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Coal investors stand to lose billions within a decade – unless utilities act now

New findings show over half of Europe’s coal plants are running at a loss today – and the figure will rise to 97% by 2030.

ClientEarth lawyers say that power companies which use coal and yet continue to project success are not providing an accurate forecast of future business – and misleading investors in doing so.

“Lignite of the living dead”, published by UK thinktank Carbon Tracker, says that EU utilities could avoid €22bn in losses by acting now to retire plants before falling clean energy prices and climate and pollution regulations deplete their value entirely.

This year saw a wave of national coal phaseout pledges and a coalition of countries recently announced the “Powering Past Coal Alliance”, designed to lead the way towards cleaner energy and away from the dirtiest.

The market is changing – who will fall behind?

Carbon Tracker shows that it will be cheaper to build and run wind and solar energy installations by the mid-2020s than just to continue to run existing coal plants. The findings are parallel to a September report by the Natural Resources Defense Council (NRDC), which said wood-burning plants would be outcompeted by clean energy by 2025.

Clean energy, demand management technology and energy storage are becoming the cornerstones of the new energy market, and Carbon Tracker warns that coal giants’ assets are on a “collision course with these megatrends”.

ClientEarth lawyer Alice Garton said: “We know the end of coal is coming. The economic argument is stacked against coal: clean energy prices are plummeting and storage technology is developing at an unprecedented rate. Meanwhile, the associated health and climate impacts also make coal politically and environmentally untenable.

“At this point, any power company still betting on a future for coal must be in serious denial. Relying on governments to prop up ageing plants is not a sustainable business model – particularly when many governments (including the UK) have officially pledged to abandon coal-burning for energy.

“Investors to the utilities sector will not be satisfied with ‘business as usual’. Business leaders will be held to account for losses made when infrastructure assets become stranded.”

The report claims German power companies Uniper and RWE are particularly exposed to loss. Together, coal-invested companies in Germany, Europe’s largest coal market, stand to lose £12bn by 2030 without action; in Poland, the figure is an estimated £2.7bn.

ClientEarth is taking a number of legal cases against illegally polluting coal plants in Europe and our company and financial project is examining how carbon-intensive companies are reporting their climate risk exposure to investors, filing complaints against those that fall short of their legal duties.

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