China's coal fleet to jeopardise global climate change goals, new report finds
Image credit: Dreamstime, E&T, Ben Heubl
Amidst growing global pressure and progress towards climate change mitigation, a new analysis reveals a dichotomy between the international efforts to retire more coal power plants than the world builds and China, seemingly the only place eager to add to its coal-fired capacity.
Calculations by the non-profit organisation Global Energy Monitor, which scrutinises coal plants globally, found China’s growth in coal power capacity is at disappointing odds with the progress to reduce coal dependence the rest of the world achieved.
The research team was surprised to find, for the first time, a negative growth rate for coal plants around the world, outside of China.
Ted Nace, head of the organisation, told E&T the finding that the world is waking up to the peril of coal power emissions is encouraging. Progress is propelled by two key factors. An international backlash against coal projects' financing is one. Notably, India's banks pulled investment money and plans for a number of projects were discarded - at least 45 coal-fired generating units at 24 locations that were previously in construction were found to have been put on hold or canceled, mostly due to financers refusing to loan money for further construction. In contrast, in China similar things started to happen, "but then it surprised everyone when [coal power] projects came back like zombies”, Nace explained.
On the other hand, the second reason for falling coal capacity is retirements within the United States. “Not because coal has lost its political support, but rather because it has such an uneconomical old coal fleet [on the brink of retirement]. Even the Trump administration can’t change economics”, Nace told E&T.
The US has heavily decommissioned coal plants in recent years. According to Global Energy Monitor analysis, 2018 was the second-highest year for coal plant retirements, second only to 2015 in the number of retirements for existing coal plants, worth 17GW - similar to the entire operating coal fleet of Vietnam. The biggest year in the US was 2015. A similar trend is observable in Europe, the researcher pointed out. In Europe, coal power generation was down 19 per cent in the first half of 2019, and in the United States by 13 per cent, according to Global Energy Monitor.
Southeast Asia also contributed to global progress. Originally assumed to be among the top growth areas of coal power capacity, enthusiasm for coal projects was found to be curbed. Construction starts in 2018 and the first half of 2019 was found to be down more than 75 per cent, compared to 2016 of the last four years, according to the latest figures on Southeast Asia.
Despite progress outside of China, the energy experts at the Global Energy Monitor remain disappointed. China is moving too slowly on actions to avoid dangerous climate change. In the past 10 years, the Asian superpower has been building the size of the entire global fleet at that time, only before doubling it to the size of the global fleets today.
The IPCC report from last year concluded that the world may only have another ten years to make drastic changes. Specifically, there is great responsibility for China, contributing a quarter of carbon emissions to the global balance, to cut down between one third and a half by 2030.
The world at a whole would need to move even faster and cut down its coal emissions by 40 per cent by 2030, to keep warming below 2°C, and by nearly two-third in the same period to keep warming to 1.5°C, according to GEM's analysis.
Since China's coal fleet is relatively young, such cutbacks will require retiring plants as new as 21 years for 2°C and as new as 17 years for 2°C. While such a pace of transition would be unprecedented, prices for renewable power and battery storage continue to fall rapidly worldwide, including recent auctions in India for large solar facilities selling power at under 3.6 cents per kWh.
The biggest risk is that China fails even to stick to its coal fleet targets under mounting pressure from its own industry groups. China's 13th five-year Energy Development Plan from 2015 stipulated a coal-fired power capacity target which allowed an increase of 1,100GW until next year.
So far, the country keeps "bumping up against that 1,100GW target”, Nace confirms. But there are signs that industry lobby groups urge the government to increase its present cap. Nace said he spotted three different industry groups proposing three different new caps - one 1,200GW, a 1,500GW and a 1,400GW cap. To bow to the pressure of these power trade groups could be detrimental to the climate.
And China's climate is especially vulnerable to emissions. Previous research found it to be one of the most susceptible nations to climate change. According to the World Health Organisation, China is indeed experiencing "more frequent and higher intensity extreme weather events.
"Floods, heat waves, droughts and dust storms, which were once rare, now happen on a regular basis causing great harm to health and society," says WHO.
Last month's publication of new research that re-estimated the altitude of future sea-level rise by 2050 predicted Shanghai's flooding within the coming 30 years without new protection measures.
Nace added that understanding why concern for its climate is not a wake-up call for China, one needs to look closely at the country's local and regional politics. The real reason China experiences more coal-plant building is the volume in the present-day planning system. “There is so much in the system that it has this momentum to play out for several more years,” he said. It would be a legacy partly from 2015, when five times the number of coal power plant permits were handed out in a single year. Now, it would all come as a huge wave of new constructions.
Despite clear signs that its national government is beginning to get to grips with the dangers of new builds, the economic incentive structure on a provincial level goes against efforts on a federal level. “There are contending forces in China. We have seen that the central government tries to make a transition [to renewable power sources] happen. But it is hard to force on the issues at provincial and industrial level."
Amidst a slowing Chinese economy, the pressure to present positive economic figures increased, which contributed to a lasting building boom. The economy is definitely a factor at the provincial level, Nace added. “For provincial bureaucrats to look good, with their economic numbers, it helps to build on big projects. Economic drivers, that are probably messing things up.”
The researchers at the Global Energy Monitor do think that national pressure put on China would matter. Statements such as that made by Secretary-General of the UN in September - who said that no new coal plants should be build after 2020 - are expected to grow more numerous.
"The more the international community makes it a priority, the stronger the forces are within China, the stronger their [national government's] hand will be”, Nace added.
A cascade of organisations started to speak out against China’s relish for the coal power bonanza - among them, pressure came from the Powering Past Coal Alliance (PPCA), the United Nations and over 100 globally significant financial institutions have now placed restrictions on financing coal plants, a sign of the sea change in business attitudes toward the future viability of coal, according to the IEEFA.
Financial risk for Chinese coal projects remains of particular concern to Nace. Stranded assets, under new renewable energy policies, is a great risk to the economy and investors. Should China move ahead and fulfil its pledge to peak its carbon dioxide emissions by 2030 under the Paris accord, it increases the risk for financial returns on fresh new coal plants just built. One solution is not to build them in the first place.
"If you think the pressure on [financial returns] is intense now, just wait two or three years. There are going to end up having to close down a much larger amount [of coal plants] than they would if they didn’t built them. It is going to be wasted money, and better they would have stopped building them earlier”, Nace added.
Nace's recommendation to Chinese policymakers is to cut down coal plant building projects as soon as possible. He explains the biggest danger could be China making another u-turn and "resuming to give out new construction permits for coal power stations".
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