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[LONDON] European power companies could save billions of dollars by stepping up closure of coal-fired power plants as nearly all of them will be loss-making in Europe by 2030, think-tank Carbon Tracker Initiative says.
Coal power should be phased out in the European Union by 2030 to meet the Paris Agreement's target to limit the rise in global average temperature to below 2 degrees Celsius.
However, the bloc is still reliant on coal-fired power and only 27 per cent of coal-fired power plants in the EU plan to close before 2030, Carbon Tracker said in a report released on Friday, basing its estimate on company reports and countries' phase-out policies.
Fifty four per cent of European coal-fired power plants are currently cashflow negative and this could increase to 97 per cent by 2030 due to rising carbon prices and stricter air quality rules, Carbon Tracker said, based on modelling from commodity price forecasts, asset operating costs, gross profitability and government policies.
"Since the majority of coal units are loss-making by 2030, the EU could avoid 22 billion euros (S$35 billion) in losses by phasing out coal power in line with the Paris Agreement," Carbon Tracker said.
Germany-based units could save 9 billion euros by phasing out coal, while Poland could save 3 billion euros.
The utilities who have the most to gain from phasing-out coal are Germany's RWE and Uniper, who could save 3 billion euros and 1.7 billion euros, respectively, according to Carbon Tracker.
Coal-fired power currently makes up 26 per cent of total EU power generation.
Carbon Tracker, however, says coal power's operating costs could be higher than onshore wind by 2024 and solar photovoltaic by 2027, while energy storage technologies and power reduction firms increasingly provide back-up power.
Analysis by the Institute for Energy Economics and Financial Analysis earlier this year said more than 100 separate power plants - representing a third of Europe's large-scale coal-fired power plant capacity - face costly air quality upgrades or closure as a result of the pollutant limits.
Many coal plant operators, however, say coal will be needed for decades to come to provide stable energy supplies as renewable energy is intermittent.