GWPF Newsletter: China's Coal Secret Revealed

China Is Building Hundreds of New Coal Power Plants

In this newsletter:

1) China Coal Power Building Boom Sparks Climate Warning
BBC News, 26 September 2018 
 
2) New Coal War: China And Japan Compete For Hundreds Of New Coal Plants In Southeast Asia
Frederick Kuo, South China Morning Post, April 2018

 
3) Rupert Darwall: The War On Coal Is A Winner For China
The New York Post, 24 September 2018 
 
4) China’s Expanding Overseas Coal Power Industry
European Centre For Energy And Resource Security, 2016  

Full details:

1) China Coal Power Building Boom Sparks Climate Warning
BBC News, 26 September 2018 
Matt McGrath

Building work has restarted at hundreds of Chinese coal-fired power stations, according to an analysis of satellite imagery.

 

The research, carried out by green campaigners  CoalSwarm, suggests that 259 gigawatts of new capacity are under development in China.

The authors say this is the same capacity to produce electricity as the entire US coal fleet.

The study says government attempts to cancel many plants have failed.

According to this study, there was a surge in new coal projects approved at provincial level in China between 2014 and 2016. This happened because of a decentralisation programme that shifted authority over coal plant construction approvals to local authorities.
The report says that at present China has 993 gigawatts of coal power capacity, but the approved new plants would increase this by 25%.



China's central government has tried to rein in this boom by issuing suspension orders for more than 100 power plants but this analysis suggests that these efforts have been significantly less effective than previous news reports had indicated.



In this study, the researchers used satellite photos to examine every power plant that was subject to a suspension order. They found construction ongoing at many locations.

For instance, in September last year, China's National Energy Administration ordered a group of plants - that together could produce 57 gigwatts of electricity - to slow down construction. The organisation also prohibited them from connecting to the grid in 2017.

However the satellite data suggests that half of this capacity appears not to have slowed down at all.

"This new evidence that China's central government hasn't been able to stop the runaway coal-fired power plant building is alarming - the planet can't tolerate another US-sized block of plants to be built," said Ted Nace, from CoalSwarm.

"It's not too late for the central government to fix the problem, but they have to start cancelling projects, not just rescheduling them."

If this extra capacity was operational, it would make it much more difficult for the world to limit CO2.

According to the International Energy Agency (IEA), for the world to limit warming to below 1.75C above pre-industrial conditions, China would have to close all its power plants that don't have carbon capture and storage facilities within 30 years.

Full story
 
See also: How ‘Green’ China Fooled The World: New Coal Boom Continues
 
2) New Coal War: China And Japan Compete For Hundreds Of New Coal Plants In Southeast Asia
Frederick Kuo, South China Morning Post, April 2018

Southeast Asia’s appetite for coal has spurred a new geopolitical rivalry between China and Japan as the two countries race to provide high-efficiency, low-emission technology. More than 1,600 coal plants are scheduled to be built by Chinese corporations in over 62 countries. It will make China the world’s primary provider of high-efficiency, low-emission technology.



A joint report by Greenpeace, the Sierra Club and CoalSwarm indicates that Southeast Asia will be the new epicentre of coal production. Asia accounts for 85 per cent of new coal power development in the world’s top 20 coal producing countries, with China as the leader of the pack. However, while tighter restrictions on domestic coal plants have been imposed by the central government to curb pollution, Beijing has pushed the development of high-efficiency, low-emission coal plants across Southeast Asia as part of the “Belt and Road Initiative”.

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As China is expanding its influence, Beijing’s foremost strategic competitor in Asia, Japan, is being forced to step up efforts to combat its shrinking influence in the region. The booming energy sector of Southeast Asia, especially coal, is proving to be the new front line in the geopolitical rivalry between Asia’s two industrial giants.

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China’s coal drive is part of a larger energy-driven investment policy that follows its attempt to reduce carbon emissions by clamping down on the coal industry and pledging to increase investments in renewables. However, Chinese energy planners have realised they cannot relinquish coal as a major power source for the foreseeable future. The country remains highly dependent on coal, with coal sources accounting for roughly 73 per cent of China’s electricity production in 2014, according to World Bank numbers.

Instead of abandoning coal, China is developing cleaner and higher-efficiency coal plants – and, as a boon to its plan for greater regional influence, aims to export the technology abroad.

