PARIS, Oct 24 — Coal is widely acknowledged as being the dirtiest fuel to produce electricity, but it is also unprofitable with four out of five European coal power plants losing money, according to a report released by an environmental group today.
Financial analysts at Carbon Tracker, who created models to analyse the operating economics of all European coal power plants, said losses could hit €6.6 billion (RM30.5 billion) this year.
“EU coal generators are haemorrhaging cash because they cannot compete with cheap renewables and gas and this will only get worse,” said Matt Gray, head of power and utilities at Carbon Tracker.
“Policymakers and investors should prepare to phase out coal by 2030 at the latest,” added Gray, co-author of the report entitled “Apocoalypse Now”.
Carbon Tracker is a non-profit think tank with a team of financial specialists that research how the financial system can be aligned with a transition to a low carbon energy industry.
The group’s analyses found German coal plants could lose €1.9 billion this year, while Berlin aims to continue using the fuel for nearly another 20 years.
Spain and the Czech Republic, neither or which have set a coal phase out date, followed with forecast losses of under €1 billion each, it found.
Carbon Tracker said if governments choose to support coal in the long term they will face having to pass on the cost to shareholders of utilities or consumers, or alternatively raise taxes or debt.
The report also questions whether some proposed mechanisms to help fund the closure of coal plants are legal, but it offers its own proposal.
Carbon Tracker suggested that governments make use of their current ability to borrow at low interest rates, then loan the money to owners of coal plants on the condition the funds be used to build renewable capacity.
Some of the profits, after repayment of the loans, could be flagged to help communities affected by the closure of coal plants and mines.
“Getting off coal is cheap and can be a win-win for consumers and shareholders, providing governments and investors work with local communities,” said Carbon Tracker’s Gray. — AFP