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The Actuary The magazine of the Institute & Faculty of Actuaries

EU must close all coal plants by 2030 to honour Paris agreement

The EU will need to shut all of its coal power plants in the next 15 years if it is to meet the Paris agreement’s long-term climate goals, according to a report by Climate Analytics released yesterday.

Existing coal plants exceed the EU’s emissions budget ©Shutterstock
Existing coal plants exceed the EU's emissions budget ©Shutterstock

A stress test for coal in Europe under the Paris Agreement shows that emissions from coal in the EU’s electricity sector will need to be close to zero by 2030, and completely stopped by 2031 in order to hit temperature limits of “well below 2˚C”.

The EU’s CO2 emissions budget for coal in the power sector is around 6.5Gt by 2050, however if each of its 315 plants continue cooperating to their full lifespan, this will be exceeded by 85%.

Climate Analytics science director, said: “Not only would existing coal plants exceed the EU’s emissions budget, but the eleven planned and announced plants would raise EU emissions to almost twice the levels required to keep warming to the Paris agreement’s long term temperature goal.”

The report reveals that a quarter of operating coal-fired plants would need to be switched off before 2020, and a further 47% would need to go offline by 2050, if the Paris agreement is to be honored.

It outlines two possible ways for the EU to complete a coal phase-out, one is based around a ‘market’ perspective, where the economic value of a coal plant is prioritised over its emissions intensity.

Another is based on a ‘regulator’ perspective, where plants with the highest emissions are phased out first, with both methods yielding a phase-out of coal by 2030.

In order to achieve this schedule, the EU will need to design enhanced policy settings and approaches that complement each other, according to the report, which include:

• A more effective EU Emission Trading Scheme
• A stable and predictable investment framework
• Bigger targets for renewables
• Strategies and policies at both national and regional levels, to ensure a smooth transition and maximisation of socioeconomic opportunities.

Climate Analytics CEO, Bill Hare, said: “This new and innovative plant-by-plant analysis shows that one of the biggest challenges for Europe will be the phase-out of coal-fired power emissions by 2030.

“For any country, in any region, and at any time this would be a major challenge, both economically and politically.”

“However, the EU already has many of the key policy instruments in place, including those required for fair and just transition strategies.

“The challenge now is for Europe to capitalise on its massive investments in climate policy, seize the opportunities created by a coal phase out, and use its institutions to ensure all regions benefit from this.”