Asia’s coal plans shrinking further after Paris

In the normal scheme of things, the last thing you’d want for a report that you spent good money commissioning is for it to go quickly out of date.

Six months ago to the day, we published a report written for us by former Reuters journalist Gerard Wynn, on how Asia’s much-discussed coal boom was slowing down.

Within weeks, it was out of date – and it’s become more and more out of date as the months have passed.

And I’m very happy about that – because the events that have made it out of date have only confirmed our conclusions.

Our starting point was to question whether the meme, imported to these shores some years back by Sir David King, that China was ‘building one coal-fired power station every week’, was still correct.

The driver for that rapid power station building was China’s pursuit of economic growth at all costs. Coal, as the cheapest form of power generation and a natural resource abundant in China, was the natural choice. Annual electricity consumption almost tripled during the decade from 2002 to 2012 – mainly fuelled by coal, and largely used for industry.

Counter-current

In 2011, something curious happened. China was still adding more than 50 gigawatts of coal-fired power stations per year (in line with Sir David’s ‘one station’) – but those stations were running for less and less of the time.

Two years later, the amount of electricity China generated by burning coal actually fell.

And that was down to a couple of reasons.

For one thing, electricity consumption was rising much less quickly, as companies used it more efficiently and the government deliberately pursued a slower, more sustainable growth trajectory and stoked diversification of the economy away from heavy industry.

For another, China had begun sprouting wind turbines and solar panels at an unprecedented rate, taking up the reins of coal generation.

The result: while the average Chinese coal-fired power station ran for about 60% of the time in 2011, four years later that figure had fallen below 50%. In total, coal consumption appeared to have peaked.

Anyone can see that against this background, continuing to build more and more coal generators would be economic folly. And so, our report predicted the build rate would surely tail off.

We predicted similar trends would transpire in the other three countries we looked at too – Indonesia, Vietnam and India – although as India is at a significantly earlier stage of development than China, we suggested it would take a while longer.

Pipeline of change

Now, at this rate I’m going to start doing the football pools, because boy have events turned out as we anticipated:

• Just a few days after we published our report, the Chinese government told 13 provinces to halt approvals for new coal-fired power stations, and told 15 to stop building ones that had already been approved
• Also in March, the Vietnamese government, having previously announced it planned to scale back coal expansion as a result of December’s UN climate pact, published a revised energy plan incorporating higher ambitions for gas and renewables
• A month later came news that China was suspending approvals for coal-fired plants in 28 out of the country’s 31 provinces
• In May, the Indonesian government cancelled a 2GW coal station in Java, amid a wider review of generation plans
• In August, Guodian, one of China’s five biggest coal generators, said an unspecified number of its old coal-fired plants had become ‘zombies’– no longer economically viable, and facing closure. It planned to keep a number of its displaced workforce in place by expanding wind farm-building plans instead
• In September, the International Energy Agency (IEA) – historically conservative on such matters – caught up with events, concluding that China had ‘over-invested’ in coal plant, and that developers may not recoup their money as a result
• The same month, Indonesia’s state-owned operator PLN said it was considering meeting some of its previous coal generation target through gas, renewables and high-voltage connections between islands
• …and India scaled back plans to expand coal-mining, due to lack of demand
• …and a rapidly-reviving Asian nation that we didn’t include in our report, Myanmar, said it would revise its previous coal expansion plans in favour of hydro
• Also in September, the IEA said China had been building two wind turbines every hour - a stunning statistic
• …and again in September, the Indian government reported plans to close about 30GW of old coal-fired plant due to climate change considerations.

One net result of all this has been a marked shrinking of the global pipeline in new coal-fired power plants – down by 14% from the previous year. Another has been the trend marked for two years now, wherein the global economy has grown while carbon emissions have stayed flat.

Becoming good enough

If you’re someone who accepts the balance of scientific evidence on climate change, this is all good news. Coal is the most polluting fossil fuel, and reducing its use quickly is the single biggest thing governments could do to bring carbon emissions down.

But is it good enough?

At face value, no. For one thing, developed nations are in general not acting with commensurate alacrity – notably Germany, whose sanctimonious claims of environmental leadership are fast being undermined by repeatedly giving in to its coal unions.