The lights are going out on coal

November has been a very significant month for the coal industry. Perhaps the most high-profile news was the election of Donald Trump as President of the United States, who promised during his campaign to end ‘the war on coal’ by repealing President Obama’s environmental regulations. Supporters at his rallies carried placards saying ‘Trump digs coal’. Trump’s victory caused shares in major coal producer Peabody to rocket by 45% in one day. His advocacy of coal encapsulated his appeal to disaffected working class voters in America’s de-industrialised ‘rust belt’ states.

Economics of coal

But this event, while significant, is an aberration from the general trend. Coal is now firmly in retreat around the world. Stopping burning coal to generate electricity as soon as possible is essential for avoiding catastrophic climate change. Per unit of electricity, coal emits more than twice as much carbon as natural gas. In 2013, coal alone contributed 42% of global greenhouse gas emissions from fuel combustion – easily more than any other fossil fuel.

Figures from the International Energy Agency (IEA) show coal consumption fell by 2.6% last year. Crucially, the two biggest coal users, China and the US, have both seen their demand for coal power fall in recent years. Much of this is happening because of changing energy economics. Take the example of the US. The shale gas revolution and technology cost reductions for renewables have successfully outcompeted coal. Michael Liebreich, a member of the advisory board of our Green conservatism project, recently wrote in the Guardian that these rival fuel sources were more responsible for coal’s demise than government regulation.

UK coal phase-out

But government intervention can certainly speed the process up. And in this area, November 2016 has contained a lot of good news. Exactly a year ago, in November 2015, the Rt Hon Amber Rudd MP made the UK the first country to commit to a date for phasing out coal from electricity generation, something which Bright Blue had been calling for. On the same day as Trump’s victory was confirmed, the UK Government recommitted to the coal phase-out by publishing its plans for consultation.

Ministers are proposing to introduce an ‘Emissions Performance Standard’ by 2025, which will mandate coal-fired power stations to close unless their emissions can be reduced to below those of a gas-fired power station. The UK’s remaining plants are on average 47 years old, and so would be in line for retirement soon in any case. In 2012, there were 17 remaining coal plants, with a capacity of 23GW. That’s now fallen to just 7, with 14 GW of capacity. Analysis has revealed that this year, for the first time, there have been periods when coal has been wholly absent from the UK’s energy mix, and entire days when solar generation has surpassed coal.

In our report earlier this year, Keeping the lights on, we found that phasing out coal would not harm the UK’s energy security. Moreover, encouraging more renewables, energy efficiency, energy storage, and DSR, alongside phasing out coal, would have benefits for consumer bills, energy security, and carbon intensity, relative to scenarios with more gas. We also called for the coal phase-out date to be brought forward to 2023. An earlier date would give investors in gas more certainty and help bring the new capacity online sooner.

Global coal phase-out

The UK’s announcement was not the only one this month. In fact, several other countries have decided to follow the British example on coal. France has announced it will close its remaining 3GW of coal-fired capacity by 2023. Canada is now set to phase out the rest of its coal fleet, which has a total capacity of 10GW, by 2030. Finally, the Finnish government has also committed to shutting its 2GW of electricity generation from coal by 2030.

Bright Blue has in the past called for the UK Government to assume a leadership role in advocating an international coal phase-out. It is highly symbolic that the UK has become the first country to use coal for electricity generation and the first industrialised country to commit to phasing it out altogether. Strengthened by this achievement, the UK could utilise its moral and political leadership to push for an ambitious global deal on phasing out coal.

As our associate fellow Ben Caldecott argued in Green and responsible conservatism, sectoral deals, such as on the use of coal, could be a more effective approach to tackling climate change than broad UN agreements. This would require developed countries to take the lead and phase out their coal fleets first. It would also require some international aid funding to support developing countries undergoing the transition to cleaner technologies. But the result for the environment could be significant.

November 2016 has been an excellent month for the global environmental campaign to end coal-powered electricity. But the scale of the challenge is still immense: in 2014, coal still generated 41% of the world’s electricity. The UK Government should build on this month’s progress and lead the international campaign for more countries to make the coal phase-out commitment.

