October 12, 2018 Read More →

Analysis: ‘Death of global coal growth’

GreenTech Media:

For years we’ve known that the coal industry was a dead man walking in the United States. So the industry has clung to future growth in other markets to justify its place at the table. But now, even those prospects are fading. 

Gonzalo Garcia, the co-head of natural resources for Goldman Sachs globally, said recently that he personally feels “we will not see another coal plant built in Western Europe ever again” and that it will be very challenging “in most OECD countries.” That’s a powerful statement coming from one of the largest global financial institutions on the planet. But it’s really not all that bold given what we know about global coal plant growth.

Just a few short months ago, the group CoalSwarm published research projecting that the world would hit “peak coal plant” by 2022. But even more powerful is the best climate story that hasn’t been told — the 573 gigawatts of new coal plants in India, which is twice the size of the U.S. fleet, that were never built. With solar now cheaper than new coal those plants will not be resurrected because they no longer make economic sense.

The death of global coal growth is largely a result of the evaporation of a staggering amount of capacity that had been planned to be built, largely in India and China, coupled with a surge in coal plant retirements, largely in the U.S. and Europe.

Retirements will only grow, particularly in Europe, where the continent’s industrial powerhouse, Germany, has formed a commission to phase out the coal industry entirely. That’s on top of the 35.5 gigawatts of operating capacity, a full 22 percent of the coal fleet, currently committed to retire.

It’s hard to understate just how important the evaporation of this pipeline and the broader death of growth is for the global coal industry. Once growth dies, an industry has no future to sell investors, regulators or the public, which pulls future impacts forward in time. No growth tomorrow means contraction today. It creates a reinforcing cycle of downward pressure that all but ensures the industry will feel more, not less pain in the days ahead.

We’ve seen this very clearly in the U.S., but it’s spreading quickly across the world.

It’s not just advocacy-oriented groups like CoalSwarm projecting this future; mainstream forecasters are seeing the same trends. The International Energy Agency has already forecast a decade of stagnation with no growth between now and 2022. Exxon, a fossil fuel bull if ever there was one, projects coal’s share of the energy mix will decline from 40 percent in 2016 to 30 percent in 2040. From governments to the private sector, the outlook for coal is grim.

More: The Death of Global Coal Growth

Comments are closed.