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Greece will stop burning coal for power plants in 2025, three
years earlier than expected, State Secretary for Energy Alexandra
Sdoukou announced on 22 April.
Greece is the tenth European country to have already exited coal
or announced a plan to do so by 2025, according to nonprofit Europe Beyond Coal.
The state's decision to move forward a planned 2028 coal
phase-out date aligns with the target of its state-controlled
utility and coal mine operator Public Power Corporation (PPC).
PPC's move is in anticipation of future EU regulations, for
example limiting the use of solid fuels like coal, that could
potentially result from the EU's Green Deal package that will
implement its recently-agreed 55% emissions
target, or the EU's financing offered to fossil-fuel-dependent
nations through the Just Transition Mechanism.
In its 2020 annual results, the operator also
blamed the lower competitiveness of its coal-fired power plants on
the high price of carbon allowances for its coal generation and a
"rigid environmental regulatory framework."
In a year in which electricity demand dropped 8% due to the
pandemic, PPC had cut its coal-fired generation nearly in half due
to lower natural gas prices and higher CO2 prices, which made its
coal-fired units less competitive than its natural gas units.
The utility advanced plans to convert its then
under-construction 660-MW coal-fired power unit, Ptolemaida V to a
natural gas-fired unit by 2025. Ptolemaida was due to operate from
2022 to replace older units and run a district heating system.
In addition, PPC's coal mining operations, intended to supply
the new unit with lignite, will stop in 2024 instead of 2028.
In January 2019, the European Commission reformed the EU
Emissions Trading System (ETS) Directive with a mechanism intended
to spur incentives to cut emissions by raising carbon prices.
As part of this reform, the EC introduced the Market Stability
Reserve to slash the surplus of EU ETS allowances (EUA) that had
arisen after the 2008 recession caused a drop in emissions.
Following the cut in the surplus, EUA prices rose steadily,
reaching their highest-ever level in November, and then continuing
upwards to €47.03/t CO2 equivalent on 22 April. This higher price
comes down especially hard on coal operators, which have to
purchase more EUAs than less-polluting gas operators.
Another reform of the EU ETS coming up this year is expected to
accelerate the trend. "As the EU is preparing for a new reform in a
few weeks in order to align the sectors in EU ETS with the new 2030
EU climate target, carbon prices are expected to escalate even
more," said Nikos Mantzaris, senior policy analyst for Greek
nonprofit The Green Tank.
The type of coal (lignite) typically mined in Greece doubles the
sector's pain. "The Greek lignite industry is particularly
vulnerable to any kind of change with an economic impact, such as
the cost of CO2, because Greek lignite has, by far, the worst
quality in the EU, having, among other things, the lowest energy
content. In other words, you get the smallest bang for your buck,"
said Mantzaris.
PPC raises green ambition, bonds
In the context of a shift away from coal and towards renewables
last year, PPC signed an agreement with German energy company RWE
to develop renewable energy projects in Greece through its
subsidiary, PPC Renewables.
PPC also made several successful green bond issuances in March
that it said will help finance projects. For example, PPC offered
sustainability-linked senior notes totaling €775 million (US$932
million) through two issuances, one of which was oversubscribed by
six times the amount of notes offered.
The bonds will help underwrite its overall environmental
strategy, which includes a drop in CO2 emissions by 40% by 2022
under 2019 levels. PPC plans to phase out its existing 3.4 GW of
coal power capacity by 2023.
PPC is already making headway in renewables. Its renewable
energy pipeline has reached more than 6 GW, the largest in the
country, of which 1.5 GW in capacity will be up and running by the
end of 2023.
Mostly, the pipeline includes solar, but it also encompasses
wind, hydropower, and other renewables. Some PV generation will be
rolled out at PPC's depleted lignite production fields alongside
the decommissioning of its lignite-fired generation assets.
But despite this progress, environmental advocates are fighting
for PPC to stop burning fossil fuels altogether.
They say converting Ptolemaida V to an energy storage facility
would be cheaper than switching to combined-cycle gas turbines
because of projected carbon prices, according to a recent paper by the Green Tank, legal
charity ClientEarth and German energy consultancy Enervis.
As it stands, the gas-fired unit will be in violation of
Greece's National Energy and Climate Plan submitted to the EU as a
condition for obtaining EU pandemic recovery funds, said nonprofit
Europe Beyond Coal.
However, Greece is currently drawing up Territorial Just
Transition Plans (TJTPs) for its coal mining regions, as required
to access financing under the EU's Just Transition Fund.
In 2019, the Greek government formed a committee to work on
transitioning its Western Macedonia and Megalopoli coal mining
regions.
In September, the committee opened a public consultation on a
long-term plan to transition to a
post-coal industry in the two regions.
Solar power is a major feature of that plan. The Greek
government had set a goal to install 2 GW PV through PPC's
partnership with RWE. This includes an agreement between Greek oil
company Hellenic Petroleum and the German company Juwi on the
construction of a 204-MW photovoltaic park in Kozani.
The Greek government is also currently working on a legislative
framework for energy storage and offshore wind farms.
Posted 30 April 2021 by Cristina Brooks, Senior Journalist, Climate and Sustainability
