The Death Of Europe's Coal Industry

Authored by Nick Cunningham via OilPrice.com,

More than half of Europe’s coal plants are already bleeding cash, but by 2030, the percentage of coal plants in Europe that report negative cash flow could explode to an estimated 97 percent.

Those findings come from a new report by the Carbon Tracker Initiative, which paints a dire picture for the economics of coal after surveying 600 power plants in Europe.

To be sure, coal has been hit hard over the past half-decade or so due to a variety of forces – falling costs for renewables, air quality and climate regulations, as well as the policy shift in Germany away from nuclear following the 2011 Fukushima meltdown.

However, coal has held onto its grip in the power sector, even if its position has weakened. Germany still generates about 40 percent of its electricity from coal.

But Carbon Tracker argues that some European utilities are making imprudent decisions by keeping some coal plants operating, and the number of planned coal plant retirements vastly understates the problems within the industry.

For instance, 54 percent of European coal plants are cash flow negative today. By 2030, there will be almost nothing left that brings in positive cash flow – 97 percent of coal-fired power plants in Europe will be cashflow negative by then, Carbon Tracker says.

“The changing economics. . . has put EU coal power in a death spiral,” said Matt Gray, Carbon Tracker analyst and co-author of the report, according to the FT.

 

“Utilities can’t do much to stop this other than drop coal or lobby governments to hope they will bail them out.”

The odd thing is only 27 percent of Europe’s coal capacity is slated for retirement by 2030. If so many are hemorrhaging cash, why do they stay open? There are several reasons.

Some utilities hope that power prices will rise, putting coal back in the money. Also, there are costs associated with clean up and dismantling old plants. Meanwhile, lobbying holds out hope of a lifeline from either the state or from broader European energy and climate policy.

But utilities are making some poor investment decisions, Carbon Tracker argues. By 2024 the operating cost of coal is expected to be higher than the levelized cost of electricity (LCOE) for wind, while the same is true for solar by 2027. That bears repeating – within the next decade, it will be cheaper to build new solar and wind projects, including all of the upfront construction costs, than it would be to simply keep an existing coal plant online.

And time is not on their side. More stringent air pollution standards come into force in 2021, and the cost of carbon in Europe’s emissions trading system is expected to continue to rise. Meanwhile, the cost of renewables and energy storage continues to fall.

“Those utilities that expect to run their coal units longer than evidence suggests are putting their assets on a collision course with these mega trends,” Carbon Tracker wrote in its report. Ultimately, the EU could save an estimated 22 billion euros if it phased out coal in line with the Paris Climate Agreement.

Carbon Tracker warns investors that they risk getting burned badly if they remain in coal.

A separate report from a global NGO called BankTrack finds that even though coal appears to be on its death bed, financing for coal-fired power plants is still alive and well. According to the report, “between January 2014 and September 2017, the global banking sector provided and mobilised financing in excess of $600 billion for the top 120 coal plant developers.”

More staggering is that nearly half of that has been provided after the Paris Climate Agreement was signed, despite the fact that such a massive volume of financed dedicated to the construction of coal plants is “fundamentally incompatible with the objectives of this agreement.”

But much of the coal funding is destined for projects in the rapidly-growing developing world. The conclusions of the two reports, taken together, suggest that coal may indeed be on its way out in Europe and the United States, but it is not entirely dead yet.

Comments

SoDamnMad DeadFred Sat, 12/16/2017 - 00:45 Permalink

The German RWE Hambach mine, the world's largest open pit mine, is cutting down ancient forests (But don't you do it Poland) and razing 2 villages in order to expand production of open pit coal mining.  Why isn't this mentioned in the story. Love that Merkel shut down nuclear power in Germany, pushes for Nordstream II and then complains that the US wants to drop the Paris Accord while China and India build more coal fired power plants.

