As a result of the COVID-19 pandemic, many experts are calling for Europe to rebuild with a green economy at its core. With coal consumption plummeting and decarbonisation efforts becoming cheaper, does this finally spell the end of coal?
British and European history is characterised by coal and steel. It helped to spur the rise in steam technologies and spearheaded the Industrial Revolution over 200 years ago, which paved the way for the rise of globalisation. Whilst coal consumption dwindled throughout the 20th century, in favour of petroleum and natural gas, it has remained a vital part of Europe’s energy mix. That is, until now.
At the start of 2010, coal was responsible for up to 30% of the UK’s energy mix (second only to natural gas). At the beginning of 2020, coal had dropped to a staggeringly low 3.7% and the lockdown-related drop in energy consumption contributed to the UK’s longest coal-free period of almost 68 days (interrupted only because of a maintenance period at the Drax coal plant, which required it to generate energy). Though a significant drop in only 10 years, it is critical to unpack how this has come about and what it spells for coal as a fuel source.
As part of the UK’s Clean Growth Strategy, announced in 2018, the Government has outlined its plan to phase out the use of unabated coal to produce electricity by 2024. This is largely being facilitated through investment into renewable energy options such as offshore wind and solar PV, but also the transition of existing coal power production to biomass power production.
In addition, the cost of production for renewable energy sources has dropped significantly thanks to innovation and government assistance. Though the Feed-in Tariff (FiT) scheme (which was designed to promote the uptake of small-scale renewable and low-carbon electricity) was phased out at the beginning of 2019, the alternative Contracts for Difference (CfD) scheme has filled the void for subsidies and grants for renewable energy alternatives. It has meant a significant amount of investment into large-scale wind projects some of which are estimated to have a capacity of over 1200MW.
Does this spell the inevitable end of coal as an energy source? In the UK, this is likely. The Clean Growth Plan is a strategy which sets out proposals for decarbonising all sectors of the UK economy through the 2020s. It commits to phasing out unabated coal by 2024, which is fully feasible given its decline as part of the national energy mix that coal in all forms can be eliminated from the energy system by 2030 through transition to more efficient, renewable options.
Will Europe be able to follow suit? That depends on what concessions and agreements are established in the coming European Commission and economic recovery schemes post-COVID-19 such as Next Generation EU.
Last year, EU leaders failed to get unanimous agreement for a 2050 decarbonisation target at summit after summit. Whilst some states have chosen to push forward with legislation on coal – such as Germany’s Kohleverstromungsbeendigungsgesetz (Coal Exit Law) – and the Czech Republic backing the EU’s green recovery plan, their more coal-dependent neighbours will hesitate to jump on the bandwagon. Poland, for instance, has not eased on their coal stance even despite the impact on health and air quality as a result of reduced coal consumption during the pandemic and its conservative President-elect is unlikely to push the green agenda. A ‘green recovery’ is still a contentious topic in European energy realms, with multiple concerns for the economic impact on jobs and industry eclipsing the need for meeting climate targets.
The EU’s Green Deal is estimated to cost up to €1tn, with many experts saying this is only a third of the necessary expenditure for full decarbonisation. But with bold ambitions to achieve net-zero emissions by 2050, and even a reduction in emissions by 50% over the course of the next 10 years, significant costs are inevitable.
There is a potential return on investment on the horizon. The EU has been the centre of a rise in jobs in the environmental and sustainability sector, contributing significant amounts to national economies. Despite Brexit, the UK is well poised to experience the same benefits.
As part of this future, the EU-wide phase-out of coal and carbon-intensive fuel sources will eventually become reality. In order to meet climate targets this not only must happen in this decade, but will occur with the natural expiration of coal.
Micheil Page is Head of Agora’s Energy & Climate Programme.