Coal Power Is Bleeding Cold, Hard Cash (Thank You, Captain Obvious)

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The US coal industry is on deathwatch. Coal power plants are falling like dominoes and yet another coal mining titan — Murray Energy — has bitten the dust. So, what is keeping the remaining coal power plants on life support? That’s a good question. A new report from the organization Carbon Tracker hints at the answer, which can be found in the precarious position of coal power in the European Union.

coal power unprofitable
Carbon Tracker has a plan for retiring unprofitable coal power plants and replacing them with renewable energy.

The Death Of Coal: Thanks For Nothing, Natural Gas

The new coal report comes under the somewhat nuanced title, Apocalypse Now. It was produced by the Power and Utilities team at Carbon Tracker. The organization bills itself as an “independent financial think tank that carries out in-depth analysis on the impact of the energy transition on capital markets and the potential investment in high-cost, carbon-intensive fossil fuels.”

Got all that? Carbon Tracker’s basic argument is that coal is simply unable to compete in today’s energy market against low cost wind, solar, and natural gas.

The natural gas angle is especially evident here in the US, where gas has been steadily beating down coal ever since the fracking boom of the early 2000s took off.

That fracking thing goes for the export market, too. In its bankruptcy filing, Murray Energy attributes its demise in part to natural gas exports from the US, which cut into its ability to compete against Russia for the shrinking EU coal market.

Renewable Energy Takes Over

Now that the cost of renewable energy has dropped, wind and solar have begun to chip away at both coal and natural gas. It’s only going to get worse. One major warning sign is the growing interest in renewables on the part of the nation’s powerful rural electric cooperative stakeholders.

Another area of concern — to fossil fuel fans, that is — is the emergence of hybrid wind, solar, and energy storage power plants and other technology improvements.

Then there’s that whole thing about local public health risks, impacts on local economic growth, and water resource impacts related to coal and natural gas but who’s counting?

No, Really: Coal Power Is Uneconomical

In its new report, Carbon Tracker looked at the ability of the European Union’s coal fleet to sustain operations at a loss, in the face of “relentless competition from ever lower-cost wind and solar, and gas.”

How bad is the bleeding? According to the report, 79% of EU coal power plants are losing money. The total losses could add up to €6.57 billion in 2019 alone.

Carbon Tracker concludes that without significant subsidies, there will be no — as in, zero — hard coal or lignite power in the EU by 2030.

As for those subsidies, that’s a matter for energy policy makers. Carbon Tracker offers this take:

“If EU governments chose to support coal over the long-term it could create intractable problems, as they will be forced to choose between destroying shareholder value, depleting fiscal resources or undermining economic competitiveness.”

That’s just for starters. Carbon Tracker also argues that the growing market gap between coal and its competitors is “shining a spotlight on the legality of out-of-market and closure payments.” The looming “legal quagmire” could have a ripple effect on utility stakeholders.

Coal Power In The US

Here in the US, the legal issue has partly resolved itself. During his tenure at the Department of Energy, soon-to-be-former US Secretary of Energy Rick Perry (you know, the guy who touted natural gas exports all over the place), made a half-hearted attempt to prop up uneconomical coal power plants, but his proposal for a special rate structure was practically laughed out of the Federal Energy Regulatory Commission.

That leaves utilities to duke it out with ratepayers, local policy makers, and activist shareholders.

Carbon Tracker proposes that governments can push things along in the right direction by establishing loan funds, and leveraging their lower interest rates to help utilities finance coal plant closures — on the condition that utilities build renewable energy replacements.

There’s a “just transition” angle to that plan, assuming that utilities train and hire local coal workers onto wind and solar projects.

CleanTechnica is reaching out to the Sierra Club’s successful Beyond Coal campaign for their insights on how this would work in the US, so stay tuned for more on that.

Image: From the report “Apocalypse Now” by Carbon Tracker.

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Tina Casey

Tina specializes in advanced energy technology, military sustainability, emerging materials, biofuels, ESG and related policy and political matters. Views expressed are her own. Follow her on LinkedIn, Threads, or Bluesky.

Tina Casey has 3148 posts and counting. See all posts by Tina Casey