The ongoing concerns around climate change are calling for stronger decarbonization measures and stricter regulations. This aggressive push toward green energy could strand investments worth $34 billion in pollution control equipment at coal plants. Also, a review of markets with strong renewable mandates and carbon emissions pricing indicates much of the U.S. fleet of recently built natural gas generation could come under pressure as well, S&P Global Market Intelligence reported Aug. 6.

The report shows much of the U.S. fleet of recently built combined-cycle gas plants built in the Midwest over the last 10 years may not ultimately earn the return investors expect, putting an estimated $68 billion in investments at risk.

With the increased presence of natural gas and renewables, coal generation—once the linchpin technology in the U.S. power sector—has steadily declined over several decades. And now as the pace of clean energy deployment accelerates, $34 billion tied to pollution controls and other enhancements intended to extend their useful life, is at stake.

According to the S&P Global Environmental Project Database, over 100 coal power plants totaling 130 GW—which is more than half the existing U.S. coal-fired fleet—have undergone or are planning to undergo environmental retrofits in some form, the total capital cost of which will be nearly $34 billion.

In fact, 22 coal plants costing over $3.5 billion have already undergone environmental retrofits and are tagged for partial or complete retirement. This trend is expected to continue.

“While natural gas has been the heir apparent to the shrinking coal fleet, the rapidly increasing push for a clean energy transition is beginning to highlight the growing risk to these assets as well, particularly in regions ahead of the curve in renewable and carbon pricing legislation,” the report stated.

In addition to coal, the push for green energy could put natural gas fleet at risk too. The report shows that the natural gas generation fleet, once seen as a key enabler of decarbonization through its replacement of coal plants, may instead become a source of stranded investment, displaced by green generation across several markets in the Eastern U.S., which combine rapidly expanding green generation with increasingly robust carbon pricing mechanisms.

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