The chief executive of Europe’s largest power utility recently told the Financial Times that the European energy sector has reached a watershed in which cheaper and cleaner energy options will destroy the economic viability of coal production within a decade.
It was a somber warning from Francesco Starace, chief executive of Enel who told the Financial Times that as the cost for solar and wind energy continue to come down other types of carbon intensive power production would be driven out of the market, and governments and companies must plan to replace the jobs that will be lost.
“The watershed moment for coal is there in some countries already, and will happen across Europe in all countries,” he told the Financial Times.
Managing the decline of older, more polluting energy production will require the industry and governments to “face the truth without panicking”, he said. “What should be done with the asset base that becomes obsolete? Can you defend it past its own time? Can you tell people lies saying it is all going to be fine continuing doing what you have been doing? “Or should you rather tell the truth, and say ‘guys, in the next five years, 10 years, 20 years, this is going to happen, so let’s plan ahead’.”
Euracoal, a trade body that represents the coal industry in Europe said the sector employs 185,000 people across the EU. Several countries, such as Germany and Spain, have already closed their pits and attempted to find new jobs for its miners.
He said the use of technology to manage capacity and distribution of power, and the continuing falling cost of building cleaner power generation production, meant that the economics of clean energy would mean more polluting energy sources would cease to be competitive. The viability of coal power in Europe has also been hit by a surge in the price of carbon credits — used by power plants and industry to offset each tonne of carbon dioxide they produce — since the start of 2018. “The question has always been: can the cost of wind or solar generation beat the cost of a fully amortised old coal plant? When that happens the old technology is dead.” Starace, outgoing president of Eurelectric, the pan-European industry trade body, said he believed he had managed to convince his peers that it was better to prepare for a future where coal power would become obsolete than “fight defensive, but losing battles.”