In reply to by DeadFred

kellys_eye VWAndy Sat, 12/16/2017 - 03:32 Permalink

Naturally the state of the market is unpredictable as .gov interference can vary so wildly.If it was purely a case for 'natural selection' (market forces) then coal would, and will, rule for decades to come.Many of the solutions to .gov financial troubles could be solved by them leaving the markets the fuck alone.Clearly, exposing the MMCC as the myth it really is would go a long way towards helping the situation.

In reply to by VWAndy

RationalLuddite Fri, 12/15/2017 - 20:34 Permalink

I will boldly predict the opposite - that by 2040 we will see a resurgence of coal due to its high eroei. Every last thermodynamically feasible pit will be open by 2040 I suspect.

Endgame Napoleon RationalLuddite Fri, 12/15/2017 - 20:48 Permalink

I have no idea, but I doubt that the so-called green energy industry will provide the same number of quality jobs, whether here or in Germany. All of the manufactured components will be made by Chinese labor, leaving only pyramid-style sales jobs that have expenses for the 1099-gig employees who pay twice-as-high SS tax. Most such jobs in other industries do not cover rent except for those at the top of the pyramid who take a cut of each underling’s straight-commission sale, or, if they do, require a second, stable income source. Frequently absentee, back-watching moms with unearned income from spouses or from welfare and child-tax-credit welfare for womb productivity will suck up all of the jobs with a regular—but rock-bottom low—pay structure and benefits. That is how it is in industry after industry, here in the land of the free, home of socialism for some, not the brave. I guess a few techies will be employed at wages sufficient to cover rent. Maybe, a handful of scientists and upper managers will likewise command high wages, and these people are always married to another high wage earner, making sure that the good jobs are not spread out to create a bigger middle class.

In reply to by RationalLuddite

Anteater Endgame Napoleon Fri, 12/15/2017 - 20:53 Permalink

As a double-dipping W-2/W-1099 Worker all my life, now I'mreduced by Trumpian economics to SS/W-1099, and becauseof SS, getting taxed on my W-1099 work at 38%, that's twicewhat Warren Buffett pays in taxes, on what he can't write off,and because of Congress, my SS is being invisibly 'taxed' bydeficit bleedoff, zero COLA and proposed payout reductions,while Warren Buffett benefits YUUGLY from Trumpian DJIA.Everyone is starting to realize this as rents continue to soar,and the price of everything continues to increase, there is somuch fear and loathing of Trump, it's a miracle he still lives.

In reply to by Endgame Napoleon

MiniCooper Kayman Sat, 12/16/2017 - 11:59 Permalink

YES and much of that wood chip pellet is is going into a huge 4000 MW coal plant called Drax in the UK. It used to be the biggest coal fired power station in Europe. It burns mainly wood pellets now. It was on full load a few days ago. The Uk was very cold with no wind and no solar and all our nuclear, coal and gas plants were on full load all day backed up by a bit of wind and hydro. The real reaosn coal is unprofitable is that subsidised renewable wind and solar has undercut them and that means they are bleeding cash. If it wasnt for masisve subsidies to build wind and solar these old coal planst would be profitable. Its a false market. In fact it has got so bad in the UK no one will build a new gas fired power station without a guaranteed subsidy via a special Capacity payment and indeed most of the gas and coal plants absolutley depend on the Capacity payment subsidy to keep running.Oddly we would have blackouts without these old coal and gas plants. Its all down to a ridiculos energy policy we have in the UK.

In reply to by Kayman

MiniCooper Kayman Sat, 12/16/2017 - 11:59 Permalink

YES and much of that wood chip pellet is is going into a huge 4000 MW coal plant called Drax in the UK. It used to be the biggest coal fired power station in Europe. It burns mainly wood pellets now. It was on full load a few days ago. The Uk was very cold with no wind and no solar and all our nuclear, coal and gas plants were on full load all day backed up by a bit of wind and hydro. The real reaosn coal is unprofitable is that subsidised renewable wind and solar has undercut them and that means they are bleeding cash. If it wasnt for masisve subsidies to build wind and solar these old coal planst would be profitable. Its a false market. In fact it has got so bad in the UK no one will build a new gas fired power station without a guaranteed subsidy via a special Capacity payment and indeed most of the gas and coal plants absolutley depend on the Capacity payment subsidy to keep running.Oddly we would have blackouts without these old coal and gas plants. Its all down to a ridiculos energy policy we have in the UK.