China is developing cleaner and higher-efficiency coal plants – and, as a boon to its plan for greater regional influence, aims to export the technology abroad.

To that end, the China Development Bank and China Export Import Bank last year lent US$25.6 billion (HK$200.92 billion) to global energy projects. This figure surpassed even the US$22.6 billion provided by the International Bank for Reconstruction and Development.

From a market perspective, Beijing’s plan to become the world’s primary high-efficiency, low-emission technology provider comes at the right time. Coal consumption across Asia is slated to outpace that of China over the next 20 years, coupled with an absolute increase in global coal demand over the next seven years. The more than 1,600 coal plants scheduled to be built by Chinese corporations in over 62 countries will make China the world’s primary provider of high-efficiency, low-emission technology.

Because policymakers still regard coal as more affordable than renewables, Southeast Asia’s industrialisation continues to consume large amounts of it. To lift 630 million people out of poverty, advanced coal technologies are considered vital for the region’s continued development while allowing for a reduction in carbon emissions.

Clearly, the countries providing this technology will inevitably expand their sway with regional governments. As a consequence, a race between Tokyo and Beijing over the construction of coal plants is already under way.

China is currently in the lead, having overtaken Japan in 2000 as Asia’s leading exporter of coal industry equipment. It remains the largest technology supplier to India and the second-largest investor in coal projects in Vietnam, behind Japan. It is also constructing Bangladesh’s first clean coal plant. These developments reflect Beijing’s advantage in providing the necessary coal funding. China has been “greening” for years, developing renewables and carbon capture technologies at breakneck speed, while also investing more aggressively in the region than Japan at a time when most multinational banks have restricted coal funding. The results speak for themselves. Between January 2010 and March 2017, the Japan Bank for International Cooperation was involved in five financing deals while Export-Import Bank of China inked seven.

But Japan is not exactly twiddling its thumbs, either. Since the 2011 Fukushima disaster, Tokyo has ramped up coal use and has raced ahead in clean coal technology development. Japan now boasts the world’s most efficient coal-fired plant, which uses less coal to produce more electricity. Seizing on this competitive advantage, Japanese Prime Minister Shinzo Abe has tried to capitalise on these capabilities in a bid to increase Japan’s reach across Southeast Asia – and in China’s backyard. Through the Japan-led Asian Development Bank, Tokyo has pledged US$6.1 billion for projects throughout the Mekong as well as for various other projects from Vietnam to Myanmar, providing an alternative to China’s regional designs.

What’s more, Japan will soon receive a boost from the Trump administration through the Japan-United States Strategic Energy Partnership. The partnership could be a game-changer in terms of Sino-Japanese energy competition, with a joint commitment by Tokyo and Washington to promote high-efficiency, low-emission deployment throughout South and Southeast Asia. With the Trans-Pacific Partnership in the doldrums, the new partnership is designed to counter Beijing’s energy diplomacy through a more coherent bilateral push.

This may well be only the beginning. US Energy Secretary Rick Perry has repeatedly emphasised that coal will be a key part of the Trump administration’s policies.

Full post 
 
see also GWPF coverage of Southeast Asia’s coal boom 
 
3) Rupert Darwall: The War On Coal Is A Winner For China
The New York Post, 24 September 2018 

We’ve just entered the 21st month of Donald Trump’s presidency. While the president is ending his predecessor’s war on coal at home, American taxpayers are still funding Barack Obama’s war on coal abroad.

That’s bad news for US taxpayers, trade — and national security.

In 2013, President Obama ordered the Treasury Department to use its representation on the World Bank, where the US is the largest funder, and other multilateral development banks to veto funding for coal-fired power stations. That year, the World Bank formalized a near blanket ban on coal. Last year, it extended the ban to the funding of oil and gas projects as well.

China is the big winner here. It dominates the solar-power industry. Nine out of the world’s top 10 solar companies are Chinese-controlled.

Just as important, access to cheap electricity is the single best way of boosting economic development in poor countries. Developing nations’ need for coal generation doesn’t go away simply because the World Bank refuses to fund it. Instead, they turn to — guess who? — China.

Indeed, across the board, the West is in danger of ceding development and influence to China: China is spending $1.3 trillion to build transportation and energy projects from the Indo-Pacific through east Africa and Eastern Europe.

