions a complete phase-out by 2050, while the South Africa government is yet to commit to a long-term coal phase-out plan.

The climate neutrality, zero pollution and just transition objectives of the Green Deal and of the EU Climate Law will be integral in pushing for a sustainable future for coal-dependent economies in Europe.

If you are someone keen on coal, then we have the right event coming up. “European Coal Phase-out & Repurposing 2021” is one of our newest virtual conferences, slated for 8th and 9th June. Join in today!