A new report has warned China and other countries will be stranded with costly and polluting coal power for decades if they build new plants to boost their economies after the COVID-19 pandemic. Financial think-tank Carbon Tracker, in its report titled Political Decisions, Economic Realities, has warned that subsidy cash is driving countries to build nearly 500 GW of new coal-fired power plants worldwide, at an unrecoverable cost of more than $630 billion.
The researchers have warned investors and governments will lose their investments because coal plants take 15 to 20 years to cover their costs. The study calculates 46% of coal plants will run at a loss globally in 2020, which will rise to 52% by 2030. The research also states 90% of the world’s coal plants are surviving only on non-market financial support, because renewables and natural gas are far cheaper than coal already.
Carbon Tracker assessed cash flows of 7,000 coal facilities worldwide – 97% of the global coal capacity – which were both operational and in the pipeline. It reported that 59% of China’s 982 GW coal-fired capacity was running at an underlying loss, with a further 206 GW in the pipeline. In India’s regulated market, the report stated 51% of the country’s coal power costs more to run than building new renewables, 2% of its existing 222 GW coal fleet is running at an underlying loss, a further 66 GW is in the pipeline, but 23% of uneconomic coal capacity would enter the market with negative cash flow. In the US, 47% of coal capacity was running at a loss, a bit lower than the 62% in the EU, according to the report.
“Governments and investors have a responsibility to navigate a transition away from coal in an orderly way to ensure consumers receive low-cost energy and investors plan for premature closures,” says the report.
Matt Gray, who co-authored the report, said propping up the existing fleet with stimulus money would be throwing good money after bad. If governments are investing billions to boost growth and create jobs, they should incentivise the closure of coal and spend on a major expansion of cheaper and cleaner renewable power, he said.
The Intergovernmental Panel on Climate Change (IPCC) says that electricity from coal must fall by 80% by 2030 in order to limit global temperature rises to 1.5°C, the most ambitious target in the Paris climate deal. According to the International Renewable Energy Agency (IRENA), decarbonisation of the global energy system can achieve global growth and create up to 28 million jobs by 2050.
Experts point out that environmentally damaging coal continues to flourish because it is propped up by state subsidies. With the research estimating a fresh coal gamble of $630 billion in the offing, the report says China should reconsider plans to spend $158 billion on 206GW of new coal power because “renewable energy and battery storage are more viable and sustainable sources of economic growth”