Carbon price drives European coal-to-gas switch

The surge in carbon prices in recent months is having disproportionate impact on carbon-intensive coal, prompting operators to switch to gas wherever possible

The economics of generating power from European coal-fired power plants have been getting steadily worse over the past three years and the latest data reveal the outlook is steadily darkening. A growing deficit in operating margins at coal-burning utilities is helping to hasten plant closures in Europe’s leading economies, and is also leading to punishing losses for companies in countries that are expected to continue using coal long into the future. Prompt-generation coal plant margins have tumbled since the start of 2019, dropping from an operating profit of round €12/MWh to a loss of around €8/MWh, for units with 38pc thermal efficiency, price data show. At the same time, margins for gas-