Coal is choking and Renewable Energy growing says new WWF report
Globally, coal mining companies are on the edge of the financial abyss and more planned coal plants are being cancelled than built, according to a new report released today by WWF. Ever cheaper renewable energy is attracting more investment than coal. In 2014 59 per cent of net additions to global power capacity were from renewable energy – nearly 80 per cent in Europe.
The financial sector in many parts of the world is also moving rapidly away from coal. Major institutional investors such as AXA, Aviva, California’s state pension funds, the city of Oslo’s pension funds and the Norwegian Sovereign Wealth Fund are divesting from coal. Banks such as Credit Agricole and Bank of America are reducing their lending to coal.
The report shows that coal is caught in a perfect storm. Concerns about climate change, the environment and health impacts have increasingly incited governments to impose regulations on its use.
The coal industry is, in short, in terminal structural decline. In order to limit global warming to well below 2 degrees, as the science recommends, that decline will need to accelerate.
Samantha Smith, leader of WWF’s Global Climate and Energy Initiative said, “Burning coal is the largest single contributor to climate changeand we must phase it out if we want to achieve any of the goals currently under discussion here in Bonn at the UN climate negotiations.
“Public money from developed countries should not go to coal, either as export credits or so-called climate finance. Increasingly governments and financial institutions are turning their backs on it and the industry is in decline. Wealthier governments should fund the solutions and put their efforts into financing a rapid and just transition into renewable energy and energy efficiency,” said Smith.
Jan Vandermosten, Policy Officer at WWF’s European Policy Office said, “We are witnessing an energy transition. The increasing competitiveness of renewable energy has further undermined the attractiveness of coal investments, to a point of no return.
“In 2014 China’s coal consumption dropped for the first time, the United States is closing its coal plants and energy giants like E.ON and RWE are now changing their businesses towards renewables. These events are creating momentum for the Paris climate agreement and the adoption of a new climate regime,” he said.
Highlights from the report include:
Chinese coal consumption dropped by 2.9 per cent in 2014 – This reduction, which represents more than the annual UK coal consumption, came on the back of structural economic reform and a deliberate choice by the Chinese government to move towards a more sustainable energy mix.
The EU and USA move towards the end of coal – The share of coal in their energy mix is falling quickly, and this trend will continue in light of tighter legislations.
Coal mining companies are on the verge of the abyss – Decreasing demand and low coal prices are squeezing coal mining companies’ profits across the globe. There are no signs of relief ahead, as major emerging economies – most prominently China – start to take steps to limit coal consumption within their boundaries.
Coal utilities are caught in a death spiral – The global coal plant construction boom is turning to bust. European utilities notably (E.ON, Enel, RWE) are forced to change their business model in light of the fast development of renewable energy.
Renewables are on the rise – Investments in solar and wind energy surged in 2014, and renewables represented more than half (59 per cent) of 2014 net additions to global power capacity for the first time ever.
Coal divestment is spreading to mainstream financial institutions – The Norwegian Sovereign Wealth Fund and Axa (amongst others) decided to move their investment out of coal while Credit Agricole and Bank of America ended or reduced their coal lending – giving a clear signal that the trust of the financial institutions in the sector is waning quickly.
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