The investment case for coal-fired power is looking increasingly unconvincing, but more plants will need to be cancelled if the world is to avoid runaway climate change, a report published on Monday said.
The report which was co-authored by green groups CoalSwarm and the Sierra Club, is the latest salvo being fired against those who finance coal, the fossil fuel blamed most for climate change.
The report said that even though two out of three coal-fired power plants globally are likely to be cancelled—mainly for economic reasons—the remaining one-third will account for nearly all of the greenhouse gases that can be emitted if the world is to stand a reasonable chance of keeping temperature rises within the 2°C limit.
"We’ve seen time and again that coal is a risky and expensive investment for anyone, especially developing countries that are on the front lines of the global energy crisis,” said Sierra Club campaigner John Coequyt.
A recent report from University College London found that, globally, in order to prevent climate change of more than 2°C, 82% of coal reserves must be left underground, along with 49% of gas reserves, and 33% of oil reserves.
Increasing pressure to curb pollution from the mining and burning of coal have all combined to undermine the economic case for the fuel, campaigners say, pointing to falling costs of alternative, and low carbon, energy sources such as wind and solar that will ‘strand’ assets such as mines and highly-polluting power stations.
Miners of Huaibei
China Most Exposed to Stranded Assets in Older Coal Power
Another report released on March 13 said that Chinese state-owned enterprises are most at risk from tightening environmental regulation as the country’s government promises to deliver on its pledge to curb smog and shut down surplus industrial capacity that burns large amounts of coal.
The report, which was prepared by Oxford University’s Smith School, added that older coal-fired power plants would become even less economically viable if governments target antiquated capacity for closure in order to meet carbon targets agreed in any future global climate deal.
And newer capacity is likely to be used less often because of big new additions of low carbon energy to Chinese power grids, points out new research from Australian academics. In India, water shortages could make coal-fired power increasingly untenable, the report adds.
The resources industry and some energy economists say the death of coal is greatly exaggerated, pointing to global population growth and the impact on energy demand, ‘locked in’ power production from the fuel, and the ambitions of many developing countries to power future economic expansion through the use of coal.
A global campaign to divest from coal has gained traction in recent years, as a slew of investment funds, educational institutions and multilateral banks have ended or slashed their funding to coal, but for campaigners, too many global banks, sovereign wealth funds and government lenders are bankrolling expansion of mines and power plants. The UN’s climate arm, the UNFCCC, in recent days has become increasingly vocal that investors and governments must end their funding for the fuel, a move which has angered the coal lobby.