In reply to by Kayman

Anteater President's analyst Fri, 12/15/2017 - 20:47 Permalink

" That bears repeating – within the next decade, it will be cheaper to build new solar and wind projects, including all of the upfront construction costs, than it would be to simply keep an existing coal plant online."HOWEVER, when it's -20F, at midnight, in the deep dark quiet chill of a NorthernHemisphere winter's eve, you might, just might, want to keep coal options open!Germany produces 100% of its electrical demand with solar on June 22nd, but bymidnight on December 22nd, their wind and solar farms contribute precisely dick.

In reply to by President's analyst

SgtShaftoe Fri, 12/15/2017 - 20:46 Permalink

Can we decentralize the grid already? This is getting stupid. In the next several decades all centralized systems are going to be challenged if not felled.

serotonindumptruck Fri, 12/15/2017 - 20:46 Permalink

With European nuclear power plants being wound down and shuttered after the catastrophe at Fukushima, are the collapse of European coal supplies considered unexpected?That Russian natural gas supply is looking more delicious every day.

lurker since 2012 Fri, 12/15/2017 - 20:47 Permalink

Coal tracker are fraudulent group dedicated to the demise of coal due to Hysteria about global warming (debased theory) I take anything they say with a grain of salt. Hey Tyler stop this Climate bullshitMerry Christmas ZZZO Heggies

Endgame Napoleon lurker since 2012 Fri, 12/15/2017 - 20:53 Permalink

No one will get cheerleading from Endgame Napoleon over the demise of the few industries that provide high-wage jobs for working-class men. As a single, childless woman, I have seen too much of a different kind of rigging by government, which favors moms with unearned income from spouses or from welfare / tax welfare to be anything but skeptical of more unfair rigging.

In reply to by lurker since 2012

SoDamnMad lurker since 2012 Sat, 12/16/2017 - 04:06 Permalink

Chinese are funding and building coal fired power plants all over Africa yet their government pisses and moans about us dropping out of the Paris Accord. One of the early, smart diplomatic moves Trump made.  Tie America's hands with compliance regulations while we go out and have the dirtiest air.  Shut down all those pollutent emitters so that we can conduct the Olympics and show the world how great we are.  Good for you. Suck up your dirty air and water and have a long happy life. 

In reply to by lurker since 2012

Kayman SoDamnMad Sat, 12/16/2017 - 10:58 Permalink

American Media is too busy checking out Trump's toe-nail clippings to report what is really going on in the world.  Besides, it negates their "Trump bad, ergo everything/everyone else must be good" agenda.Ahhh... all moralizing while sipping spritzers with the all-knowing crowd of well scrubbed imposters.

In reply to by SoDamnMad

Tachyon5321 Fri, 12/15/2017 - 21:22 Permalink

Coal will come back the next time there is a massive snowstorm that knocks out the solar grid for two weeks. After half of Europe freezes to death.  It has almost happened just a few years ago... The East European coal plants saved Germany and France after miles of new powerlines were pull in just a few days. This untold solar story is why Germany build or expanded all their new coal plants. Solar is cr@p as a power source Get over it and move on 

SteveK9 Fri, 12/15/2017 - 22:17 Permalink

This is utter nonsense.  Wind and solar are not even remotely cheaper than coal.  The subsidies are the reason. and even they cannot cover the reality that wind and solar are limited to a relatively small percentage of total electricity output, maybe 20-25%.  After that enormous costs would be associated with energy storage.The problem with coal is not cost, it is that is ruins the air (one could consider that a cost of course).  The answer to coal replacement is uranium.  It always has been.