Yet the US has one hand tied behind its back. Already China is financing coal-fired power stations in Pakistan, Bangladesh and Kenya. Although the Trump White House rescinded Obama’s anti-coal financing directive last July, it has made only half-hearted efforts to overturn the World Bank’s financing bans.

Forming an alliance of like-minded countries to promote the responsible use of fossil fuels has been in the works for some months and would help force a change of policy.

But a major stumbling block appears to be the Treasury, which has day-to-day responsibility for safeguarding American interests at the World Bank and other international-aid banks. What explains the foot-dragging on a policy so obviously harmful to the United States?

The likely answer is: Much of its key leadership is drawn from Wall Street, including Treasury Secretary Steve Mnuchin — meaning they probably share Wall Street’s cultural assumptions that coal is the past and wind and solar the future, even if it’s Chinese.

There’s a revealing passage in Bob Woodward’s “Fear” on life inside the Trump White House. The president and his top economic advisers were having an argument on trade and the loss of blue-collar jobs. People didn’t really want manufacturing jobs, argued Gary Cohn, who was serving as director of the National Economic Council.

“I can sit in a nice office with air conditioning and a desk,” the ex-Goldman Sachs president continued. “People don’t want to go into coal mines and get black lung.”

“Trump wasn’t buying it,” Woodward says. The president is right and Cohn badly out of date. Surface mining overtook underground mining some time in the early 1970s. And Wall Streeters continue to ignore renewable energy’s biggest drawback: It doesn’t keep the lights on.

Meanwhile, falling natural-gas prices should be pushing Americans’ energy bills lower, but high-cost renewable energy is pushing them up. In California, which is gearing up for a 100 percent renewable-energy mandate, electric rates are already 60 percent higher than in the rest of the country. A recent survey by the Energy Information Administration found that one in five households reported reducing or forgoing necessities such as food and medicine to pay an energy bill.

It’s even worse for the world’s poor. According to a UN report, providing universal energy access could be done for less than $50 billion a year, but doubling the share of renewable energy could cost $500 billion a year.

There’s no other word for it: Foisting high-cost energy on those who can least afford it is immoral. It’s the poor who bear the heaviest burden of renewable energy.

The next World Bank meeting convenes Oct. 8. Let’s hope Mnuchin and the Treasury Department have what it takes to end Obama’s war on coal and on developing nations around the world. It’s time to lift the ban.
 
Rupert Darwall is the author of “Green Tyranny” and The Anti-Development Bank: The World Bank’s Regressive Energy Policies 
 
4) China’s Expanding Overseas Coal Power Industry
European Centre For Energy And Resource Security, 2016  
Frank Umbach & Ka-ho Yu

China is the world’s largest energy consumer overall and the largest coal consumer in particular, using nearly as much coal as the rest of the world combined. It is also the largest coal producer, providing more energy to the world’s economy than the entire Middle Eastern oil production. Since 2011, it has also become the world’s largest importer of coal. 

But in contrast to China’s oil and gas investments abroad, Beijing’s expanded investments in foreign coal mining and coal power projects have failed to garner much international attention. This lack of interest exists, presumably, because the West does not see comparable geo-economic and geopolitical implications in these investments, even if said investments cast a shadow over on-going energy policy and emission reduction debates at the global climate summit in Paris and beyond.

This perception continues despite emerging and visible China-backed changes to the current international economic and geopolitical balance and infrastructure.

Chief among these moves are both Beijing’s new economic and diplomatic project One Belt, One Road (OBOR), as well as the developing world’s mounting dissatisfaction with the West’s refusal to providing financial support to coal projects in developing countries, where coal remains a key energy resource for economic growth. In this context, these countries have now turned to Chinese and new institutions such as the Asian Infrastructure Investment Bank (AIIB) for their financing needs. In addition, China may triple its global offshore assets and thus become the world’s largest overseas investor in the next decade.

The limited debate on Chinese coal investments abroad also overlooks several factors. First, China and other countries are actively and increasingly exploring new coal options – in particular the gasification of coal.

Second, as part of its official strategy, Beijing has continuously increased its overseas investment in coal mining and power projects during the last decade.

Third, China may have the third largest coal reserves behind the United States and Russia, but it may last a decidedly low 30 years, which helps explain the Chinese search for coal import supplies and investment abroad. Finally, China is currently restructuring its own coal industry by closing many smaller, inefficient mines and companies.

