WHY THIS MATTERS IN BRIEF
- Coal fired power stations are regarded as the most polluting form of energy production, this latest roll back of investment in coal could be good news for the environment
At the same time that China’s government is talking about creating new global energy supergrids to help spread the benefit of renewable energies around the world they’ve also announced that they’re cancelling plans to build more than 100 coal fired power plants as they attempt to rein in runaway, wasteful investment and move the country away from one of the dirtiest, most polluting forms of energy production.
The announcement, made by China’s National Energy Administration, cancels 103 projects that were planned or under construction, eliminating a huge 120 Gigawatts (Gw) of future coal fired capacity. That includes dozens of projects in 13 provinces, mostly in China’s coal rich north and west, on which construction had already begun. Those projects alone would have had a combined output of 54Gw, which is more than the entire coal-fired capacity of Germany, according to figures compiled by Greenpeace.
The cancellations make it likelier that China will meet its goal of limiting its total coal fired power generation capacity to 1,100Gw by 2020. That huge figure, which is three times the total coal fired capacity in the US, is far more than China needs. Its coal plants now run at about half of capacity, and new sources of power, like wind, solar and nuclear, are coming online at a fast clip.
Nevertheless, China’s capacity would have surged well past the 1,100Gw mark by 2020 had it not begun cancelling coal fired plants in the works.
“The key thing is that yes, China has a long way to go, but in the past few years China has come a very long way,” said Lauri Myllyvirta, a researcher for Greenpeace in Beijing.
Electricity generated from coal is one of the biggest source of the greenhouse gases and the pollution they generate contributes to the shrouds of smog that has blankets most of China on a daily basis. But despite the vast amount of capacity added in recent years, China’s coal use has been on the decline since 2013.
Still, China’s state-owned power companies remain politically powerful. Grid operators often favor power generated from coal plants over that made by wind and solar, and despite the cuts, China is still building far more capacity than it needs.
In contrast, utilities in the US have only four coal fired plants set to go online through 2020, with a combined capacity of less than 1Gw, according to the Energy Information Administration. The US retired more than 13Gw of coal capacity in 2015 as the country shifted toward natural gas, wind and solar.
Despite the government announcement, it is far from clear that the Chinese jurisdictions most affected by the directive, including Inner Mongolia, Shanxi and Xinjiang, will actually take the politically costly move of halting construction, laying off workers and cancelling contracts, said Lin Boqiang, director of the China Institute for Studies in Energy Policy at Xiamen University in southeastern China.
“Some projects might have been ongoing for 10 years, and now there’s an order to stop them,” he said, “it’s difficult to persuade the local governments to give up on them.”
But Lin and Myllyvirta said one factor that made the directive likelier to succeed was its specificity. It names each project set for cancellation, putting provincial and other local officials on the spot and making it harder to continue the projects.
Matthew Griffin Futurist, Industry Advisor and Editor in Chief
Described as “The Adviser behind the Advisers,” Matthew is an award winning international speaker and writer who was recognised in 2013, 2015 and 2016 as one of Europe’s foremost futurists and industry disruption experts. Matthew combines these two disciplines to help governments, multi-nationals and regulators predict, adapt to and shape new disruptive cultural, industry and societal trends and innovate new products, services, strategies and visions. Matthew’s clients include Accenture, Bain & Co, BCG, Bank of America, Blackrock, Booze Allen Hamilton, Citi, Deloitte, Dentons, Deutsche Bank, Ernst & Young, Goldman Sachs, JPMorgan Chase, KPMG, Mckenzie & Co, PWC, Qualcomm, SAP, Schroders, UBS, the UK’s HM Treasury and the USAF.