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Coal is Dying and We are in for A Treat - İrem Ayça Aykın

The world is experiencing an interesting energy transition, maybe the fastest one yet. Partially because of increasing demand in renewables, green politics and the harsh economic truth coal has started loose its popularity. From America’s coal-rich Powder River Basin, to Germany’s coal plants the demand for coal is decreasing drastically. Even in the Southeast Asia, where the largest coal exporter Indonesia is located, coal generator construction is going down consistently since 2017. In the world it is expected to decrease even more in 2020.

According to Moody’s Investors Service report, America’s coal-rich region is distressed. The report also suggested that production from the region will drop in 2020 42% within a decade. The change happened also during when coal was still a cheaper option. Now the tables have turned and the renewables are in trend.

As well as the drop happening in the US, Southeast Asia is experiencing an end of an era in terms of coal. Although coal plant construction are long-term projects and there are yet to come, the question of increase in demand has occurred. As Australia suggests to have growth potential, the Institute for Energy Economics and Financial Analysis claims that the suggestions can be misleading while the plant closures increasing approximately 30%. Across the region, 53.4 gigawatts are mentioned as pre-constructed, and yet 69.4 gigawatts have been cancelled since 2015 and this number is expected to increase in the future.

A similar change is going on in Europe too. The think tank Carbon Tracker Initiative reported that the German power firm faced nearly 1 billion euros of losses because of its coal plants this year. German dark spreads indicates that for two years the profit on coal generations have been negative. Although RWE AG, a Germany-based company engaged in generation of electricity and gas, have denied the numbers.

The RWE spokesman claimed that the assumptions do not stand up to the facts and that if they would not be covering their costs they would not run the plants. RWE AG can stretch their margins by utilizing carbon credits acquired in former years but the stocks will run out eventually. And German government’s goal to end coal generations by 2038 is likely to happen earlier.

The world is experiencing a great energy transition, but still it happens at the very surface. Renewables became a cheaper alternative to coal, but the renewable in itself raises a question about its sustainability. And that is why coal will still be in need due to provide stable energy supply since renewable energy is considered unreliable and intermittent. Still the decreasing cost of renewable energy creating a competitive environment against coal. Finally, we have an alternative to coal in accessible terms.


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