{"id":108807,"date":"2021-06-30T10:01:00","date_gmt":"2021-06-30T02:01:00","guid":{"rendered":"https:\/\/www.mediaintel.asia\/?p=442289"},"modified":"2021-06-30T10:01:00","modified_gmt":"2021-06-30T02:01:00","slug":"planned-coal-power-projects-in-asia-exposed-to-150bn-investment-risk","status":"publish","type":"post","link":"https:\/\/www.chinalegalblog.com\/en\/2021\/06\/30\/planned-coal-power-projects-in-asia-exposed-to-150bn-investment-risk\/","title":{"rendered":"Planned coal power projects in Asia exposed to $150bn investment risk"},"content":{"rendered":"
\"MediaIntel.Asia\"<\/a><\/div>\n

By Andrew Fawthrop \u00c2 \u00c2 29 Jun 2021 A 300GW pipeline of new coal plants, many in China and India, could prove 'uneconomical' as renewable alternatives get cheaper
\nGlobal demand for coal power is expected to grow in 2021, driven by consumption in Asia (Credit: Rudmer Zwerver\/Shutterstock)
\nNew coal power projects planned across Asia pose a $150bn investment risk \u00e2\u0080\u0093 even in the absence of tougher climate policies \u00e2\u0080\u0093 and should be cancelled, according to a new analysis from financial think tank Carbon Tracker.
\nThese include the vast majority (92%) of more than 600 planned or under-construction projects in China, India, Indonesia, Japan and Vietnam \u00e2\u0080\u0093 totalling 300 gigawatts (GW) capacity and accounting for 80% of the global development pipeline.
\n\u00e2\u0080\u009cThese last bastions of coal power are swimming against the tide, when renewables offer a cheaper solution that supports global climate targets,\u00e2\u0080\u009d says Catharina Hillenbrand von der Neyen, Carbon Tracker\u00e2\u0080\u0099s head of power and utilities.
\n\u00e2\u0080\u009cInvestors should steer clear of new coal projects, many of which are likely to generate negative returns from the outset.\u00e2\u0080\u009d
\nCarbon Tracker\u00e2\u0080\u0099s analysis suggests progress towards reducing global coal-fired power generation this decade rests \u00e2\u0080\u009calmost entirely\u00e2\u0080\u009d with this handful of Asian markets, particularly China and India, which collectively account for around three quarters of total installed capacity worldwide.
\nBut some investors appear to be ignoring the risks of backing new projects, both in terms of climate and economic arguments, the report states. \u00e2\u0080\u009cBy committing money to operating coal assets there is a significant risk of either not recouping the investment or achieving an investment return below what was originally expected.\u00e2\u0080\u009d
\n\u00c2
\nA quarter of coal power already unprofitable, and new climate policies would pose further investment risk Faced with \u00e2\u0080\u009coverwhelming\u00e2\u0080\u009d competition from low-cost renewables , the analysis finds the economics of even existing coal plants to be \u00e2\u0080\u009cextremely fragile\u00e2\u0080\u009d, with 27% of the current global fleet already unprofitable \u00e2\u0080\u0093 rising to 66% by 2040 based on current policies and regulations.
\nEven where profits are being made, almost one-third of worldwide coal operations are returning \u00e2\u0080\u009cvery close to break-even levels\u00e2\u0080\u009d of no more than $5 per megawatt hour (MWh).
\n\u00e2\u0080\u009cA 5% annual reduction in utilisation versus our base case would see global coal unprofitability almost double to 52% by 2030 and rise to 77% by 2040,\u00e2\u0080\u009d the report adds.
\nWith around 70% of the world\u00e2\u0080\u0099s coal plants currently reliant on some form of government policy support such as subsidies, any tightening of emissions regulations that removes these \u00e2\u0080\u009cmarket distortions\u00e2\u0080\u009d would likely leave projects further exposed to value destruction.
\nStronger national commitments to achieve Paris Agreement targets could create a $220bn stranded asset risk for coal plants currently in operation, with ten companies accounting for 40% of this risk exposure, notably India\u00e2\u0080\u0099s NTPC and Adani Group, and Indonesia\u00e2\u0080\u0099s PLN.
