The EC is proposing a target emissions reduction of 55% by 2030 compared to 1990 levels, instead of the previously agreed 40% (which the EU is on course to surpass). The main tool for achieving it will be the EU Emissions Trading System (ETS). Prices for allowances will rise, making coal increasingly uncompetitive. Sören Amelang, Kerstine Appunn and Julian Wettengel at CLEW talked to a number of experts who say the new target implies a near total phase out of coal by that date. Coal’s contribution to the EU power mix will fall from 14.6% (2019) to around 2%, according to some estimates. Oil and gas will drop significantly too. The EC expects renewables’ share to at least double from today’s levels of 32%. But questions are being raised over how the big coal consumers, Germany, Poland, the Czech Republic, Bulgaria and Romania, will cope given their national plans appear to contain far too much coal power to reach the new target.

The EU Commission proposal to step up climate ambitions and aim for an emissions cut of at least 55 percent by 2030 would imply that the bloc must almost entirely phase out coal by that date, experts say.

Therefore, this target would also imply that countries like Germany will likely have to pull forward current plans for exiting the emission-intensive fuel. Germany, which officially backed the more ambitious target, currently plans to phase out coal by 2038 at the latest.

In its proposal, the European Commission said that buildings and the electricity sector can make the largest and most cost-efficient contribution to reaching a 55 percent emissions cut.

Strengthening the EU Emissions Trading System

Emissions from power plants are governed by the EU Emissions Trading System (ETS), which the Commission intends to strengthen significantly. This would cause prices for allowances to rise, making the most emissions-intensive fuel – coal – increasingly uncompetitive, as the Commission expects the renewables share in EU electricity production to at least double from today’s levels of 32 percent to around 65 percent or more.

In an analysis of the EU’s Impact Assessment on raising the EU 2030 climate target, Belgian consultancy Climact and think tank Ecologic estimate that coal will only represent around two percent of the EU’s power mix in 2030 in different scenarios.

Electricity from coal contributed 14.6 percent to the EU’s power mix in 2019. The biggest users are Germany and Poland, who jointly have around half of the bloc’s coal capacity installed and are responsible for around 50 percent of emissions from coal.

Oil and Gas down too

The EU Commission in its 2030 target plan said coal consumption would be reduced by more than 70% by 2030 compared to 2015, and oil and gas by more than 30% and 25%, respectively. Renewable energy instead would see its share increase.

Hanns Koenig from consultancy Aurora Energy Research called the calculations in the report by Ecologic and Climact “absolutely realistic.” He pointed to Aurora calculations showing that even an EU emissions reduction of only 50 percent would result in a coal share of only 5 percent.

“If we go to 55 percent and the European Emissions Trading System (ETS) is adjusted accordingly, the coal exit will almost inevitably come much faster than previously planned, driven by the market,” Koenig told Clean Energy Wire.

A challenge for Europe’s big coal users

Electricity analyst Dave Jones from British climate think tank Ember agreed that the new EU target would imply a near total phase-out of coal power plants. “When the European Commission released their impact analysis of how to achieve 55%, one of their main model outputs is a near-complete phaseout of coal power by 2030,” Jones said. “That’s an implicit finding, rather than explicit – there’s many ways to crack a nut and it’s possible to hit 55% with a small coal tail, without a complete 2030 coal phaseout.”

But Jones added that national energy and climate plans in Germany, Poland, the Czech Republic, Bulgaria and Romania contained far too much coal power to reach a 55% emission cut in 2030.

EU coal power generation already fell 24 percent in 2019, and was 47 percent below 2012 levels. Six countries in the EU are now coal-free and fourteen have pledged to become coal-free by 2030 or earlier. Coal power plants (lignite and hard coal summed) made up 31% of EU ETS emissions in 2019.

German coal exit needs to be brought forward 

The analysts agreed that current plans for phasing out coal in Germany will likely be incompatible with the new target.

After a long and arduous debate, Germany agreed to a law that ends coal by 2038 at the latest. The law also said the exit could happen in 2035, conditions permitting.

“I would expect the last German coal-fired power plants to close in the early 2030s, and many will not be running much before then because so many more renewables will be built,” Koenig said, adding that gas-fired power plants will very likely outcompete most coal plants in the market.

Unprofitable coal

Given rising prices for emissions and strong renewable power generation, the use of coal power already decreased sharply in Germany this year. As a result, an increasing number of coal plants have become unprofitable, prompting utility Vattenfall to say it wanted to shut down its youngest and most efficient coal plant in Germany, which only started operating five years ago.

Ecologic analyst Katharina Umpfenbach, one of authors of the study cited above, said the exact impact of a new EU target on Germany’s coal exit remained uncertain because Germany’s coal exit law specifies a timetable for plant closures, but doesn’t specify how much the plants will be used beforehand.

However, she said a more ambitious EU climate target will certainly mean that German coal plants will operate much less than currently assumed.

Targets, laws, emissions markets

Umpfenbach pointed to an Aurora study commissioned by energy think tank Agora Energiewende* on the impacts of the coal exit on Germany’s power sector estimating that 93 TWh of coal-fired electricity would still be generated in Germany in 2030.

“This is clearly incompatible with the result of the impact assessment,” Umpfenbach told Clean Energy Wire, adding the EU’s assessment corresponded to about 50 TWh of coal-based electricity in 2030 in the whole of Europe.

“Even if only a handful of countries in Europe will use coal by then, it is not conceivable that the remaining coal capacities will be exclusively in Germany,” she said.

Because the EU’s impact assessment model suggests the coal phase-out will be driven by a rising price in the EU emissions trading system, a formal adjustment of the German coal phase-out law will not be necessary, Umpfenbach said.

“Power plant operators could then, for economic reasons, withdraw their capacities from the market more quickly than provided for in the law, or use the plants only to a limited extent, at least as long as grid stability and security of supply are guaranteed,” she explained.

But coal expert Philipp Litz from Agora Energiewende* said the next government might use provisions in the coal exit law that allow an earlier phase-out. “However the negotiations on the 2030 target come to an end, it seems pretty likely that the next German government needs to make use of the revision clauses in the coal phase out law,” Litz said on Twitter.

The pro-business Free Democratic Party’s (FDP) climate policy spokesperson Lukas Köhler told Clean Energy Wire a more ambitious target would “obviously” accelerate the coal exit via higher emission prices. He said it remained uncertain when exactly Germany will shut its last coal power plant, adding: “What is certain, however, is that this will be the case long before 2038.”

*Like the Clean Energy Wire, Agora Energiewende is a project funded by Stiftung Mercator and the European Climate Foundation.

***

Sören Amelang is a staff Correspondent for Clean Energy Wire

Kerstine Appunn is a staff Correspondent for Clean Energy Wire

Julian Wettengel is a staff Correspondent for Clean Energy Wire

This article is published under a “Creative Commons Attribution 4.0 International Licence (CC BY 4.0)”