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Notes from a small island - how King Coal was dethroned in Britain

Notes from a small island - how King Coal was dethroned in Britain

15-07-2020 | Statistiques stupéfiantes

Take a bow, Britain! The nation that gave the world industrialized coal has become the first industrialized economy to do without it for a sustained period.

  • Chris Berkouwer
    Chris
    Berkouwer
    Equity Analyst

Speed read

  • Coal has not been burned for electricity in the UK since 9 April
  • Renewable energy is set to exceed fossil fuels for the first time
  • Decarbonization likely to accelerate once the corona dust settles

What has happened?

First used by the Romans to heat hypocausts, and widely traded from the 13th century, British coal powered the 18th century industrial revolution that made the modern world possible. The skies were so thick with choking coal smog, evoking images of the ‘dark satanic mills’ and ‘pea-souper’ fogs, that they ushered in the world’s first environmental legislation with the Clean Air Act of 1956.  

Now, no coal has been burnt to generate power in the UK since the last four remaining coal-fired power plants were taken off the grid on 9 April. The current coal-free period smashes the previous record of 18 days that was set in June 2019. The coronavirus pandemic was partly responsible, as the lockdowns led to much less energy being demanded by shops or businesses that were closed.

It is a significant turnaround for a nation that was once so reliant on coal that a miners’ strike in the 1970s brought the country to its knees. ‘King Coal’ accounted for 40% of all the UK’s energy production as little as 10 years ago. 

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Why is it important?

Instead, the country is becoming something of a superpower in renewable energy, already possessing the world’s largest offshore wind farm. The giant Drax power station in Yorkshire, which once used coal to generate 3,900 megawatts of electricity, or 6% of the UK total, has been converted to burning wood pellets imported from sustainable forests in the US.

It all means that energy generated from renewable sources is on track to exceed that from fossil fuels for the first time this year. Renewable energy led by hydroelectric power from Scotland accounts for 37% of electricity generated in the year to date, compared to 35% for fossil fuels led by offshore natural gas. Nuclear accounts for 18%.

Switching from fossil fuels to renewables is a vital part of the transition to a low-carbon economy, so that countries including the UK can meet their commitments to the Paris Agreement. This aims to limit global warming to 2 degrees Celsius above the levels seen before the industrial revolution that British coal ushered in. 

What does it mean for investors?

“The demise of coal in the UK, which even accelerated recently, is a strong reminder that fossil fuels will soon be a relic of the past,” says Chris Berkouwer, Portfolio Manager of the Robeco Sustainable Global Equities strategy.

“Fortunately, ‘green investments’ are at the heart of many pandemic recovery plans, most notably that of the EU, which will definitely help scale up the technologies needed to decarbonize societies such as clean hydrogen, green building renovation and the further deployment of renewables.”

“The decarbonization theme has multi-decade legs and offers many angles with which to play it. Our favorite ways to do so are through biofuel refiners, industrial gases companies making hydrogen and facilitators of renewable energy.” 

Statistiques stupéfiantes
Statistiques stupéfiantes

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