Shedding light on the global move away from coal

Blog - Sept. 27, 2017 - By Binnu Jeyakumar

Milner power plant near Grande Cache, Alberta. Photo: Roberta Franchuk, Pembina Institute

You may have missed an important announcement that happened early last week. Prime Minister Justin Trudeau and Prime Minister Theresa May, announced that Canada and the U.K. will collaborate on phasing out coal-fired power. 

Seeing the leaders of a liberal party and a conservative party committing to a clean energy transition is a powerful reminder that the move towards cleaner energy sources is a non-partisan issue. It’s also an important opportunity to shed light on the growing global movement away from coal-fired power, and look at some of the questions that continually come up around this issue. 

Coal is no longer economically viable

It cannot compete with renewables and natural gas. Investors, developers, and utilities across the globe are by and large moving away from coal. A growing list of major banks, including Bank of America, JPMorgan Chase, Citigroup, and Morgan Stanley are recognizing this and stepping away from investments in coal. Even in the heart of U.S. coal country, utilities are retiring their coal plants earlier. In 2015, U.S. utilities closed several plants ahead of schedule, resulting in faster shutdown than originally anticipated. In fact, the 10 largest companies that are retiring coal will be shutting down about 12 GW between 2015 and 2020 — twice the coal generation capacity that exists in Alberta.

Even here in Alberta, companies have started walking away from coal. Maxim Power suspended generation at the H.R. Milner generating station in March 2016, citing “record low Alberta power prices, which have undermined profitability for a prolonged period.” The plant had been in operation for 44 years, so this shutdown is well ahead of the federal government’s 50-year end-of-life estimation for coal units.

“But what about China?”

There are many misconceptions around China and its use of coal-fired power. China does have plans to build coal plants, but many of these plants are already being cancelled due to air pollution and overcapacity. The utilization of existing coal plants is dropping dramatically as well.

Looking beyond individual coal plants, the International Energy Agency concludes demand for coal generation in China has already peaked and has started to decline, along with declining investments. In 2016, China saw the commissioning of new plants decline by 25 per cent, and at the same time it committed to double its solar and wind generation by 2020. In India, while coal plants may also be planned, solar is already undercutting coal, and growing rapidly. India’s coal-fired power will likely follow a similar trajectory as China, with planned plants not even getting built. India has also set a target of achieving 40 per cent of its electricity from non-fossil fuel sources by 2030.

The benefits of replacing coal in Alberta

 In Alberta, phasing out coal can help avoid nearly $3 billion in social economic costs of health impacts between 2015 and 2035. The electricity sector also has readily available cheaper alternatives such as natural gas and renewables. Alberta’s upcoming Renewable Electricity Program is expected to bring in some of the cheapest renewable generation in all of Canada.

Need for just transition

It is generally accepted that coal needs to be replaced with cleaner and more flexible generation. However, it is the pace and the pathways to replacement that are most often debated. Market forces are likely to shutdown coal plants earlier than anticipated and in an ad-hoc manner. Setting a phase-out plan allows proper planning to help support the transition of workers and communities. Rather than trying to fight against global market trends, we should be setting ideologies aside, and starting to develop solutions for the transition.

Such conversations are taking place already in Albertan communities, there are two events focused on solutions for the transition this week alone.

The Just Transition and Good Jobs Conference — taking place todayin Calgary — will include keynotes as well as workshop-style discussions on issues including the phase out of coal-fired electricity, what is needed for a just transition, and how to ensure good jobs for Albertans and Canadians. 

The Pembina Institute’s Alberta Climate Summit is tomorrow, September 28th also in Calgary. This annual event will showcase the innovation and opportunities around clean energy that are already underway in Alberta. It includes a panel discussion on Just transition: Labour and indigenous perspectives, featuring Samantha Smith from the Just Transition Centre. 


Binnu Jeyakumar

Binnu is the program director of electricity for the Pembina Institute. She is based in Calgary.


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