More than 40 percent of the world's coal power plants operate at a loss because of high fuel costs, according to a report released by nonprofit think tank Carbon Tracker Initiative on Friday.
The London-based think tank, which has carried out the first global analysis of the profitability of 6,685 coal power plants around the world, predicts that 72 percent of global coal capacity will be unprofitable by 2040 as existing carbon pricing and air pollution regulations drive up costs, while the costs of wind and solar power continue to fall.
"Building new renewables, wind and solar power, will be cheaper than 96 percent of existing coal power plants by 2030," it said.
At least 59 percent of coal power worldwide must be retired by 2030 to limit global warming to 1.5 degrees and many countries have set phase-out dates, the report said, citing the UN's Intergovernmental Panel on Climate Change.
According to the report, closing coal plants could save China $389 billion while the EU could save $89 billion, the U.S. $78 billion and Russia $20 billion.
"The narrative is quickly changing from how much do we invest in new coal capacity to how do we shut down existing capacity in a way that minimizes losses. This analysis provides a blueprint for policymakers, investors and civil society," said head of Power and Utilities at Carbon Tracker and co-author of the report, Matt Gray.
The report warns that backing coal in the long term will threaten economic competitiveness and public finances as politicians will be forced to choose between subsidizing coal power or increasing power prices for consumers.
"In countries such as China, India, Japan and parts of U.S., governments typically approve the cost of generation and pass it on to consumers," it said.
By Mehmet Yavuz