With the energy transition in Europe at a significant crossroads and the European Union looking to increase its climate ambitions to a 55% reduction in greenhouse gas emissions by the end of the decade, decarbonising Europe’s remaining coal-reliant countries has the potential to create billions in clean energy investment that could pave the way for a vital green recovery from the global COVID-19 pandemic.
This is the primary conclusion from a new report published this week by Today, Bloomberg Philanthropies and BloombergNEF (BNEF) entitled Investing in the Recovery and Transition of Europe’s Coal Regions.
Launched via a virtual meeting which was ‘attended’ by Michael R. Bloomberg, founder of Bloomberg L.P. and Bloomberg Philanthropies, among others, the report seeks to highlight the opportunity currently before Europe to accelerate it’s transition away from coal towards clean and renewable energy sources.
“Growing the economy and fighting climate change go hand in hand, and BNEF’s latest report shows that there’s a smart economic way for countries that still rely on coal to phase it out quickly, right now,” said Michael Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies.
“By investing in clean energy, governments in Central and Eastern Europe can help drive the economic recovery from COVID-19, while also reducing air pollution, improving health, and slowing the effects of climate change.”
The new Bloomberg report analyses the transition of the power sector in four key Central and Eastern European economies – Bulgaria, Czechia, Poland, and Romania – four of Europe’s most coal-intensive economies that have similarly failed to define a plan to phase-out coal.
According to the report, the four countries together have more than 50GW of coal- and lignite-fired capacity in their electricity mix and account for nearly two-thirds of Europe’s coal capacity not yet covered by a coal exit policy.
The report models two power system outlooks for each of the four countries – a least-cost scenario, and a scenario based on each country’s National Energy and Climate Plan (NECP). Unsurprisingly to those paying attention, the results of the report’s least-cost scenario “show that significantly more ambitious 2030 renewables targets are already possible” and that the four countries could each reach a 47% share of renewables generation by 2030 compared to the 31% achieved through their existing NECPs.
Bloomberg’s least-cost scenario for the four countries is policy-agnostic, relying simply on the cost-competitive nature of renewable energy sources such as solar and wind, and finds that the energy transition could deploy 53GW of new renewable capacity across the four countries and unlock up to €53.7 billion ($A87 billion) in new investment.
In short, the report finds that “Following a least-cost power system development model can help better manage transition costs, and free budgetary funds to mitigate the socio-economic impact of phasing out coal.”
“As the EU aims to slash its emissions by 55% from 1990 levels and adopt a green recovery strategy, it will need to accelerate the pace of transition in the power sector, which accounts for the largest share of EU greenhouse gas emissions,” said Jon Moore, CEO of BNEF.
“This report highlights the opportunities generated by the decarbonization of central and eastern European countries, which could halve their power sector emissions on an economic basis under current market and regulatory conditions.”
The report concludes by clearly stating that “Renewables are the cheapest source of new bulk electricity generation for Poland, Czechia, Romania and Bulgaria” and that “New renewables are becoming competitive against the marginal cost of existing coal and gas power plants.”
In turn, this allows for the development of more ambitious 2030 renewable energy targets in these countries which would not only accelerate the climate necessary energy transition but would provide significant benefits to economies.
However, as with all reports of this nature, the concluding arguments run hand in hand with necessary policy support and stability, seriously lacking in the report’s four case study countries.
“Energy transition is essential towards EU climate neutrality by 2050,” said Michał Kurtyka, Minister of Climate of Poland. “However, it is not the only action. We need unprecedented changes in the existing way of life – change the way of mobility, housing, and even food production.
“We need to secure existing investments to guarantee the continuation of the transformation, strengthen local industry and direct new investments not only to reduce emissions, but also to increase employment and resilience of economies. Central and Eastern European countries may soon be the driving force for green recovery and implementation of EU climate ambitions.
“However, great opportunities often carry even greater responsibilities. Poland and the other EU Member States need support from the Recovery Fund to stimulate economies, protect key sectors from the effects of the recession, and trigger a transformation with the mission of achieving climate and energy goals for 2030.”