Informal presentation of Carbon Tracker report, Lignite of the Living Dead. In this report, Laurence Watson and I look at how a scenario for the EU28 that is compliant with limiting the rise in global warming to below 2°C might affect the valuation of coal-fired power plants.

2. Report narrative
=
Cashflow negative
coal plants
OMG zombies!

3. 3 key takeaways
1. Over half (54%) of EU28 coal plants are cashflow negative today,
increasing to nearly all (97%) coal plants by 2030
2. By the mid-2020s it will be cheaper to build new renewables than
continue to operate existing coal plants
3. Since nearly all coal plants are loss-making out to 2030, the EU
could avoid €22bn in losses by phasing out coal consistent with
Paris Agreement

4. Takeaway 1 – Gross profitability today
-60
-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
2016€/MWh
Cumulative coal capacity (MW)

5. Takeaway 1 – Gross profitability in 2030
-60
-50
-40
-30
-20
-10
0
10
20
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000
2016€/MWh
Cumulative coal capacity (MW)

6. Takeaway 1 – why are loss-making plants still
open?
• Loss-making plants still have optionality!
➢ Stay open to get capacity and retirement payments
➢ Stay open in case a competitor closes and tightens the market (price ↑)
• Clean up costs
• Government blocks (e.g. Spain’s royal decree or German local
governments with RWE)

7. Takeaway 2 – building renewables cheaper
than running coal
0
10
20
30
40
50
60
70
€/MWh
Onshore wind LCOE
Solar PV LCOE
Coal operating cost
(cash+FOC+ENV)
Coal cash cost
(Fuel+CO2+VOC)
Building new wind
cheaper than
operating coal in
2024
Building new solar
cheaper than
operating coal in
2027

8. Takeaway 3 – Climate scenario analysis
Since most coal generation in the EU is loss-making, investors could avoid €22 bn in
losses by retiring coal power in accordance with the Paris Agreement
-
5
10
15
20
25
30
-6,000
-5,000
-4,000
-3,000
-2,000
-1,000
-
1,000
Operatingcoalcapacity(GW)
Strandedvalue(€m)
Stranded value Coal capacity

9. Takeaway 3 – Climate scenario analysis
Since most coal generation in the EU is loss-making, investors could avoid €22 bn in
losses by retiring coal power in accordance with the Paris Agreement
-
10
20
30
40
50
60
-14,000
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
Germany
Poland
CzechRepublic
Spain
UnitedKingdom
Netherlands
Denmark
Greece
Finland
Hungary
Bulgaria
Slovakia
Austria
Croatia
Sweden
France
Ireland
Romania
Portugal
Italy
Slovenia
Operatingcoalcapacity(GW)
Strandedvalue(€m)
Stranded value Coal capacity

10. Thanks!
More information: https://www.carbontracker.org/reports/lignite-
living-dead/
Contact: mgray@carbontracker.org