General Electric has announced it will exit manufacturing coal-fired power plants, marking a key environmental moment for one of the world’s largest equipment manufacturers of coal-fired plants.
The company is one of the most influential suppliers of equipment for coal fired power plants, and the move to pivot away from fossil fuels could trigger a sell-off of its existing coal assets. It has said that its steam power division will continue to operate and service current coal power plants.
The news comes just months after the U.S. Energy Information Administration released figures showing that in 2019, coal production was at its lowest point since 1978, with a year-on-year drop from 2018 of 7%.
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General Electric’s senior vice president, Russel Stokes, has issued a statement saying that “with the continued transformation of GE, we are focused on power generation businesses that have attractive economics and a growth trajectory.”
He continued to explain that “GE will continue to focus on and invest in its core renewable energy and power generation businesses, working to make electricity more affordable, reliable, accessible, and sustainable.”
“As we pursue this exit from the new-build coal power market, we will continue to support our customers, helping them to keep their existing plants running in a cost-effective and efficient way with best-in-class technology and service expertise,” he added.
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The energy giant continued to explain that “GE’s steam power business will work with customers on existing obligations as it pursues this exit, which may include divestitures, site closings, job impacts and appropriate considerations for publicly held subsidiaries.”
As it stands, General Electric is a massive supplier of equipment for nuclear and renewable energy sites, predominantly wind farms. The company has been moving steadily toward renewables under its CEO, Larry Culp.
According to a report from Bloomberg “the exit from coal marks yet another step in Larry Culp’s effort to reshape GE’s electricity-equipment business, which has been at the heart of the company’s financial woes in recent years.”
In response, the Natural Resources Defense Council has issued a statement saying that “communities and organisers have been calling on GE to get out of coal for years. This is an important and long overdue step in the right direction to protect communities’ health and the environment.”
Five years ago, General Electric doubled-down on coal resources in its portfolio after purchasing one of its competitors, Alstrom for $9.5 billion; the largest purchase in General Electric’s history.
Kathy Hipple, a financial analyst working at the Institute for Energy Economics and Financial Analysis has told the Financial Post that “GE’s exit from building new coal-fired power – after decades as a leader in this space – is an acknowledgement that grown in the energy sector will not longer be in coal.”
“The market will ultimately reward GE for exiting new coal builds,” Hipple added.
A few weeks ago, we reported that oil companies were downgrading their assets by a staggering $87 billion after record low production numbers and forecasts of oil prices that were significantly lower than anticipated. BP forecasted an average price of $55 per barrel between 2020 and 2050, while Shell dropped its forecasts from $60 per barrel to just $35.