Juggling growth goals and lifting its people out of poverty, India walks a tight rope between fuelling its needs with cheaper but harmful sources versus becoming a clean energy leader.
Is the age of coal really over?
Italy’s coal plants are closing down, but coal still powers several European countries and major Asian nations. This delay will weigh heavily on consumers.
The end of coal – one of the most polluting and CO2 emitting fossil fuels in use today – seems to be defined by slow, unremitting agony. In Europe, at least. Ugly, dirty, but cheap and widely available, it has marked and continues to mark energy production globally. A so-called phase-out ought to have begun, although the most recent data appear to suggest the opposite, so much so that in January 2021, they pushed the EU to ask for it to be abandoned globally.
- The world is still burning too much coal
- The phase-out of coal in Italy has already started
- The issue of post-coal employment
- The role of gas in Italy’s energy transition
- The capacity market: resource or bluff?
- What to do with old power plants: the case of Monfalcone
The world is still burning too much coal
It’s an established fact that coal use is now in sharp decline across Europe, even if the signs are quite conflicting and undoubtedly caused in part by the pandemic and the subsequent economic recovery. Global coal production dropped by only 4 per cent in 2020, to around 6.9 billion tons. Although the entire Western world has seen a strong contraction in its demand for coal, which stood at 390 million tons in 2020 (a 22-per-cent reduction compared to 2019), the demand for fossil fuels in Asia has remained strong, so much so that China produced 3,690 million tons in 2020, the same value as in 2019. Not only that, but the International Energy Agency (IEA) foresaw a strong rebound in 2021, with global demand for coal up 4.5 per cent compared to 2019. This resurgence can be seen in Germany – one of Europe’s largest coal producers after Poland – where the production of lignite in the first quarter of 2021 increased by 25 per cent compared to the previous year.
However, the IEA itself stated that in order to reach net emissions targets by 2050, it is essential to cancel investments “in new fossil fuel supply projects and no further decisions to invest in new coal plants”. Confirming this trend is last year’s announcement by Enel, a major international energy provider. “Globally we are exiting this technology, according to a plan that expects to complete the phase-out by 2027, 3 years earlier than the previous target of 2030,” says Luigi La Pegna, head of hydro, geothermal and thermal generation at Enel global power generation.
The phase-out of coal in Italy has already started
Italy seems to be trending in this direction. In 2019, the Ministry of Economic Development and Labour, in collaboration with the then Ministry of the Environment (now Ecological Transition), decided to close down all coal plants by 2025, in line with the PNIEC (Integrated National Plan for Energy and Climate) at the time. “We’re not too far off,” explains Filippo Taglieri, Re:common campaigner. “Even if each plant has its own plan; for example, those of La Spezia and Fusina are closing in 2023, and are already working at a minimum. And at Civitavecchia, which we recently visited, only one unit is still functional”.
In all, there are still eight plants operating throughout the country, totalling approximately 8 gigawatts (GW) of installed capacity. “In Italy, to encourage and accelerate the departure from coal, it is necessary to implement an important plan for the development of renewables and a new flexible capacity that can respond to the needs of the grid, such as accumulations. In certain limited cases, to the extent strictly necessary to guarantee the safety of the national electricity system, we will also need high-efficiency gas systems,” says La Pegna. But while, for the head of the energy company, it is necessary to increase the share of renewables and storage systems, it will also be essential to “work on the entire supply chain, from the production of electricity to transport and consumption”, so as to have electricity “produced increasingly from renewable sources, and therefore without emissions, fed into intelligent and increasingly resilient grids”.
In 2020, the volume of coal purchased and burned in Enel plants totalled approximately 6 million tonnes, part of which came from the Cerrejón mine in Colombia, also known as the “mine of discord“. As Re:common explains, Cerrejón is one of the largest open-pit mines in the world, which over the years has caused the forced displacement of indigenous and Afro-Colombian communities and the widespread pollution of air and water. Enel confirms that the group purchases coal from the Colombian mine Cerrejon, through the associated company CMC-Coal Marketing (CMC), but that, to date, these are contracts signed in previous years with delivery deadlines prior to December 2021. In line with the global strategy of decarbonisation, the group has purchased ever decreasing quantities of coal in recent years. Today, coal represents a marginal share of the purchase of fuels. With regard to CMC in particular, the purchase of approximately 9,000 tonnes of coal was planned for 2021.