Moreover, two other factors need to be considered in the context of China’s current efforts to restructure its coal industry. First, it is important to question whether China may be merely following the U.S. and European examples of favouring foreign rather than domestic investment in energy intensive industries. Such a move would, in turn, have the added benefit of reducing domestic greenhouse gas emissions (GHGE), but at the cost of so-called carbon leakage by merely transferring CO2 emissions to other countries and leading to even higher global GHGE.

Second, the weakening Chinese economic growth and recent stock market meltdown has triggered considerations to relocate foreign and Chinese production facilities elsewhere. But this situation might also constrain future investments at a time when the Chinese government has initiated a new geopolitical investment strategy. Likewise, it may also decrease China’s foreign investment in coal mining and power projects.

Against this background and the recent global climate summit in Paris of last December, this study analyses China’s overseas investments in coal mining and coal power projects. It sheds light on China’s new business opportunities and risks, as well as on the geopolitical implications for European and global energy markets. By analysing developments in world markets and the major directions of China’s future climate, energy and coal policies, the study reveals the following:

Global Coal Markets: Shifts in Production and Demand Patterns 

With a reserve-to-production (R/P) ratio of 110 years, coal will be available for much longer than conventional oil or natural gas reserves – 52.5 and 54.1 years, respectively –; while global coal reserves have been halved during the last decade due to rising coal demand particularly in Asia and China. Future technology and better prices could grant access to currently unusable coal concentrations that are 20 times larger than existing coal reserves.

After oil, coal is currently still the second most important energy resource for global energy consumption. It is cost-competitive and not limited to any regions and countries. Coal is not just used as a fuel for coal-fired electricity generation and heat, but also to make steel, cement, fertilisers, and is a feedstock for the chemical industry.

For more than 20 years, global growth in absolute volumes in coal-fired generation has been greater than that of all non-fossil fuel sources combined – including during the last few years.

Almost all international energy organisations and experts expect global energy demand to continue climbing through 2040, with Asia experiencing the largest growth in energy needs.

Similarly, coal is expected to continue to play a major role in global energy supply during this period; hence, global coal trade is expected to grow up to 40 per cent through 2040, mainly because of rising coal imports from China and India.

Even though India is not expected to also replace China as the world’s largest coal consumer after 2025 or 2030, its coal demand growth will have far-reaching consequences given that Indian CO2 emissions per capita are eight times lower than China’s and thus have more room to grow.

In addition, Southeast Asia energy demand is expected to grow by 80 per cent, while regional coal demand is forecasted to increase at the fastest rate among all energy sources and reach a level equivalent to India’s present demand for the resource; all in all, Southeast Asia will remain a net coal exporting region.

In the United States, the recent decline in domestic coal consumption and the growth of the natural gas industry have contributed to a reshaping of global and European coal markets.

The global growth in demand for coal owes as much to Chinese and Indian energy development, as to coal’s status as an inexpensive resource for energy generation in many other developing countries; as long as there are no viable cheap alternatives, coal consumption – and with it GHGE – may further increase in the years to come.

Nevertheless, even a rapid expansion of renewable energy sources (RES) will fail to tackle the huge demand and supply problems, as reliable energy storage technologies are currently unavailable and the costs of a renewables-only electricity system is prohibitive for most developing countries.

Coal remains an important option particularly for developing countries, given that it can sustainably meet their growing energy demand amid global population trends that point to a hike from the current seven billion people to over nine billion after 2040; in addition, almost one-third of humankind still lacks access to electricity.

In this context, expanding both RES electricity generation and clean coal technologies may hold the potential of helping the world cope with its rising energy demand, while also providing a future perspective for countries’ economic development.

This reality, however, clashes with Western policies that make investment in new coal plants and mines exceedingly complicated, if not outright impossible; ahead and even in the aftermath of the Paris global climate summit, the energy schism between the West and the largely coaldependent developing world has only grown larger.

While countries had adopted new important national initiatives for the global climate conference last December, it appeared that the Paris summit would agree either on a less ambitious binding global agreement or a more ambitious non-binding agreement. Despite the much celebrated outcome, there are still fundamental uncertainties and differences of opinion regarding the implementation of the mostly unbinding final product.

Full paper

The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.thegwpf.com.