A report published by the International Energy Agency provides evidence of the early stages of an exodus from fossil fuel investment, as the companies funding coal-fired power stations show signs of diversifying their portfolio away from fossil fuels.
There is an evident decline in the Final Investment Decisions (FIDs) for coal plants, 75 per cent in the past three years, according to the IEA. You can access the IEA’s report here, but keep in mind that the IEA requires a subscription to access its reports in full
The report outlines that for the first time in recorded history, more coal power stations came offline than were approved for construction.
The IEA estimates that for the first time in human history, there has been a measurable reduction in coal-fired power. Although the number of coal-fired generators in Asia has risen by 63 per cent, Europe’s use of coal has dropped by a quarter, and the US has dropped by a whopping 40 per cent over the last 10 years.
Currently, there are 236 gigawatts of coal plants under construction around the globe. In 2015, FIDs accounted for 88 gigawatts of projects under construction- in 2018 this number fell to 22 gigawatts.
The IEA has released a statement outlining that according to their research, “it appears that banks, insurance companies, hedge funds, utilities and other operators in advanced economies are exiting the coal business.”
Also mentioned in the report is the fact that despite new coal-fired power plants coming into the foray, the rate at which coal power plants are being decommissioned translates to a net reduction in the rate of coal being used around the globe last year; 30 gigawatts of coal-fired electricity generators were retired last year.
According to The Independent, “without policy necessarily directing them, the financial concerns of investors over the future of the fossil fuel business are slowly ensuring money is being allocated to different areas.”
The report was handed down just days after the United Nations’ secretary-general António Guterres told the Associated Press it was essential that the globe’s supply chain changes drastically, with a failure to diversify translating to “a catastrophic situation for the whole world.”
IEA executive director, Dr Fatih Birol said that “energy investments now face unprecedented uncertainties, with shifts in markets, policies and technologies. But the bottom line is that the world is not investing enough in traditional elements of supply to maintain today’s consumption patterns, nor is it investing enough in cleaner technologies to change course.”
“Whichever way you look,” he said, “we are storing up risks for the future.”
“Current investment trends show the need for bolder decisions required to make the energy system more sustainable. Government leadership is critical to reduce risks for investors in the emerging sectors that urgently need more capital to get the world on the right track.”