In the meantime, the Federico II thermoelectric plant in Brindisi, operational since 1997, closed its first unit last January. To date, it is among the largest plants in Europe and the second-largest in Italy. With over 10 million tonnes of CO2 emitted every year, it contends for first place with the Torrecavadaliga Nord plant in Civitavecchia, Lazio, in terms of emissions and the economic value of damage associated with pollution. For the same reason, it is also among the twenty-five plants with the highest environmental impact in Europe, as reported by the Beyond Coal think tank. “At the end of 2019 Enel closed the Bastardo plant, at the end of 2020 it closed Unit 2 of the Federico II plant in Brindisi while units 1 and 2 of the Andrea Palladio in Fusina will be decommissioned at the end of this year (2021), in line with the authorisation of competent authorities”, confirms La Pegna.
The issue of post-coal employment
In recent months, however, the issue of employment has remained prominent, in regards to both Brindisi and Civitavecchia – two of the largest pillars in the country’s energy sector. “The impact on workers had already been announced and it was reflected in the drop in energy demand,” explains Taglieri. “There is definitely a problem because workers need to be relocated: gas turbine plants require only half the workforce, although the company doesn’t have problems relocating a few hundred people”. Currently, the Federico II plant in Brindisi directly employs about 300 people, and the next closure would mean the loss of linked activities related to the handling of coal and therefore also to port industries, in addition to maintenance and logistics.
As far as Civitavecchia is concerned, the position of trade unions and Lazio’s regional administration seems to be oriented towards a “green” conversion of the plant. For CISL Lazio, “the impetus for the energy shift should come from a modernisation of the electricity grid and from incentives that allow an increasingly consistent transition towards the choice of renewable energy”.
A separate discussion holds true for Sardinia, where the Porto Torres and Portovesme plants are still operational. The government, Terna (manager of the electricity grid), and Enel (owner of the plants in question) have made a proposal to make the region “a real ‘green island’ by 2030, through zero-emission energy production and the electrification of industry and consumption”, explains La Pegna. “Considering some specific characteristics of the territory, such as its near-zero use of gas and a forecast significant increase in electricity connections to the mainland thanks to the creation of a new connection (Thyrrenian Link), the company has proposed for Sardinia to shift directly to an energy supply solely from renewable sources supported by storage systems”.
The role of gas in Italy’s energy transition
Despite existing proposals and an apparent desire for further development of renewables, Italy’s energy conversion is wholly dependent on natural gas as a “transition fuel”. In fact, to compensate for the exit from coal, over the next decade utilities plan to build new gas plants for a total capacity of 14 GW, of which 5.8 GW are already guaranteed by supply contracts awarded in the capacity market and should be operational by 2023.
“The development of flexible capacity gas, to the extent strictly necessary for the stability and safety of the national electricity system, is indicated by the PNIEC as an indispensable medium-term tool needed for an adequate and progressive transition towards a generation based increasingly on renewable sources”, explains La Pegna. “The actual evolution of the national electricity system in the coming years will determine how long these plants will be needed for grid safety and stability, but this is a transitory technology that supports a more sustainable model with the goal of a generation completely supplied by renewable sources “.
However, according to Carbon Tracker, plans to build new gas plants in Italy could jeopardise the country’s climate objectives and lead to losses of up to 11 billion euros in investments, missing a great opportunity to reduce domestic electric energy consumption. It’s quite interesting to note that, back in April 2021, the think tank’s experts had already warned that “if Italy continues to focus on generating electricity through gas plants rather than on low-cost clean energy solutions, consumers will see an increase in their bills “.
What’s more, a recent report by the Center for Research on Energy and Clean Air (CREA), titled”Ripe for closure: accelerating the energy transition and saving money by reducing excess fossil fuel capacity”, shows how nine European countries, including Italy, could immediately close fossil fuel power plants for a total of 48.8 GW of installed power without jeopardising the supply of electricity for families and businesses. This is a good 17 per cent of all power installed in fossil fuel power plants in Europe. With the early retirement of unnecessary plants, the savings in fixed operating and maintenance costs would be almost 2 billion euros per year.
The capacity market: resource or bluff?
The capacity market is under fire: approved in 2019, it was created with the aim of supporting the gradual decommissioning of coal-fired plants while protecting the ability of the network to ensure adequate programmable electricity supplies. The mechanism introduced by this market aims to compensate large plants based on their willingness to produce energy in case of need or, alternatively, to reward demand management operators for their willingness to reduce consumption. “It is a question of compensating power plants regardless of the amount of energy they produce,” explains Matteo Leonardi, co-founder of independent think tank Ecco. “This system leads to the acquisition of further capacity, with an incentive to build new plants regardless of whether they are used or not.” It is therefore a question of a system that gives disproportionate incentives, rewarding electricity production by new and existing gas plants.