J2nh Fri, 12/15/2017 - 23:42 Permalink

The problem for utilities that generate with coal is the legislative favoritism that is given to solar and wind.  When the wind blows and sun shines the utilities are required to buy the energy they produce.  Coal plants then idle, something they don't do well, and don't generate income.Coal, non-peaker natural gas and nuclear plants are designed and financed to operate 24/7 with 90%+ reliability.  Forcing them to take a back seat to intermittent sources makes them unprofitable.The catch-22 is that grids can't survive without sources capable of running 24/7 and they are being legislated into unreliability.Answer?  Remove the mandates for renewables and allow the market to function competitively.  Wind and solar will become mainstream when wind/solar + storage is cheaper than coal or natural gas (non-peaker).  

marsrecords Sat, 12/16/2017 - 00:42 Permalink

Coal is the ultimate disrupter. The "wrong" people have too much of it and the powers that be don't want anything to disrupt their oil monopoly.U.S. Patent 4,780,112 is a real problem for these criminals that lust for control. Seems two Australians created a chemical process that removes 99.97% of the pollution causing impurities in coal, before burning, leaving nearly pure carbon. This makes coal fired power plants pollution free. They used some type of acid to dissolve out the mineral contaminates and they figured out how to "recharge" the acid using another cheap mineral. And the removed minerals could then be sold at a profit. Imagine a coal plant producing energy AND money. So the coal pollution industry would collapse.But thats not all.The 99.97% coal could then be ground into micro particles and used as a DIRECT REPLACEMENT for oil in a combined cycle power plant. The micro coal particles are a perfect replacement for the micro particles of oil being injected into the power plant. What do you say to the arabs and the oil companies holding America hostage? "So long, pal"That really pissed people off.But here is the kicker. The industrial growth and progress of a civilization is limited by the amount of steel they can produce domestically. And the amount of steel production of a county is limited by the amount of giant graphite electrodes they can afford for their furnaces. Control the graphite = Control the country.The above patent works on ALL types of carbon, not just coal. It works perfectly on graphite.One single plant with the above process installed, dedicated to graphite, could purify ALL THE GRAPHITE PRODUCED IN THE WORLD. The suppression of the Turner-Lloyd process leaves hundreds of billions of dollars on the table for every country that refuses to use it. The government knew about this before 1988. They still cover it up.And the so called "investors" and "venture capitalists" are just part of the same family. The whole story as well as the documents are here - http://www.relfe.com/wp/money/clean-coal-technology/ 

LA_Goldbug marsrecords Sat, 12/16/2017 - 04:17 Permalink

Well you opened my eyes.

http://lib.dr.iastate.edu/cgi/viewcontent.cgi?article=1182&context=pate…

What I find amazing (but not surprising) is how different search results are using GOOGLE vs. duckduckgo.com using these terms,

"CenFuel project economics treatment coal"

Duck actually gives useful articles.

SO what is the deal here. This makes headlines in 2002 and then ...... NOTHING.

http://www.power-eng.com/articles/print/volume-106/issue-8/news-update/…

In reply to by marsrecords

yarpos Sat, 12/16/2017 - 14:55 Permalink

Just the symptoms of a distorted virtue signallers market.  Why would you keep a coal plant open when you can game the system?Install wind and solar,  gain subsidies on top of income and get preferential access to the market.   Your wind and solar destablise the grid so make sure that you are also in the market with fossil fueled generators (gas or diesel) to fill in the inevitable gaps and "solve" the problem you have created.  This fill in power can be sold at even higher rates often 10x+ your already inflated prices.   Meanwhile govts make sure you have a smooth run by keeping coal fired plant off the market, expecting them to operate like peaking plants and raising taxes on mined coal.    Its a great govt sponsored scam,  so why fight it?  just take the money.