Coal plants face ‘stranded capacity’ scenario warns report

As much as 37 per cent of global investment in coal power plants over the next 40 years could be “stranded” if climate action is delayed, with China and India set to bear most of the costs, according to a new report.

The study from the International Institute for Applied Systems Analysis in Austria uses the term ‘stranded capacity’ for power plants that sit idle while their owners and investors suffer huge losses.

IIASA researcher Nils Johnson, who led the new study, said: “If we are serious about meeting climate targets, then the reality is that eventually we will have to start shutting down coal-fired power plants. But the longer we delay climate action, the more stranded capacity we’ll have.

“Delaying action encourages utilities to build more coal-fired power plants in the near-term. Then, when policies are finally introduced, we have to phase out coal even more quickly and more investments go to waste.”

The study found that as much as 37 per cent of global investment in coal plants over the next 40 years could be stranded if action is delayed, with China and India – as the biggest builders of new coal power stations – bearing the brunt.

The report goes on to explore strategies to reduce stranded capacity in coal plants while limiting future climate change to the internationally agreed 2°C target.

Johnson said that “the best strategy would be to stop building new coal power plants starting today”, but IIASA researchers conceded that this might not be realistic “if governments are not yet willing to limit new plant construction”.

The study therefore examines two strategies: grandfathering existing plants so that they are exempt from future climate policies, or retrofitting plants with carbon capture and storage.

However the report states that “both of these strategies create a major risk that average temperatures will rise above the 2°C goal. While the grandfathering strategy would allow power plant operators to keep the old ones running, it would lead to greater emissions and reduced chances of limiting climate change to the 2°C target.”

And it adds that while the CCS option could “theoretically be used to retrofit coal plants”, this would mean “hundreds of power plants would need retrofitting in a short period of time”, which would put “a lot of pressure on a technology that as yet remains both technically and politically uncertain”.

Volker Krey, co-author of the study, said: “CCS could buy us time, but what if it doesn’t work? It’s a risky strategy.”

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