A report published on June 25 has said that China currently has 249.6 gigawatts (GW) of coal-fired capacity under development, despite the country slowing down coal plant developments in recent years. The report by Global Energy Monitor (GEM) and the Centre for Research on Energy and Clean Air (CREA) says that China has 97.8 GW under construction and 151.8 GW in planning, a 21% increase from 2019 and a larger amount than the total coal capacity of the US.
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The study shows that so far in 2020, China has proposed 40.8 GW of new coal plants. The number of plans for new coal plants has steadily increased since the government loosened restrictions on coal plant developments in 2019. There has also been an increase in the number of plants advancing in the permitting process with the country approving 17 GW of coal power for construction between January and June 2020. In this period, 11 GW of new coal plants also began construction.
China’s state-owned investment holding company State Development & Investment Corporation (SDIC) has even invested in 3.2 GW of new coal plants in 2020, despite saying it was planning to quit the coal industry in 2019.
In June 2020, six government ministries announced that coal plants should only be built as and when they were needed. They stated that priority should be given to clean energy, imports and flexibility, suggesting that the central government has taken note of the coal boom at a provincial-level and is beginning to rein it in, the study says. However, the report says that no official plans have been announced to curtail coal plant developments which are limited to a traffic light policy that already authorises new coal plants in most of the country’s provinces.
The report highlights the reasons for China’s resurgence in coal development as being misguided incentives and not due to a need for more coal. The race to gain market share in power generation and coal mining as well as to prop up GDP numbers with large infrastructure projects, has led to the sudden expansion of the country’s coal power capacity. GEM and CREA’s report adds that the situation has been worsened by an increase in local lending quotas and calls to boost spending in order to offset the economic impact of the COVID-19 pandemic.
The latest string of coal proposals has come at a time when China continues to deal with an overcapacity crisis. The report says that the country currently has an estimated 400 GW of excess coal capacity, as shown by the average thermal power plant generating at 49% capacity in 2019. This compares to 50% in 2015 and 60% in 2011. The 360 coal-fired plant units added from 2015 to 2019 represent at least $80 billion dollars of wasted investment, just in the form of construction costs, the study says.
To read the Global Energy Monitor (GEM) and Centre for Research on Energy and Clean Air (CREA) report, click here.