Why the ENGIE Group will embark on no new coal-fired power plant projects
ENGIE Chairman & CEO Gérard Mestrallet explains why the Group will build no more coal-fired power plants, and restates his commitment to countering climate change.
Gérard Mestrallet interview for Le Figaro
With just a few weeks to go before COP21, the global conference on climate change in Paris, the news has a particularly strong resonance: French energy giant ENGIE (formerly GDF Suez), which operates in more than 70 countries, has announced its decision to build no more new coal-fired power plants. Interviewed by Le Figaro, ENGIE Chairman Gérard Mestrallet stressed that this decision has been under consideration for some time, having originated with the Magritte Group of Europe’s largest energy companies formed in 2013 at the initiative of Gérard Mestrallet. “Since then, and therefore well ahead of the COP21 meeting, we have lobbied for a realistic carbon price high enough to encourage operators to invest in renewables and limit their CO2 emissions. Since we believe that this price signal will become firmly established as a necessity and that the price of carbon will strengthen, investment in high-emission coal-fired power plants will be significantly penalized. The conditions are therefore in place for us to take the economic and ecological decision to build no further coal-fired power plants now.
Currently, electricity generation accounts for one-third of ENGIE activity, and only 15% of that comes from coal-fired plants. All of these facilities will continue in operation. “Similarly, all those coal-fired projects for which we have already entered into firm commitments will be honored,” continues Gérard Mestrallet. “On the other hand, all those projects where contracts have not yet been signed will de facto be suspended.” That is the case, for example, in South Africa and Turkey, where ENGIE was planning to build two coal-fired power plants of 600 MW and 1320 MW respectively.
Half of all new ENGIE power generating projects will emit no CO2
Gérard Mestrallet does not believe that this decision will penalize the Group’s international expansion, including in the world’s emerging economies (Brazil, India, etc.), which continue to rely significantly on coal to generate electricity: “It’s true that these countries are building coal-fired units, but more importantly, they have very high ambitions for renewables. And we are very well placed in that segment of the market. Half of all our current power generating projects are already solar power, wind power, hydropower, biomass or geothermal projects that emit no CO2. In practical terms, ENGIE has made the decision that all its new investments in power generation will be focused on projects that emit little or no CO2 because they are based on renewables and natural gas. One indicative sign of the growing influence of green energy sources is that in 2014, 50% of all new power generating plants (worldwide and for all operators) were solar plants.
The ENGIE decision to turn its back on carbon going forward is further explained by the fact that it has a good complement to renewables in the form of gas; an energy source can provide an effective backup to offset the intermittent nature of green power generation systems. “We are not the only ones to believe in the enormous potential offered by gas, when cities like Beijing have officially decided to replace all their coal-fired plants with gas-fired plants,” emphasizes Gérard Mestrallet. Not only does gas represent an important economic gain, but it also delivers very significant economies in terms of CO2 emissions.