As the world recovers from the impacts of the pandemic, we have a once-in-a-lifetime opportunity to put the global energy sector on a clean, low-carbon, resilient growth trajectory.
The Covid-19 pandemic has accelerated the global decline of coal. Coal-fired power generation is set to fall by more than 10% this year, the largest decrease on record. But unlike the lives that have been lost or changed forever by the pandemic, this historic drop is only temporary. As the global economy recovers, coal use will likely rebound.
The real, long-term impact of the pandemic on coal phase-out will be determined in part by the nature of the recovery packages that governments around the world put in place in the coming months.
If government stimulus is used to prop up existing coal facilities, or spurring new coal capacity, it will lock countries into environmentally and financially unsustainable coal power for decades to come, undermining global climate action and the transition to a low carbon economy.
Using public money to sustain or expand coal power is economically, socially and environmentally harmful.
Conversely, economic recovery measures should be aligned with global climate efforts, support a just transition for all, and build a solid foundation for more resilient and sustainable societies.
Green recovery packages can be an opportunity to prompt a steep decline in coal power generation, given their massive, once-in-a-lifetime scale.
Renewables are the cheapest source of new bulk electricity in countries representing two-thirds of the world population and 71% of global GDP. In virtually every market, coal is no longer the cheapest source of new generation.
Cheaper renewables and weaker demand growth are also increasingly causing a large number of gas and coal-fired power stations to stand idle, with the global coal fleet running at just above 50% of capacity in recent years. This trend adds to the risk of seeing coal investments become stranded assets. In recent years, we have seen over 100 leading financial institutions move away from financing coal-fired power plants. This is just good business sense.
Investing in coal power would disregard the growing climate crisis. We are faced with a significant opportunity to prepare our societies for the future. By taking ambitious action on energy transition now, we can avoid another massive disruption, this time caused by climate change. If we are to meet the Paris Agreement goals and avoid the most dangerous impacts of climate change, EU and OECD countries must phase out unabated coal-fired electricity generation no later than 2030, with the rest of the world no later than 2050. PPCA members are working collectively towards this goal.
Eliminating coal power generation will also bring tremendous benefits for public health and quality of life. As air pollution levels plummet given current sharp reductions in coal and oil burning, a recent study found that 11,000 air pollution-related deaths will be avoided in Europe. This shows what can be achieved with a shift away from coal towards cleaner energy sources.
In the wake of this pandemic, instead of reviving polluting coal energy production, governments should encourage the energy sector to accelerate the clean energy transition.
Recovery measures can be an opportunity to incentivize a major expansion of clean power and a retirement of coal. This will help create green jobs, uplift communities, and rebuild economies that are stable, resilient and sustainable.
A recent report for the Oxford Review of Economic Policy found that green projects create more jobs, deliver higher short-term returns per dollar spend and lead to increased long-term cost savings when compared to traditional fiscal stimulus. Effective recovery measures that support climate and economic goals include investments in renewable energy, storage, grid modernisation, energy efficiency retrofits, worker retraining away from fossil fuel industries, reforestation and sustainable agriculture, and research and development into clean technology.
Governments can further accelerate the transition by financing the retirement of coal power plants, in particular where the oldest and most polluting plants are operating in markets with oversupply. The shift must be accompanied with social protection and security for the affected workers and communities.
Public support for investing in climate action as a post-coronavirus recovery is high across the world. Momentum is also building among public and private sector actors. Powering Past Coal Alliance co-chairs and members, both government and businesses, are committed to doubling down to spur a green recovery. International collaboration, support and knowledge sharing will be critical to ensure that the stimulus funding accelerates the coal-to-clean transition.
The Powering Past Coal Alliance stands ready to support governments in shaping and implementing recovery plans that build a renewed, sustainable progress and prosperity across the world – fueled by clean electricity in place of coal.
This article is part of a PPCA special insight series on the coronavirus crisis and its impact on the transition away from coal power generation.