Blog

Overcoming inertia: Guterres has kickstarted the great global coal transition

By

Antonio Guterres
Photo by UN Photo/Mark Garten of Secretary-General António Guterres

On April 27, in Beijing, UN Secretary General Antonio Guterres introduced an unexpectedly direct challenge into the global climate conversation. In remarks to the unassumingly titled ‘Leaders’ Round Table on Promoting Green and Sustainable Development to Implement the 2030 Agenda for Sustainable Development’ the world’s top diplomat described how he was deeply concerned about the climate crisis. He highlighted the need for green development. And he invited leaders to attend September’s UN summit with plans to increase their nationally determined contributions. So far, so good, so normal.

But Guterres then deftly pivoted from the abstract to the specific, stating:

And this is why I have been asking leaders around the world to adopt carbon pricing that reflects the true cost of emissions … but also to end subsidies on fossil fuels, and not to start construction of new coal plants beyond 2020.

In the months since, his repeated utterance of this dirty four-letter word has been viewed as shocking. The last remaining defenders of fossil fuel promotion recognise that his intervention tips the balance firmly in the direction of the coal-to-clean transition and want to knock him back. Meanwhile old school defenders of UN diplomacy don’t want to ruffle feathers, preferring to be polite and indirect, than be correct but impolite.

The Secretary General’s call for ‘no new coal by 2020’ has been expressed in varied formulations over recent months as it has become a repeated rallying point for challenging the headlong race towards climate catastrophe. Some critics of Guterres have claimed that he is wrong to challenge the decisions of developing countries and emerging economies that still want to build coal power generation. But they have missed their target, because he has been very even handed.

For far less visible in the media, but just as important, is the other half of Guterres’ challenge to old king coal. In May, he wrote to G20 leaders to set out his expectations for the upcoming UN summit. A leaked copy of his letter to the EU was circulated in Brussels and seen by E3G, revealing that he had included the statement that ‘I am asking all leaders to curtail their countries’ current coal capacity…’. Action on coal is required by all leaders. Current coal use must fall, everywhere, not just an end to new coal plants.

Moreover Guterres has identified the full spectrum push required to shift from coal to clean energy. He has highlighted the undeniable need for the world to reduce coal power generation to meet climate change goals. And he has called for governments to act to:

  • Stop building new coal power plants by 2020
  • Curtail current coal capacity
  • End subsidies for fossil fuels (including finance for coal plants)
  • Tax pollution, not people (including improved carbon pricing)

E3G’s recent analysis ‘Rising to the challenge’ looked at the latest data on the global distribution of coal power plants in operation or under different stages of development. We highlighted that:

  • Construction of new coal power plants is slowing and concentrated in Asia. Many countries could commit to no new coal construction by 2020.
  • Coal power generation is in decline in Europe and North America. Members of the Powering Past Coal Alliance are developing national policies.
  • China, Japan, and South Korea are still providing significant finance for coal power plant construction.
  • Carbon pricing in the UK and Europe has helped secure a rapid reduction in coal power generation, aided by investment in renewable energy.

Overall, we found that global trends are positive, so governments can act with confidence. But some crucial actions are required – particularly an end to coal finance from the Big 3 providers of China, Japan, and South Korea, competing both for sales and geopolitical influence. These governments love to claim that they are only providing what host governments want – yet when we worked with pollsters YouGov to ask citizens in six countries what they wanted from foreign investment, the overwhelming response was for clean energy (especially solar) and not coal.

Fundamentally, the Secretary General is correct to name and shame coal. The science is clear that coal-fired electricity generation needs to end first and fast if we are to maintain a stable climate. The economics are now aligned, with coal generation increasingly expensive and running at lower load factors, suffering from competition from renewables. There is simply no business case to waste money constructing a new coal power plant that would want to run for 40+ years.

Nevertheless, the Secretary General’s direct attack on coal has been a shock to the system. This was the first time that many countries have been challenged directly to address their coal use. Too many governments had comforted themselves with abstract commitments to climate ambition without grasping the nettle of real economy actions. They are now bumping up against project developers, utility companies, and (a dwindling number of) financiers that have been working on coal projects for years and don’t want to walk away. Private sector players are seeking public finance to bail out bad investments: governments need to wake up before they are left with the bill.

We also know from our own experience in the UK that shifting from coal-to-clean requires policy makers to confront their standard ways of operating and engrained assumptions about investments and electricity systems. The UK government announced an end to new coal projects back in 2009, and then took six years to 2015 before it became the first to announce a national commitment to phase out. At every stage utility companies sought to extend the operating life of power plants or avoid regulation – while they were profitable. But as soon as they started to lose money, they were quick to flip and pursue closure.

Just four months have passed since Guterres wrote to leaders to ask them to curtail coal generation and stop the construction of new coal power plants. Despite the positive trends pointing away from coal, there is still a substantial inertia to overcome. Projects take time to be unwound. Officials have to rethink plans. Government departments need to collaborate. Leaders need to look up and see what is over the horizon.

In our view, the UN summit isn’t a test of Guterres’ call to action on coal. Instead, his interventions over recent months have kickstarted the great global coal transition. We expect to see it take shape over the next week in New York and then gather pace over the coming months and years. COP26 in 2020 will be an important milestone – ideally a moment to announce an end to the financing of new coal power plants, and instead create new financial vehicles to unwind the coal age.

During summer 2019, Portugal and Spain experienced an unprecedented period of low electricity production from coal-fired power plants. Portugal’s electricity system ran coal-free for 19 days, while Spain’s coal-fired electricity generation met less than 1% of the country’s consumption over 10 consecutive days. Our latest analysis explores this further.

UN Secretary General Guterres has called on governments to curtail coal power generation in response to the climate crisis. The substantial and sustained reduction in coal use in his own country Portugal is further evidence that this is a realistic request also achievable by others. He isn’t making it up: coal has to head to the exit.