Published on May 22nd, 2018 | by Joshua S Hill0
The Netherlands Announces Ban On Coal, Plans To Close 2 Power Plants By 2024
May 22nd, 2018 by Joshua S Hill
The Netherlands has announced that it will ban the use of coal for electricity generation from 2030 onwards, and that the two oldest plants must close by the end of 2024, in a move that Germany utility company RWE has deemed “ill judged.”
The power industry in Europe is undergoing a seismic shift as renewable energy sources such as onshore and offshore wind, and solar PV, continue to increase their share of the market. And, when you add more of something, more often than not something else will suffer, and in the case of Europe’s power sector, that ‘something’ is coal.
The most high-profile hit to coal came when the UK made the move to close all coal plants by 2025. Of course, coal has been losing market share steadily over the last few years due to renewable energy capacity increases, natural gas, and the success of neighboring interlinks — and just last month the UK went 76 hours without using or needing any coal at all.
Germany, too, this year announced it hopes to come up with a plan to phase out coal by early 2019, and Finland announced in late 2016 it intended to ban all coal by 2030. Add in the fact that, according to a Carbon Tracker Initiative report published last December, 54% of all European coal plants are losing money, and if left unattended that figure would rise to 97% by 2030.
So, it should come as no real surprise, then, that the Netherlands’ Minister of Economic Affairs and Climate, Eric Wiebes, announced last week that his country was moving to ban coal in all electricity generation from 2030 onwards. More specifically, all coal-fired power plants will be closed by 2030 at the latest, and the two oldest plants — the Hemweg and Amer coal-fired power plants — must shutter their doors by the end of 2024.
“The Netherlands phaseout decision is particularly striking because three of these power plants are brand new,” said Gerard Wynn, an energy finance consultant with the Institute for Energy Economics and Financial Analysis (IEEFA), speaking via email. “It is the ultimate warning for investors in new coal and coal power life extension in Europe. It adds to coal phaseout plans in the UK, Italy, France, Finland and Portugal, and other coal power headwinds and especially rising carbon prices and growth in renewables.”
The ban on coal is part of the Netherlands’ efforts to reduce its CO2 emissions by 49% by 2030. The Netherlands was one of seven European Union Member States in April to call on the EU and other Member States to align their long-term climate ambitions with the objectives laid down in the Paris Climate Agreement. Further, just last week, the EU formally adopted greenhouse gas emission reduction targets for 2021 to 2030 which, though they vary from country to country, will deliver a 30% overall reduction in EU emissions.
The Netherlands Government has advised the remaining coal-fired power plants that, in the intervening period, they should make their plants suitable for electricity production by other means or other fuels — such as sustainable biomass.
The move has come as a surprise to at least one company, however, judging by the reaction from Germany utility RWE, which has numerous power plants in the Netherlands including two coal-fired power plants — the 600 megawatt (MW) Amber Power Plant in Geertruidenberg, and the 1,560 MW Eemshaven Power Plant. Specifically, the Amer Power Plant was one of two coal-fired power plants which the Netherlands Government ordered to be closed by the end of 2024.
In a press release published in response to the news, the company said “RWE is confounded by the draft law that was announced today by the minister of Economic Affairs and Climate.” RWE also said that, while it “is committed to the CO2 reduction target of the Dutch Government … it believes that energy politics should be a balance of security of supply, affordable energy prices, sustainability and providing a stable and reliable investment climate.”
RWE went on to explain the merits of both their power plants and added that it now “foresees significant impact on its business by today’s announcement.
“Currently no compensation is planned for the ban on operating the plants according to the granted permits. This is despite the fact that RWE built the Eemshaven power plant at the specific request of the Dutch government, investing €3.2 billion going into operation in 2015. RWE will now analyse the proposed law carefully. If the law is imposed as proposed, the company will assess the possibility of taking legal action.”
In a way, RWE seems to make a strong argument in its favor. But an October report from the IEEFA highlights the long trend that RWE could have acted upon. Specifically, IEEFA — in its report, Global Electricity Utilities in Transition: Leaders and Laggards: 11 Case Studies — explains that “RWE has shut down or mothballed almost 12 [gigawatts (GW)] of capacity since 2012” which has resulted in significant impairments on its books. In 2016 alone, “RWE total impairments came to €4.3bn, of which €3.7bn related to the company’s German power plant portfolio” and “Value write-downs have occurred on new capacity in the Netherlands.”
Further, and most tellingly, the IEEFA report notes that it is only RWE’s stake in its renewable energy spin-off, Innogy, that is keeping the company afloat. In other words, RWE has long seen the tide rising but is now surprised that it is drowning. The implementation of the European Union Emissions Trading Scheme further sealed the deal for coal-plant owners across Europe, but companies did not react properly to compensate for the pending future.
“That RWE management and the board were still been building new coal plants a decade after the EU ETS was put in place can only be explained as a reflection that RWE did not accept climate science and/or they failed to anticipate the Paris Climate Agreement would emerge to bring together a global consensus to deal with this critical issue,” explained Tim Buckley, Director of Energy Finance Studies, IEEFA, to me via email.
“It was a failure of managment by the owners of those three power plants, RWE, E.ON and Engie, to proceed with construction at the time of the global financial crisis,” added Gerard Wynn. “There were warning signs then for weaker power demand and prices, from the recession as well as the rollout of renewables in neighbouring Germany. Even before the Netherlands coal phaseout decision they had written off half or more of the value of these brand new assets. RWE must take responsibility for that mistake.”
Follow CleanTechnica on Google News.
It will make you happy & help you live in peace for the rest of your life.