Photo: AP

Coal is dying. Long live renewables.

That’s the message from a new report by U.K. climate nonprofit Sandbag and and German think tank Agora Energiewende. It shows that 2017 was the first year in history that renewables overtook coal as a source of electricity generation in the European Union. It also shows that wind installation passed a new record.

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Yet this good news about renewables comes with a major carbon accounting caveat. It’s still worth cracking a beer to cheers but keep the champagne on ice.

There’s two trends happening concurrently that have helped the EU reach the inflection point for coal and renewables. The first is that coal is simply not economically or politically viable in a number of EU countries. While Eastern Europe remains fairly dependent on coal, Western Europe has seen coal use decline.

Carbon Brief, a U.K.-based outlet reports this is happening for a couple reasons:

“Air pollution rules, ageing capacity, stagnant demand and competition from gas, as well as renewables, have spelt trouble for the finances of the EU’s coal fleet. In the UK, a top-up carbon tax has been significant in driving coal’s decline.”

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Five countries, including the U.K., have announced coal phaseouts, putting another nail in coal’s coffin. That said, Germany, the largest EU coal user, has yet to make a similar move.

The other side of the coin is that renewables are on the rise as prices fall. That’s particularly true for wind, which now generates more electricity that hydropower, formerly the top renewable in the EU.

“Onshore auction prices reached unexpectedly low levels of 3.8 Euro cents/Kilowatt hour in Germany, and an equivalent of 3.3 Euro cents/Kilowatt hour in Spain—at or below forward wholesale electricity prices,” the new report’s authors state.

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Solar prices have similarly dropped, though new installations have slowed compared to torrid growth in the first half of the decade, which means wind is providing a bigger and bigger chunk of renewable generation in the EU.

Here’s what it looks like on a graph:

Renewable vs. coal electricity generation. Image: Sandbag/Agora Energiewende

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“This is incredible progress, considering just five years ago coal generation was more than twice that of wind, solar and biomass,” the report authors wrote.

But here’s where the caveat comes in. Renewables beat coal thanks to that green wedge up there. Biomass refers to burning wood pellets to generate electricity. It’s a big deal in the EU, which is home to a number of biomass plants across the continent ranging from a series of smaller plants in Germany to the U.K.’s massive Drax biomass plant (which itself used to be a coal plant).

Burning pellets releases carbon dioxide, but EU rules label it as carbon neutral because there’s an assumption the trees will be replanted. It can take decades for replanted forests to hoover up the carbon their predecessors released when burned, though, and in some cases the process can even result in higher carbon emissions than coal plants. Wood chips and sawdust, which would have gone to landfills and released carbon dioxide there, are better for the climate but plants like Drax generally rely on pellets from trees cut for the express purpose of being pelletized and burned.

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And that’s why the champagne has to stay on ice. Sandbag and Agora Energiewende note that the biomass boom that over took Europe is likely finished given that plant installations have slowed. But it also means there are a lot of potential polluters masquerading in renewables clothing, and that the EU still has a lot of work to do.

The report also notes there are other challenges on the horizon, including the rise of electric vehicles that would increase electricity demand. The EU’s overall carbon emissions are also increasing due to increased industrial activity and nuclear phaseouts. Finally, the biggest challenge is to help the renewable revolution spread.

Germany and the U.K. alone drove 56 percent of renewables growth over the past three years. They’re the two biggest emitters in the EU so that’s good, but everyone’s going to have to pitch in to solve this climate change thing.

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[h/t Carbon Brief]