In the meantime, “the new auctions to allocate subsidies for 2024 and 2025, scheduled for last summer, were postponed, but probably only slightly,” Re:common explains in a press release. “In addition to mitigating the surcharges in electricity bills – due to the obtuse focusing only on gas in recent years – an authentic ecological transition that is also fair would require us to immediately stop new gas plants, with no ifs and buts”.
What to do with the old power plants: the case of Monfalcone
Another crucial issue is the recovery and conversion of production sites once they are decommissioned. “It is a question of redeveloping the plants from a circular economy perspective, enhancing the areas on which the structures are built and, where possible, reusing materials and parts of the plants themselves, to reduce the consumption of raw materials”, explains La Pegna. A good example can be found in the Spanish power plant of Teruel, in Andorra, which involves investment of over 1,487 million euros and has the ultimate goal of installing 1,725 MW of renewable energy, of which 1,585 MW is from solar energy, making it the largest plant under construction for this technology in Europe, and 140 MW of wind power, as well as a large-scale energy storage system of up to 160 MW.
“In Italy, for the Porte Tolle site in Veneto, a preliminary sales agreement was signed with an open-air tourism group to create an innovative hospitality village; with the preparatory activities complete, demolitions are currently underway on the functional assets of the development project,” says La Pegna. “The former Carpi power plant has already been transformed into a modern logistics hub, while the goal for the coal-fired sites that will have to be decommissioned by 2025 is to create integrated energy hubs in which renewables, storage systems, and gas plants coexist.”
Enel has also created Enel Logistics, a sub-company that operates in Italy for the recovery and enhancement of existing areas and structures within the group’s industrial sites. Located near strategic places such as ports, airports and freight villages, these areas are to be converted to customs warehouses for logistics, handling and storage of goods. “The goal is to attract new flows of goods to Italy and at the same time intercept part of those flows that now pass through the Mediterranean and which, due to lack of infrastructure, continue towards Northern Europe”, says La Pegna.
So what will happen to the coal plants at La Spezia, Fusina, Brindisi and Civitavecchia? “In July 2020 we launched four competitions, ‘New spaces for energy’, asking architects and designers to design new facades for the four power plants. Participants were asked to design new energy poles in which renewable sources (solar photovoltaic), batteries for energy storage and, to the extent strictly necessary for the national electricity system, gas plants with very high efficiency, can coexist. These areas are to be increasingly integrated with the surrounding environment, thanks to solutions that will reduce the impact on the landscape by designing a new and open idea of a power plant that also provides space for local communities,” the Enel manager explains. “The competitions are carried out in collaboration with the Universities of Genoa, IUAV in Venice, Tuscia, and Salento”. About 350 architectural firms and professionals expressed an interest in the competitions, for which the participation of young talent was encouraged. The proposed projects were evaluated on the basis of the criteria and principles of the call and by a commission made up of representatives of the group and institutions and universities of the territories involved. At this time, the competitions of Fusina, Civitavecchia and Brindisi have been awarded.
The issue is exemplified by the situation of the Monfalcone power plant in the province of Gorizia, located along the eastern bank of the Valentinis canal. The plant covers an area of about 30 hectares and occupies a third of the port quay. It has been active at minimal output for about a year and is expected to close by 2025. The owner, A2A, has proposed to convert the site into an 850 MW gas-fired power plant and last September the Ecological Transition and Culture Ministries gave the green light to the project.
The municipal administration is strenuously opposed to the idea of the conversion and criticises the project, saying: “The construction of a new gas generation plant in Monfalcone is convenient only for the capacity market mechanism which, by supplying 900 million euros, practically doubles the value of the investment, allowing the company an advantageous financial transaction, paid for by the town at the shared price of triple the CO2 production”, explained Mayor Anna Maria Cisint in a meeting on October 4th.
According to the think tank Ecco, this is a region that has already paid dearly, including in terms of health and air quality. The presence of a coal-fired power plant, which even today could redeem itself with a “fair transition”, risks not only taking advantage of coal exit policies, but of becoming a much larger power plant which, when switched on, will emit harmful emissions comparable to those of the previous plant. Then there is the issue of employment: a power station of this size would involve the employment of around 30 people compared to the current 130. Instead, the project by Council would have an increase of over 4 thousand units just by providing a shift of 10 per cent of Venice’s cruise traffic, and without calculating all the positive effects on tourism. “Employment prospects are on the land not in gas. Monfalcone said no, because we would like to see the capacity of local growth activated,”, concludes Matteo Leonardi of Ecco. “If it’s not done there, where should it be done?”
This article was produced with the support of Clew – Clean Energy Wire
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