Paris — Investors in coal plants risk losing more than $600bn as power from renewables proves cheaper than electricity generated from new coal projects, market watchdog Carbon Tracker said Thursday.

In a new analysis of the cost of coal power across the world, it found that more than 60% of the existing supply is already more expensive than electricity from renewables such as solar and wind.

Coal is the most polluting fossil fuel, and experts from the UN Intergovernmental Panel on Climate Change (IPCC) say power derived from it must fall drastically if the world has any hope of meeting the Paris climate goals.

Yet nearly 500GW of new coal power is under construction or being planned, at a total cost of $638bn.

Sriya Sundaresan, co-head of power and utilities at Carbon Tracker and co-author of the report, titled “How to waste over half a trillion dollars”, said this represented a substantial stranded asset risk as coal plants typically take 15-20 years to cover costs.

“Building new renewables is cheaper than building coal in almost every market,” she said. “And over half of the operating coal fleet actually cost more to run than it would be to build renewables.”

The International Energy Agency (IEA) said in February that greenhouse gas emissions from power generation had flattened in 2019, largely due to a fall in coal use in North America and Europe.

However, coal use in Asia increased by roughly 3% year-on-year as energy demand there soars.

Carbon Tracker found that China alone had $158bn at risk, with 100GW of coal power in construction and more than that planned.

China's current coal fleet has a capacity of 982GW — 71% of which costs more to run than building new renewables would, according to the analysis.

In India, $80bn is on the line, with $78bn at risk across Southeast Asia.

“Especially for countries there, where there is a lot of investment in new coal, it actually doesn't make financial sense to do that anymore,” said Sundaresan.

‘Wake up call’

Investors are increasingly divesting from coal projects as the world switches to natural gas, and coal plants rely ever more on government subsidies.

The Paris agreement enjoins nations to limit global temperature rises to “well below” 2°C and to a safer cap of 1.5°C if possible.

In a landmark 2018 report, the IPCC said that to meet the 1.5°C target electricity generated by coal would need to fall 80% by 2030.

Carbon Tracker said one coal plant would need to close every day until 2040 to keep the 1.5°C goal in sight.

Sundaresan said countries must take stock of current coal capacity and look for additional demand to be met by renewables.

“It's undeniable that the long-term viability of the coal fleet is just not there,” she said.

“It's really a wake up call for investors, particularly in Southeast Asia where an enormous amount of capacity is being planned.”


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