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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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The World’s Last Coal Plant Will Be Constructed Soon

In its latest energy investment report, the International Energy Agency said energy companies continued investing in coal as demand for electricity continued growing fast and renewable and nuclear capacity additions couldn’t keep up. But, the agency said, “decisions to invest in coal-fired power plants declined to their lowest level this century and retirements rose.”

When something happens for the first time in a century, it’s definitely worth mentioning, especially if it marks the change in a persistent trend. This is not to say that coal power will be eliminated from the world’s energy mix within the lifetime of those who are now in their thirties and forties. Yet the fact that last year retirements of coal plants exceeded the number of final investment decisions on new ones suggests we may be witnessing peak coal.

Bloomberg’s David Fickling notes in a commentary piece on IEA’s report that coal capacity retirement has been already going strong for several years in Europe and North America: in Europe, coal’s down by 25 percent since 2009 and in North America its part in total generation capacity has fallen by as much as 40 percent. Yet Asian demand for power has spurred a 63-percent jump in coal capacity in that powerhouse of the world.

Add to this the other 236 GW of coal capacity under construction around the world and the good news of coal plant retirements versus final investment decisions begins to seem insignificant. It is, however, anything but. First steps are usually the hardest and this is no exception. The world will continue needing coal for quite some time as global population growth leads to a substantial increase in energy demand. However, if more of an effort is made to make renewables cost-competitive with coal in the places where there is the greatest need for more energy, the demise of the dirtiest of fossil fuels might accelerate.

It is a big if, that’s for sure. Last year, new renewable energy capacity additions globally remained unchanged on 2017, disappointing everyone who expects a renewable revolution that will change the face of energy.

Among the different types of renewable energy, solar was by far the leader, with total additions at 97 GW last year, unchanged on 2017. Wind power capacity additions, however, inched up to 50 GW last year, from 48 GW in 2017. New hydropower capacity additions, however, declined to 20 GW in 2018, from 25 GW in 2017. The total stood at 180 GW, which is a bit more than half of the 300 GW in renewable power that the world needs to add annually until 2030 if we are to meet the 2050 goals of the Paris Agreement. Related: Middle East Tensions Put Oil Markets On Edge

These figures from an earlier IEA report did not go into detail about the reasons behind this slowdown in renewable additions but it is becoming clear that solar and wind alone would not be able to offset the loss of coal-powered generation capacity on their own, not the way they currently are.

Nuclear energy proponents would be happy to supply a solution: more nuclear. Yet this otherwise clean source of energy remains highly controversial in many parts of the world, which has hampered new additions. In some places, including the U.S., nuclear power is also having a hard time competing with renewables, made harder by a slew of state legislation efforts to reduce the share of coal in the energy mix.

Legislation is certainly a large part of how the world will eventually stop using coal for power generation. Yet what the most vocal clean energy activists might want to remember is that it won’t happen overnight. It cannot happen overnight because replacing coal with alternative sources of energy is not as easy as many people would like it to be and the data proves it. What we’re looking at is an energy evolution rather than a revolution and evolution takes longer.

By Irina Slav for Oilprice.com

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Leave a comment
  • Art McTeagle on September 15 2019 said:
    Good article, I would just like to add, that in developing countries coal plants are economically attractive, because they require a lot less infrastructure (for e.g. compared to natural gas -pipelines, storage etc.).
    A lot of these countries have their own coal deposits, which makes the economics even more attractive. China continues to fund and construct coal plants throughout the developing world.

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