\nNew coal project economics to 2030. BAU= Business as Usual, NPV= Net Present Value (Credit: Carbon Tracker) Coal projects still being planned, despite \u00e2\u0080\u0098fragile economics\u00e2\u0080\u0099 According to Carbon Tracker\u00e2\u0080\u0099s analysis, new renewables already outperform 77% of operating coal facilities on the cost of producing electricity \u00e2\u0080\u0093 with this figure rising to 98% by 2026 and 99% by 2030 based on current policy scenarios.
\nThis finding is backed up by a recent report from the International Renewable Energy Agency (IRENA), which says 62% of the renewable capacity added globally in 2020 is undercutting even the most cost-competitive coal-fired units.
\nAhead of the COP26 climate summit in November, pressure is mounting on major economies to commit to a coal phase-out, while UN Secretary General Ant\u00c3\u00b3nio Guterres has urged international investors to end financing support for new projects.
\nHillenbrand von der Neyen says: \u00e2\u0080\u009cCoal no longer makes sense financially or environmentally. Governments should now create a level playing field which allows renewables to grow at least cost, using post-Covid stimulus spending as an opportunity to lay the foundations for a sustainable energy system.\u00e2\u0080\u009d
\nBut despite a record 4% drop in coal generation in 2020 caused by the coronavirus pandemic, a rebound in the sector is expected this year , driven by higher usage across Asia, particularly China.
\nThe International Energy Agency (IEA) has warned this trend will drive the largest annual rise in energy-related carbon emissions for more than a decade \u00e2\u0080\u0093 around 1.5 billion tonnes.
\nAt the Leaders\u00e2\u0080\u0099 Summit on Climate hosted by the White House in April, Chinese President Xi Jinping \u00e2\u0080\u0093 whose country accounts for more than half the world\u00e2\u0080\u0099s coal-fired generation \u00e2\u0080\u0093 hinted at a national coal phase down, but not until at least 2026 during China\u00e2\u0080\u0099s 15th five-year economic plan.
\n\u00e2\u0080\u009cNew coal plants are still being built and planned, which typically implies a commitment of at least 40 years,\u00e2\u0080\u009d Carbon Tracker states.
\n\u00e2\u0080\u009cThis is a risky bet as these coal plants are highly unlikely to generate a return above their cost of capital over the project lifetime as a cocktail of carbon pricing, lower-cost renewables continuing to displace fossil fuels, and tight carbon budgets in the wake of net-zero announcements leave limited space for running polluting coal plants and may lead to early closures driven by policy decisions.\u00e2\u0080\u009d
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This data comes from MediaIntel.Asia's Media Intelligence and Media Monitoring Platform<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Andrew Fawthrop \u00c2 \u00c2 29 Jun 2021 A 300GW pipeline of new coal plants, many in China and India, could prove 'uneconomical' as renewable alternatives get cheaper
\nGlobal demand for coal power is expected to grow in 2021, driven by consumption in Asia (…<\/p>\n","protected":false},"author":253,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[144,586,671,931,477,693,194,1332],"tags":[10417,10424,3472,10323,10324,2214,10328,8694,3549,3904,2972],"class_list":["post-108807","post","type-post","status-publish","format-standard","hentry","category-china","category-economy","category-finance","category-india","category-investment","category-japan","category-news-chinese-law","category-white-house","tag-alcoholic-beverage","tag-china-general-news","tag-chinese","tag-coronavirus","tag-covid-19","tag-indonesia","tag-pandemic","tag-paris","tag-united-nations","tag-vietnam","tag-xi-jinping"],"_links":{"self":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/108807","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/users\/253"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/comments?post=108807"}],"version-history":[{"count":1,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/108807\/revisions"}],"predecessor-version":[{"id":108808,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/posts\/108807\/revisions\/108808"}],"wp:attachment":[{"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/media?parent=108807"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/categories?post=108807"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chinalegalblog.com\/en\/wp-json\/wp\/v2\/tags?post=108807"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}