The immediate end of coal is key to achieving net-zeroMaría Mendiluce, CEO of the We Mean Business coalition
The future of human health and wellbeing hinges on commitments made at the world’s energy and environment ministers meeting at the International Energy Summit on March 31. What they decide on the future of coal is pivotal.
Earlier this month the UN Secretary-General António Guterres said: the world still has a “’fighting chance’ to limit global warming by ending dependence on coal.” For countries to achieve national 2030 and 2050 climate targets, governments need to end coal finance this year to give businesses and investors a clear signal that the future is one of clean power so they can adapt their strategies accordingly and in time to meet those goals.
According to the Energy Transitions Commission, a successful transition to 100% zero-carbon power systems by 2050 requires policy makers to fully phase out coal-power by 2030 in advanced economies, and globally by 2040. To avoid risks of stranded assets, it is vital that governments set clear end dates now.
Today, 19 countries have committed to completely phasing out coal power globally.
A rapid transition to renewables and away from coal will also drive a recovery from the COVID-19 crisis in a way that is better for jobs, health and economic growth. As Frans Timmermans and Mike Bloomberg recently said: “Ending coal subsidies will save lives.”
This is an opportune moment, since power markets are already moving away from coal and embracing renewables. Hong Kong-based insurer AIA – which manages $326bn – announced last week that it will pull out of all coal investments by 2028 and one of India’s largest electric utilities, the Tata Power Company has committed to set a science-based target. Over 290 companies through the RE100 campaign are driving enough demand for renewables to power a medium sized country. Over 50 RE100 companies have already announced they have reached 100% renewable electricity and 65 members are using over 90% renewable electricity.
Mining companies are also making the switch. Rio Tinto Group sold its last coal mine in 2018. Anglo American Plc and BHP Group are moving away from coal and Glencore Plc, long the largest producer of seaborne thermal coal, plans to run down those assets by 2050. Access to coal finance is already reducing due to the fall in value of coal assets which has accelerated since the onset of the pandemic. The energy sector is now the smallest sector in the S&P 500. Since its inception in 2012, the S&P 500’s Fossil Fuel Free Total Return Index has consistently outperformed the S&P 500 overall.
The trend in renewables is the exact reverse. As of 2019 and 2020, the share of global electricity generation investment in renewables exceeded 50%, suggesting that an economic tipping point has indeed been reached. The costs of renewables has fallen so far that new renewables outcompete new coal virtually everywhere. Solar installations are projected to quadruple by 2030, a new report shows. And renewable energy returns have increased 426% since 2010, outperforming fossil fuels more than threefold
For the businesses that are already harnessing the benefits of renewable power, a strong signal to stop financing coal from governments will give them the confidence to go even further and faster. Importantly, governments must also provide transition financing for workers and communities reliant on high carbon sectors– a report by the Rocky Mountain Institute, Carbon Tracker and the Sierra Club outlines how this might be achieved. And research from Corporate Leaders Group found that in the Romanian power industry, for example, the renewables industries can provide new opportunities for highly skilled engineers and technicians from the coal workforce.
As electrification of areas like heat and transport play a key role in achieving net-zero, the coal phase out and switch to renewables is urgent and highly desirable. If the transition is not swift, technologies like renewables and electric vehicles will be unable to achieve their full emissions reduction potential.
Another important element is the coal embedded in the production of materials such as steel. Companies that have committed to net zero emissions will need to reduce emissions from their supply chains and will soon start to look at the carbon footprint of the products they use. For heavy industry, coal is no longer a necessity. Scaling up investment into hydrogen technology is critical. While gas may be used as an interim fuel to remove coal from value chains, business and governments must be wary of investing too much in gas infrastructure, since it will also need to be phased out.
A rapid transition away from coal and into clean power brings multiple benefits. As we emerge from the COVID-19 crisis, the imperative to improve health and protect jobs is front of mind.
Research published last month shows that fossil fuels are responsible for more than 8 million premature deaths annually. That’s double the previous estimate of fine-particle pollution mortality, and three times the combined number killed by HIV/AIDS, tuberculosis, and malaria in 2018.
And our recent report demonstrated that focusing Covid-19 economic stimulus measures on boosting renewables, upgrading electricity grids and improving energy efficiency would create more jobs and growth than traditional economic stimulus measures, like reducing sales tax.
It’s time for policymakers to ban coal and switch to renewable power. It’s good for public health, makes economic sense and the technology is available. As net-zero goals become widespread globally, this is an essential and tangible action toward achieving them.
We call upon all governments to put in place policies that accelerate investment in renewable energy supply, storage and grids, along with phasing out coal and enabling public and corporate procurement of renewables.
To enable a successful transition to 100% zero-carbon power systems by 2050, policy makers need to support renewable energy deployment, alongside a full phase out of coal-power by 2030 in advanced economies, and globally by 2040. They must:
- Enact national renewable energy and 100% clean power targets.
- Enable public and corporate procurement of renewables.
- Establish a moratorium on new coal power, end coal finance this year, and set a coal phase-out date.