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Nearly US$640b in coal investments undercut by cheap renewables: study

London

NEARLY US$640 billion of investment in coal-power capacity worldwide is at risk because it is cheaper to generate electricity from new renewables, research by think-tank Carbon Tracker Initiative has found.

Institutional investors are increasingly withdrawing from fossil fuel companies due to the risk their assets will become stranded as tougher emissions-cuts targets discourage their use, and renewable energy becomes even cheaper.

The report examined the economics of 95 per cent of operating coal plants, those under construction or planned worldwide. Globally, 499 gigawatts (GW) of new coal-power capacity is planned or under construction, with an investment cost of US$638 billion.

More than 60 per cent of global coal plants are now generating electricity at a higher cost than could be produced by building new renewables.

By 2030 at the latest, it will be cheaper to build new wind or solar capacity than to continue operating coal in all markets, the report said.

The capital recovery period for new investments in coal capacity is usually 15 to 20 years, making these investments risky.

"Renewables are out-competing coal around the world and proposed coal investments risk becoming stranded assets, which could lock in high-cost coal power for decades," said Matt Gray, co-author of the report and co-head of power and utilities at Carbon Tracker.

A 2018 United Nations report said that the share of coal power in electricity generation needs to fall to under 2 per cent by 2050 for global warming to stay within a 1.5 deg C limit.

Carbon Tracker said that in the European Union, 96 per cent of the bloc's 149 GW of operating coal capacity costs more than new renewables. On the whole, Europe has been reducing its dependency on coal due to higher carbon costs. EU investment of US$16 billion is at risk on 7.6 GW of new coal capacity planned.

In China, the world's biggest coal producer, US$158 billion of investment is at risk, with 100 GW of coal capacity under construction and 106 GW planned. China has 982 GW of existing coal power, and 71 per cent of this costs more to run than building new renewables.

In India, US$80 billion is at risk, with 37 GW of coal power under construction and 29 GW planned. Of the 222 GW of existing coal capacity, REUTERS