Coal developers could be wasting over $600bn (£479bn) on new projects thanks to renewables becoming a cheaper source of electricity than coal in all major markets.
That is according to a report from Carbon Tracker, which shows that over 60% of coal power plants are generating electricity at a higher cost than could be produced by new renewables.
Despite this, there is 499GW of coal power planned or already under construction worldwide, with the researchers estimating that this could result in $638bn in stranded assets.
“Renewables are outperforming coal around the world, and proposed coal investments risk becoming stranded assets which could lock in high-cost coal power for decades,“ said report author Matt gray.
“It makes economic sense for governments to cancel new coal projects immediately and progressively phase out existing plants. The market is driving the low-carbon energy transition but governments aren't listening.“
The report evaluates the economics of 95% of coal plants that are operating, under construction or planned worldwide. This includes 6,696 operating units and 1,046 in the pipeline.
It shows that there is $158bn at risk in China, with 100GW of coal power under construction and 106GW planned. A significant 71% of its current coal power is more costly to run than new renewables.
In India, there is $80bn at risk thanks to 37GW of coal power in construction and 29GW planed, with 51% of its current capacity costing more to operate than new renewables.
There is $16bn at risk from new coal power in the EU, primarily in Poland and the Czech Republic, with a massive 96% of its current capacity more costly than new renewables.
The US has 254GW of coal capacity and 47% costs more than new renewables, however, the researchers said that there is no new coal planned in the country.
In South East Asia 78GW of coal power is planned or in construction at a cost of $124bn, but by 2030, it will be cheaper to build new renewables than continue operating existing coal plants.
Carbon Tracker warned that governments and investors might never recoup their investments because coal plants typically take 15 to 20 years to cover their costs.
The report urges governments to deregulate so renewables can compete on a level playing field, cancel new projects and phase out existing coal fleets, and introduce regulations that allow renewables to deliver maximum value for energy systems.
Co-author Sriya Sundaresan said: “Investors should be wary of relying on continued government support for coal when a phase-out will save their voters billions and make their economies more competitive.“
Image credit ©iStock
