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The Actuary The magazine of the Institute & Faculty of Actuaries

European energy companies to halt investment in coal plants after 2020

An association of European energy companies, with a collective turnover of €200bn (£171bn), has announced its intention not to invest in new-build coal-fired power plants after 2020.

Power sector taking "concrete action" ©Shutterstock
Power sector taking "concrete action" ©Shutterstock

EURELECTRIC confirmed in a statement two days ago that the electricity sector is committed to delivering a carbon-neutral power supply in Europe by 2050, after a board of directors meeting last month.

It is hoped that this will help achieve decarbonisation objectives agreed in the Paris agreement, with the group saying this was essential to guarantee the long-term sustainability of the global economy.

“This commitment to decarbonise electricity generation, together with the electrification of key sectors, will make a major contribution to help Europe meet its climate change targets,” the statement said.

“The power sector is already widely investing into low-carbon and innovative solutions to achieve carbon-neutral electricity supply by 2050, and does not intend to invest in new-build coal-fired power plants after 2020.”

It went on to say that mechanisms such as carbon markets are the most cost-effective tool for mitigating greenhouse gas emissions and encouraging investment in low carbon technologies.

However, it also states that, in conjunction with capping emissions, improvement must be made in the EU’s electricity market design, so that movements can be made towards the electrification of industries.

“The power sector is determined to lead the energy transition and back our commitment to the low carbon economy with concrete action,” EURELECTRIC President, António Mexia, said.

“With power supply becoming increasingly clean, electric technologies are an obvious choice for replacing fossil fuel based systems, for instance in the transport sector.”

This would need to be underpinned by a coherent regulatory framework, according to the group, with clearly targeted policy instruments, and an effective balance between incentives and protections for investors.

“The challenge for policy makers in the next two years will be to target the political instruments so that they are complementary, and advance decarbonisation and electrification at the same time," EURELECTRIC secretary general, Kristian Ruby, added.

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