China risks wast­ing US$490b on coal plants

The Myanmar Times - - Business -

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 895GW 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 205GW al­ready un­der con­struc­tion and plans for an ad­di­tional 405GW.

At an es­ti­mated US$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 in a re­port.

Power de­mand growth had slowed from 10 per­cent to 3pc or less per year, it added.

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

“China no longer needs to build any ad­di­tional coal plants and there­fore should act with con­vic­tion to con­tain its coal over­ca­pac­ity cri­sis,” the re­port said. 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.

But even though ca­pac­ity cuts do not nec­es­sar­ily lead to re­duc­tions in pro­duc­tion, they have been blamed for ris­ing coal prices, giv­ing stricken pro­duc­ers a new lease of fi­nan­cial life.

CTI’s com­ments echo state­ments by en­vi­ron­men­tal cam­paign group Green­peace, which es­ti­mated in July that China has up to 300GW of ex­cess coal-fired ca­pac­ity.

Two new coal power plant projects were be­ing be­gun each week across 10 dif­fer­ent prov­inces, it stated.

China’s cur­rent five-year plan – a blue­print for eco­nomic and so­cial de­vel­op­ment in 2016-2020 – was “dis­ap­point­ing” and “far from am­bi­tious enough” in tack­ling coal power over­ca­pac­ity, Green­peace has said.

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 of ex­pec­ta­tions. –

Photo: AFP

Peo­ple wrap up against snowy weather in Bei­jing.

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