EU Green Deal could phase out European coal by 2030

A new study published this week by the Potsdam Institute for Climate Impact Research has concluded that tightening the European Union’s emissions trading system (EU ETS) in line with the EU Green Deal could result in a complete phase out of coal use as early as 2030.

The European Union officially adopted new climate targets last week, pledging to cut carbon emissions by at least 55% by 2030 compared to 1990 levels.

Greenpeace called the resulting 50% cut in real emissions a “hollow” victory, with Greenpeace EU climate campaigner Silvia Pastorelli describing Europe’s climate action as “all smoke and mirrors.”

Despite the naysayers, researchers from the Potsdam Institute for Climate Impact Research set out to quantify the expected shifts in Europe’s electricity system stemming from the new EU climate target.

Key amongst their findings is a guarantee of higher carbon prices which will not only help to cut emissions but will also accelerate the transition to an inexpensive electricity system powered by renewable energy sources.

“Once the EU translates their recently adjusted target of cutting emissions by at least 55% in 2030 in comparison to 1990 into tighter EU ETS caps, the electricity sector will see fundamental changes surprisingly soon,” said Robert Pietzcker, one of the lead authors from the Potsdam-Institute for Climate Impact Research (PIK).

“In our computer simulations of the new ambitious targets, this would mean that renewables would contribute almost three fourths of the power generation already in 2030 and we would reach zero emissions in the power sector as soon as by 2040. Once the change is initiated, it can gain speed in an unprecedented way.”

The researchers studied variations of the emissions reduction targets, increased electricity demand, and investments in building an effective transmission grid infrastructure to better pool renewable energy resources across the EU.

The researchers also analysed the effect of potential unavailability of new nuclear power deployment and carbon capture and storage (CCS) power plants designed to reduce the amount of man-made emissions of CO2.

This last point turned out to be of little relevance in achieving the emissions reduction in the researchers’ computer simulations.

“All things considered, the 55% target will have massive consequences for the power sector,” said Sebastian Osorio from PIK, another lead author.

“Under the previous EU climate mitigation target – which meant reducing greenhouse gas emissions by 2030 by merely 40% – it was expected that the carbon price within the EU emissions trading system would rise to €35 per tonne CO2 until 2030.

Yet by adhering to the new target of minus 55%, carbon prices in the ETS would in fact more than triple to roughly €130 per tonne CO2 in 2030.

“This would be the end of coal-generated power as we know it – a meagre 17 terrawatt-hours in 2030, 2% of what it was in 2015.“

“In contrast to what was observed over the last years, the demise of coal will not lead to more gas-based generation in the future,” added Robert Pietzcker.

“With CO2-prices rising above €100 per tonne CO2, we expect gas-based power generation to decline to less than 40% of its 2015 value by 2030, and to less than 4% in 2045.

“The plans to build new combined cycle gas power plants in some EU member states feels like traveling back in time to 2005, when utilities planned new coal power plants despite the EU-ETS, thereby creating billions in stranded assets that will never repay their investment costs. The only new constructions that are likely to recover their investment costs are plants with turbines that can switch to high shares of hydrogen. “

As with most new energy scenarios being published in recent times, the report identified the increasing role of green hydrogen in the future global energy mix.

According to the Potsdam researchers, seasonal hydrogen storage in combination with better interconnection between the EU member states and deployment of batteries will result in a stable operation of a clean power system based almost exclusively on renewable energy sources.

Importantly, while electricity prices might jump slightly in the short-term, the researchers concluded that electricity prices will quickly drop back to current levels.

“Shutting down fossil power plants before the end of their lifetime, and the earlier scale-up of wind and solar power in this decade will temporarily raise prices,” said co-author Renato Rodrigues from PIK.

“But after 2025, costs will decrease again due to a greater availability of cheap wind and solar power, ultimately bringing electricity prices down to the levels seen over the last decade. Thus the EU is well advised to quickly translate the new target into tighter ETS caps in order to ensure an affordable and sustainable transformation of our power system.”