A new report by the International Energy Agency (IEA) reveals more coal power stations around the world came offline last year than were approved for perhaps first time since industrial revolution.
Since the start of the industrial revolution, coal-fired energy has become the single biggest driver of man-made climate change and its use across the world is still increasing.
While dependence on coal remains high, with coal-fired power plants currently fuelling around 38 per cent of global electricity, the new IEA report indicates the demise of coal is already well underway.
The IEA’s new world investment report released this week, reveals the companies funding coal-fired power stations appear to be making significant recalculations about the long-term viability of these plants.
This is shown by a collapse in Final Investment Decisions (FIDs) for coal plants, which have tumbled by 75 per cent in three years.
The report said a total of 236 gigawatts (GW) of coal plants were under construction worldwide.
In 2015, FIDs signed off 88GW for construction, but this fell to 22GW in 2018.
Furthermore, the rate at which coal power plants are being decommissioned has risen to the extent that despite new power plants coming online, there was a net reduction in coal power being used globally over 2018.
Around 30GW of generators were retired last year, and it is estimated this could be the first time there has been a reduction in coal-fired power capacity across the world since the industrial revolution.
When the FIDs fall to zero, it will only be a matter of time until coal’s reign is over.
Last year, with FID’s going down, the IEA noted: “It appears that banks, insurance companies, hedge funds, utilities and other operators in advanced economies are exiting the coal business.”
This means that even without policy necessarily directing them, the financial concerns of investors over the future of the fossil fuel business are slowly ensuring money is being allocated to different areas.
Most of the current expansion in coal is in Asia.
In the West, the move away from coal has gathered pace, with Europe’s overall use of coal down a quarter, while in the United States it has fallen by 40 per cent over the last 10 years.
The IEA report outlined two scenarios for measuring energy progress.
The first is its Sustainable Development Scenario (SDS). In this scenario, energy production meets the criteria set out under the United Nations sponsored Paris Agreement targets and air pollution around the world is slashed.
The second is the less ambitious New Policies Scenario (NPS), which would see less action taken to tackle fossil fuels and less investment in renewable energy, resulting in warming reaching around 2.5 degrees Celsius by 2100.
Dr Fatih Birol, the IEA executive director said: “Energy investments now face unprecedented uncertainties, with shifts in markets, policies and technologies.
“But the bottom line is that the world is not investing enough in traditional elements of supply to maintain today’s consumption patterns, nor is it investing enough in cleaner technologies to change course.
Whichever way you look, we are storing up risks for the future.
“Current investment trends show the need for bolder decisions required to make the energy system more sustainable.
“Government leadership is critical to reduce risks for investors in the emerging sectors that urgently need more capital to get the world on the right track,” Dr Birol added.
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