$1tn could be wasted on 'unneeded' new coal plants, report warns
Almost $1tn of investment in new coal-fired power stations could be wasted if growing concerns about climate change and air pollution leave the plants unused, according to a new report.
About 1,500 new coal plants are in construction or planning stages around the world but electricity generation from the fossil fuel has fallen in recent years, the detailed report from the Sierra Club, Greenpeace and CoalSwarm found. In China, existing plants are now used just 50% of the time, coal use is falling and new permits and construction have been halted in half of the nation’s provinces, affecting about 250 plants.
A second new report has found that China, India, Indonesia and Vietnam - seen as big growth areas by the coal industry - are likely to build far less than half of their planned coal plants. However, 84GW of plants (about 85 stations) were built in 2015 and new plants are being commissioned at five times the rate that old plants, such as those in the UK, are being retired.
The coal sector has been hard hit by increasing regulation to curb global warming and to cut air pollution, which is estimated to cause 800,000 premature deaths a year. Earlier in March, the world’s largest private mining company, the US’sPeabody Energy, warned it was on the verge of bankruptcy. But, with the world in the midst of a run of record hot years, concern is mounting over the viability of the large number of plants being developed in Asia.
“The era of big coal is clearly coming to an end,” said Nicole Ghio, at the Sierra Club. Investment bank Goldman Sachs declared the fuel had reached “retirement age” in January 2015. Coal is also under pressure from the plummeting costs of renewable energy.
“This research has revealed hundreds of billions being squandered on unneeded coal plants, but there’s more at stake here than money,” said Ted Nace, director of CoalSwarm. “In terms of climate safety, the clock is ticking on the transition to clean energy.”
The calculation of $981bn of investment in future coal plants did not assume all proposed coal plants would go ahead, but used the implementation rates seen in each region in the last five years. The report also only include capital spending. Asia would see by far the bulk of the investment: 87%.
The second report, from the UK’s Energy and Climate Intelligence Unit (ECIU), found that the Asian nations with the world’s biggest coal power project pipelines - China, India, Indonesia and Vietnam - are likely to build far less than half of their current planned coal plants. It said development would be curtailed due to both India and China already having more plants than needed, concerns over air pollution and difficulties in financing the plants. The UN climate change agreement signed in Paris in December is also expected to increase investment in low-carbon energy.
In India, the ECIU report said, four proposed coal plants have been cancelled for every one built since 2010 and a carbon tax on coal has been introduced.
The report’s author Gerard Wynn, consultant at GWG Energy, said: “The evidence suggests the shift away from the dirtiest fossil fuels in favour of cleaner forms of energy is happening much faster than anyone could have expected.”
Richard Black, ECIU director, said: “Money is moving away from coal, with the world’s largest private company Peabody hovering on the edge of bankruptcy and investors such as JPMorgan Chase and Norway’s sovereign wealth fund pulling out of coal.”
However, Benjamin Sporton, chief executive of the World Coal Association, said electricity generation from coal would grow again in the future.
“Forecasts from the International Energy Agency show electricity generation from coal will grow by 24% between now and 2040, driven mainly by growing Asian economies,” he said. “Rather than wishing coal out of the energy mix, we should be focussing on how to reduce emissions. Our research shows that high efficiency coal could cut two gigatonnes of CO2 emissions making it the most cost-effective way to reduce CO2 emissions.”
A separate study has warned that despite the sharp slowdown in coal use by China, it is too soon to conclude that emissions from the world’s largest polluter are also falling.
“Carbon dioxide emissions depend mainly on the energy content of the coal. China is consuming better quality coal, meaning that emissions decrease less than the amount of coal burnt,” said Robbie Andrew, at the Center for International Climate and Environmental Research Oslo (Cicero) in Norway, one of the authors of the research published in the journal Nature Climate Change on Monday.
Another author, Jan Ivar Korsbakken, also at Cicero, said: ”It is enticing to jump on the latest Chinese statistics and report any good news. We find that preliminary energy statistics from China are unreliable, and the most easily available data is often insufficient for estimating emissions.”