China coal plants may waste $490B

CHINA could waste as much as half a trillion dollars on unnecessary new coal-fired power stations, a climate campaign group said yesterday, arguing the world’s top carbon polluter already has more than enough such facilities.

The Asian giant’s rise to become the world’s second largest economy was largely powered by cheap, dirty coal.

But as growth slows, the country has had a difficult time weaning itself off the fuel, even as the pollution it causes wreaks havoc on the environment and public health.

Many of China’s giant state-owned coal mining firms are unviable and plagued by overcapacity, but the ruling Communist Party is reluctant to turn off the financial taps and risk widespread unemployment, with its potential for anger and unrest.

As of July, China already had 895 GW in coal-fired power stations – representing more than half its electricity generation – said the London-based Carbon Tracker Initiative, which argues for limiting carbon emissions using financial data.

The country was operating the coal units at less than half their capacity, it said, but “perversely” had another 205 GW already under construction and plans for an additional 405 GW.

At an estimated $800 million per kW, that could cost $490 billion in total, CTI said.

“This misallocation of capital is a microcosm of wider structural woes within the Chinese economy,” it said. Power demand growth had slowed from 10 percent to 3 percent or less per year, it added.

Even if power consumption grew at 5 percent a year until 2020 and coal-fired stations were run at 45 percent capacity, it said, existing plants and those currently under construction would be enough.

Beijing has repeatedly pledged to cut overcapacity in several sectors as it seeks to reform the economy to make it more efficient. It set a target of reducing coal production capacity by 250 million tonnes this year, which Premier Li Keqiang announced last week had been met by the end of October.

Public discontent about the environment has grown in China, leading the government to declare a “war on pollution” and vow to reduce the proportion of energy derived from fossil fuels, but critics say efforts have fallen short.