Sam Hall is a researcher at the Bright Blue

We’ll always have Paris

This week, delegates from almost 200 countries are gathering in Marrakech for the next round of UN climate talks. There are many reasons for climate diplomats to be cheerful. Last year’s Paris Climate Agreement, signed by all those countries, has come into legal force over a year earlier than planned. All the major emitters, including the US, China, India, and the EU, have now completed domestic ratification of the treaty. The global economy seems firmly set on a trajectory towards net zero emissions by the end of this century.

But despite these successes, there are several major challenges facing attendees in Marrakesh: how to increase individual emission pledges, how to raise sufficient climate finance, and how to respond to President-elect Trump.

Ratcheting up the ambition

Signatories to the Paris Agreement pledged to limit average global temperature rises to well below two degrees and to aim for a rise of just 1.5 degrees. Yet the Intended Nationally Defined Contributions (INDCs), voluntary pledges by individual countries of how much they would cut their emissions, are not sufficient to achieve these high-level goals.

Ahead of the summit in Marrakesh, the United Nation’s Environment Programme released a report on the ‘emission gap’, which is the deficit between the INDCs and the long-term goals. They find that current pledges will lead to an average warming of around 3.2 degrees above pre-industrial levels. They also calculate that, under current INDCs, both the 1.5 and 2 degrees ‘carbon budget’, the total amount of carbon that can be emitted before temperatures rise above a certain level, would be easily exceeded by 2030.

In the text of the agreement, there is a resolution to begin a dialogue in 2018 on progress towards the 1.5 and 2 degree targets. Another key feature of the Paris deal is that signatories must reassess and increase their individual contributions every five years to help ensure the high-level goals are met. The first occasion this will happen is in 2020. So there are mechanisms for scaling up pledges, but urgent progress is required.

Securing climate finance

The support of developing countries for the Paris Agreement was contingent on securing sufficient funding to help them mitigate and adapt to climate change. A total of $100 billion per annum by 2020 must be raised by developed countries. The UK Government this week released a statement showing that funding currently stands at $62 billion per annum, up from $53 billion in 2013. The UK’s own contribution is set to rise to £1.76 billion by 2020.

Donald Trump has said he will cancel the United States’ payments to this fund. President Obama had pledged to give a total of $3 billion by 2020. Assuming Trump follows through with this election pledge, replacement finance will now be required, as well as the outstanding amount.

Managing President-elect Donald Trump

During his election campaign, Donald Trump pledged to withdraw the US from the Paris Agreement. But as the ratification process was so swift, he is unable to cancel the treaty altogether. In fact, reports have suggested the possibility of Trump as President helped instil the urgency to bring the treaty into force. In theory, the US would have to wait four years before it could leave, but in reality, there is little to stop him disregarding the emission reduction pledges made by President Obama. In addition, Trump has promised to “end the war on coal”, and review the current regulations helping to drive coal off the system.

Nevertheless, strong economic forces, as much as political will, are now helping to drive decarbonisation. The rapidly-falling costs of low-carbon technologies have made renewables as cheap as, if not cheaper than, traditional fossil fuels. The International Energy Agency (IEA) reported that costs of onshore wind have fallen by 30% between 2010 and 2015, and those of solar by two-thirds. Independent analysis for the UK Government this week show that onshore wind and solar will both outcompete gas on price by 2025. This may help keep the US, and indeed the rest of the world, on a low-carbon trajectory in the absence of presidential leadership.

Conclusion

Even before the election of Donald Trump, the challenges of matching action with ambition and raising sufficient climate finance were significant. When President Obama hands over to President Trump, an important galvanising force for international climate action will be lost. But other major climate leaders are now emerging. China actually castigated candidate Trump in November 2016 for his intention to withdraw from the Paris Agreement.

Countries like India and China are clear that they are pursuing their own self-interest by championing climate action. Decarbonising helps India to cut its air pollution, with pollution in parts of New Delhi currently five times the level considered safe by the US’s Environment Protection Agency. Similarly, China sees a major economic opportunity both from increased low-carbon infrastructure spending and from becoming a leading exporter of low-carbon technologies.

Post-Paris there is both a political framework for scaling up ambition and an economic imperative to be at the forefront of the low-carbon transition. Despite Trump, the delegates in Marrakech can be optimistic.

Sam Hall is a researcher at Bright Blue