Power workers inspect photovoltaic power generation facilities at a 35-megawatt “fish-light complementary” photovoltaic power station in the Binhai New Area of Hainan City, Jiangsu Province, East China, on March 15, 2022.
CostFoto | Future Publications | Getty Images
Record-high coal and gas prices are similarly pushing up prices for consumers and businesses, but there may be a silver lining.
According to the results of climate analytics firm TransitionZero, switching from coal to clean energy is now cheaper than switching from coal to gas – thanks to the low cost of renewable and battery storage, with increasing volatility in gas prices.
Jacqueline Tao, an analyst at TransitionZero, said the price of carbon needed to switch from coal production to renewable energy for storage has fallen to negative prices.
“So basically it means you can actually switch to renewables at a lower cost,” he told CNBC’s Street Sciences Asia on Wednesday.
The report claims that the average global cost of converting coal to renewable energy has decreased by 99% since 2010 compared to the conversion from coal to gas.
Using coal to clean up the carbon price index – or the C3PI project – the company measured carbon prices in renewable ways, from new coal to new coastal winds or solar photovoltaic plus batteries, to inspire 25 countries to change energy.
Regional breakdown of carbon price switch, 2022 average
| Region | Gas from coal ($ / tCO2) | Clean from coal ($ / tCO2) |
| Global weighted average | 235 | -62 |
| China | 40 | 11 |
| EU | 288 | -90 |
| India | 64 | 38 |
| Japan | 69 | 59 |
| South Korea | 90 | 38 |
| Philippines | 44 | 57 |
| United Kingdom | 216 | -98 |
| Us | 15 | 50 |
| Vietnam | -27 | 23 |
Source: TransitionZero
Their findings show that the price of carbon needed to encourage coal-to-clean energy switches dropped to an average of $ 62 per tonne of carbon dioxide emissions in 2022. This compares to $ 235 / tCO2 to encourage them to switch from coal to gas.
It challenges the placement of natural gas as a “bridge fuel” for the conversion of clean energy such as wind, solar and other renewable energy from coal. Traditionally, gas has been considered a renewable bridge from coal because flammable gas has a lower carbon intensity than coal.
The price of clean carbon from coal varies in different regions, and the picture is not so much “pink” in Asia compared to the European Union due to differences in market structure and fuel price process, Tao said.
Southeast Asian countries such as Indonesia, the Philippines and Vietnam still face relatively high costs for direct conversion from coal to renewables. According to Tao, these countries have traditionally lagged behind in shifting to renewable energy because of subsidies for fossil fuels for domestic producers of coal and gas.
Hedging against climate risk
But outside of cost savings, renewable energy also “helps raise energy security concerns,” Tao said.
Renewable investment provides a hedge against the risks of climate change, he told CNBC.
“Banks increasingly consider lending to these fossil fuels to be risky amid concerns that they could become a resource stuck in the near future due to global energy changes,” he explained.
“This means that there is going to be a limited upstream supply that is going to come online, and we are going to see a growing tight gas market and a fossil fuel market in general that will be at risk of pushing demand and supply.”
On the other hand, fossil fuel infrastructures could face physical risks as a result of climate change and extreme weather events, he added.
“We think investing in renewable energy will now provide a hedge.”
