Presentation on global coal plant phase-out at IEEFA energy finance conference (March 13, 2018).

1. IEEFA Energy Finance 2018
March 12-14, 2018
2,000 gigawatts in 20 years
Matt Gray
Analyst – Power & Utilities

2. 2
Outline
1. Global coal phase-out outlook
i. New investments
ii. Existing assets
2. How to shut down 2,000 gigawatts in 20 years
i. Market liberalization
ii. Environmental regulation
iii. Investor engagement
3. Future Carbon Tracker work

3. 3
Today there is 2,000 GW of coal in operation and
over 400 GW planned or under construction
Source: CoalSwarm (2012-2018), Carbon Tracker (2018)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2012 2013 2014 2015 2016 2017 2018
Capacity(GW)
Global coal power capacity pipeline 2012 to 2018
Proposed
Construction
Operating
Despite recent progress, wasted capital
and asset stranding are still huge
issues for coal power

4. 4
Wasted capex: today’s planned coal capacity
represents $540b of misallocated capital
Source: CoalSwarm (2018), Carbon Tracker (2018)
Coal capacity build today will unlikely
recover capital costs if Paris
temperature goal is enforced
-
20
40
60
80
100
120
140
160
180
SE Asia Non-EU
Europe
East Asia Africa and
Middle East
South Asia Latin
America
EU28 Eurasia
US$(billions)
Overnight investment cost of planned and construction
capacity in 2018

5. 5
Stranded assets: 2,000 gigawatts of existing coal
will need to be retired within 20 years
0
2,000
4,000
6,000
8,000
10,000
12,000
2016 2019 2022 2025 2028 2031 2034 2037 2040
Grossgeneration(TWh)
IEA scenarios for global coal generation
Beyond 2-degree scenario (B2DS) Business as usual scenario (BAU)
(2010-2017: ~200 GW retired)
Source: Energy Technology Perspectives, IEA (2017)
To comply with Paris, 100 GW has to be
retired every year until 2040!

6. 6
Source: Lignite of the Living Dead, Carbon Tracker (2017)
How to replace 2,000 gigawatts in 20 years
1. Market liberalization – EU example
-40
-30
-20
-10
0
10
20
30
40
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000
Grossprofitability(GW)
Cumulative coal capacity (MW)
Gross profitability of operating EU coal fleet in 2017
2017: ~50% of EU coal fleet
is cash flow negative

7. 7
Source: Lignite of the Living Dead, Carbon Tracker (2017)
How to replace 2,000 gigawatts in 20 years
1. Market liberalization – EU example
-50
-40
-30
-20
-10
0
10
20
30
40
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000
Grossprofitability(GW)
Cumulative coal capacity (MW)
Gross profitability of operating EU coal fleet
2017
2018
March 2018: ~66% of EU coal
fleet is cash flow negative

8. 8
Source: Lignite of the Living Dead, Carbon Tracker (2017)
How to replace 2,000 gigawatts in 20 years
1. Market liberalization – EU example
-50
-40
-30
-20
-10
0
10
20
30
40
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000
Grossprofitability(GW)
Cumulative coal capacity (MW)
Gross profitability of operating EU coal fleet
2030
2017
2018
Liberalised power markets
kill coal through economics
2030: ~100% of EU coal fleet
is cash flow negative

9. 9
Source: Chasing the Dragon? (Updated data) Carbon Tracker (2018)
How to replace 2,000 gigawatts in 20 years
1. Market liberalization – China example
Liberalized power markets drive efficiency
gains through increased utilization
Lower prices
Less capacity
0
10
20
30
40
50
60
70
0 200 400 600 800 1,000
US$/MWh
Coal capacity (GW)
Operating cost of China's coal-fired capacity
Operating cost
of existing coal
units
Coal capacity
needed with
70% capacity
factor
Total coal
capacity with
47% capacity
factor

10. 10
How to replace 2,000 gigawatts in 20 years
2. Regulation – US example
Operating cost is based on a capacity weighted average. Learning rate of 20% for solar and 5% for wind. Capacity additions based on IEA B2DS.
Source: No Country for Coal Gen, Carbon Tracker (2017)
2021: New wind
cheaper than
operating coal
2023: New solar PV
cheaper than
operating coal
0
10
20
30
40
50
60
70
$/MWh
US: LCOE of wind and solar versus operating cost of
coal
Onshore wind LCOE
Solar PV LCOE
Coal operating cost
(cash+FOC+ENV)
Push policies: Capacity
mandates drive RE cost down
Pull policies: air pollution
regulation drive coal costs up

11. 11
How to replace 2,000 gigawatts in 20 years
2. Regulation – EU example
Operating cost is based on a capacity weighted average. Learning rate of 20% for solar and 5% for wind. Capacity additions based on IEA B2DS.
Source: Lignite of the Living Dead, Carbon Tracker (2017)
0
10
20
30
40
50
60
70
€/MWh
EU: LCOE of wind and solar versus operating cost of
coal
Onshore wind
LCOE
Solar PV LCOE
Coal operating cost
(cash+FOC+ENV)
2024: New wind
cheaper than
operating coal
2027: New solar PV
cheaper than
operating coal
Push policies: Capacity mandates drive
RE cost down
Pull policies: air pollution regulation and
CO2 pricing drive coal costs up

12. 12
How to replace 2,000 gigawatts in 20 years
3. Investor engagement – US example
Source: No Country for Coal Gen, Carbon Tracker (2017)
Two thirds of US coal capacity is
regulated, making it highly profitable and
thus could lose billions if the US complied
with the Paris Agreement
0
2,000
4,000
6,000
8,000
10,000
Strandedvalue($m)
Below 2oC stranded value for US coal power investors
Regulated % Merchant %

13. 13
How to replace 2,000 gigawatts in 20 years
3. Investor engagement – EU example
Source: Lignite of the Living Dead, Carbon Tracker (2017)
-6,000
-5,000
-4,000
-3,000
-2,000
-1,000
0
1,000
Strandedvalue(€m)
Below 2oC stranded value for EU coal power investors
Since most coal generation in the EU is
loss-making, utilities could save money by
retiring coal power in accordance with the
Paris Agreement

14. 14
How to replace 2,000 gigawatts in 20 years
Future CTI work
Developing a global coal power economics
portal for:
 Tracking the competitiveness at asset-
level
 Company-level analytics for investor
engagement
 Public education and activism

15. For more information please visit:
www.carbontracker.org
@carbonbubble
If you are interested in knowing more,
please get in touch:
mgray@carbontracker.org