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CO2 price of EUR 20 would deter coal burn in 2030

A carbon price of 20/t would be enough to stop coal-fired generation by 2030 as the cost of deploying renewable energy should continue to drop, said SEB bank chief analyst Bjarne Schieldrop on Thursday.

“The price you need to kill coal becomes lower and lower,” he told Montel’s Swedish Energy Day in Stockholm.

“In 2030 you will only need a carbon price of EUR 20/t to price coal plants out of the market even if the coal price drops to USD 50/t. In 2050 you only need a carbon price of EUR 10/t.”

Carbon prices have more than trebled to around EUR 25/t since the start of 2018, spurring power producers to switch from coal to natural gas, which emits less CO2.

But in the future, even gas will be outcompeted by cheaper renewables, even with relatively low gas and carbon prices, Schieldrop added.

Currently, carbon prices would need to be EUR 80/t to force gas out of the market at a gas price of EUR 10/MWh, but this figure would probably drop to around EUR 35/t by 2030 and EUR 10/t by 2050.

“Earlier it was assumed that we needed a very high CO2 price to make coal and gas unprofitable. But that was based on a thought that renewables [are] very expensive,” the analyst said.

“Now we are in a totally different situation, where we will probably drown in renewable energy.”

Coal phase-out

His comments come as the EU’s 2030 climate targets call for a reduction of at least 40% in greenhouse gas emissions against 1990 levels and an increase of at least 32% the share for renewable energy.

And several EU nations such as France, the Netherlands and the UK already have pledged to phase out coal-fired generation next decade, with Germany – the bloc’s biggest economy – pursuing a similar move by 2038.

Outside Europe, other countries are looking to boost renewable energy capacity as well.

For instance, SEB expects that yearly growth in global output from solar plants will rise from 136 TWh currently to 478 TWh by 2025, while the figure from wind will rise from 132 TWh to 298 TWh over the same period.

Source: Montel