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Global coal power plant capacity falls for fourth year, but China a concern, says report

SINGAPORE – The number of coal-fired power plants under development worldwide fell last year (2019), as climate concerns and competitive renewable energy projects chipped away at coal’s viability, a study released on Thursday (March 26) showed.

The study by four non-governmental organisations looked at key indicators of the coal power sector globally, including capacity growth, construction starts and the amount of capacity permitted for construction.

For the fourth consecutive year, despite an uptick in the number of new coal plants going into operation, the overall global pipeline for new coal power capacity continued to contract.

Coal power capacity under construction and in pre-construction development has fallen two-thirds from 1,468 gigawatts (GW) in 2015 to 499.2 GW in 2019, say the authors. Capacity under construction fell 16 per cent last year compared with 2018.

Globally, the amount of power generated from coal fell 3 per cent last year compared with 2018, with coal plants operating on average 51 per cent of their operating hours, a record low.

“Global power generation from coal fell by a record amount in 2019, as renewable energy grew and power demand slowed down,” said Dr Christine Shearer, lead author and director of the coal program at Global Energy Monitor (GEM), which tracks global coal plant development.

Coal plant retirements also accelerated last year. But perversely, new plants, mainly in China, led to additional global capacity but ultimately less power generation because of reduced usage.

“The number of new plants added to the grid accelerated, meaning that the world’s coal plants were operated a lot less – more plants generating less power. For banks and investors that continue to underwrite new coal plants, this means weakened profitability and increased risk,” Dr Shearer added.

Globally, 33 governments and more than 120 banks and insurers are leading a movement to shift away from polluting coal.

Burning it in power stations and steel mills is the single largest source of carbon dioxide (CO2), the main greenhouse gas heating up the planet. It is also a major source of harmful air pollution.

China is the world’s largest greenhouse gas polluter and largest coal consumer, with about half the world’s fleet of coal-fired power stations.

The authors found that outside China, the global coal fleet shrank overall with continued retirements in the United States and the European Union.

Within the Organization for Economic Cooperation and Development, coal power capacity has been declining since 2011, say the authors, with the exception of Japan. Nearly half of the retired coal power capacity in 2019 was in the US. During President Donald Trump’s tenure, US coal plant retirements have increased 67 per cent compared to President Barrack Obama’s time because of cheaper gas and renewables.

Globally, construction starts were down 5 per cent from 2018 and 66 per cent from 2015, compared to 2019, say the authors from GEM, Greenpeace International, the Sierra Club, and the Centre for Research on Energy and Clean Air.

Despite the decline in new project starts, the coal fleet grew by 34.1 gigawatts (GW) in 2019, the first increase in net capacity additions since 2015. Nearly two-thirds of the newly commissioned capacity was in China and it came online after being under construction for several years.

China’s continued additions to its coal fleet put at risk global targets to limit planetary warming, even if the plants are only running 50 per cent of the time or less.

The United Nations’ peak climate body, the Intergovernmental Panel on Climate Change, says the global economy needs to cut CO2 emissions by nearly half by 2030 to try to limit warming to 1.5 degrees Celsius above pre-industrial levels. Even at this level, there will be serious risks from more extreme weather events and rising sea levels.

The world has already warmed 1.1 deg C, the UN’s World Meteorological Organization says.

Meeting the 1.5 deg C target, part of the 2015 Paris Climate Agreement, means deep cuts in coal use and rapid phase-out of coal plants. But China’s development plans, and likely economic stimulus to recover from the pandemic, risk undermining the 1.5 deg C target, say analysts.

“The long plateau of coal use in China and emissions sticking close to current levels by 2030 or 2040 is the nightmare scenario,” said Mr Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air.

“The concern about China’s coal plants is not that they are going to run 24/7 and generate that much CO2. The big concern is that they will generate drag in terms of very powerful stakeholders resisting the shift away from coal,” he told The Straits Times.

For example, from March 1 to 18 (2020), more coal-fired capacity was permitted for construction in China (7.9 GW) than in all of 2019 (6.3 GW), according to GEM.

In South-east Asia, commissioning of new coal plants has been slowing.

“South-east Asia is often hailed as the next centre for coal plant development. Construction starts there have fallen over 85 per cent, from 12.8 GW in 2016 to 1.8 GW in 2019,” says the report.

Vietnam recently announced it was cutting its targets for coal-fired power generation from 2020 until 2030.

The pandemic has also led to a delay for some coal projects in Asia, says GEM.

In South and South-east Asia, GEM identified 15 locations totalling an estimated US$21 billion (S$30.5 billion) in capital outlays where coal-fired power plant construction is now on hold due to workforce and supply chain disruptions because of the coronavirus. Most of the projects are in Indonesia.

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For richer or poorer, coronavirus and cheap oil test climate vows

BOSTON/LONDON (REUTERS) – Climate change commitments by banks, pension funds and asset managers face their first major test as markets reel from the twin shocks of  the coronavirus pandemic and a sliding oil price.

The challenge looks formidable. When the 2008 financial crisis tipped the world into recession, carbon emissions fell.

But as economies grew again, governments proved unable to halt an emissions rebound.

The issue now is that at a crucial moment for international negotiations, the latest global economic blow could put paid to costly ideas for slowing climate change from political leaders and the private sector alike.

“When things are more difficult, people are really going to be focused on financial performance,” Ms Hester Peirce, a Republican member of the US Securities and Exchange Commission, said on Monday (March 9) as world markets dived.

This time around, money managers interviewed by Reuters say a growing recognition of the prospect of massive disruption, underscored by Australia’s bush fires, has permanently shifted the dial and put environmental, social and governance (ESG) issues front and centre.

“People look at ESG as a luxury and when recession hits, it gets thrown out of the window,” said Mr Michael Lewis, who heads research into environmental issues at German asset manager DWS.

“There’s still going to be significant pressure on policymakers not to take their eye off the ball, because of the financial materiality of climate change,” he added.

CLIMATE OF FEAR

The initial stages of the epidemic in China have already had a dramatic impact on the world’s biggest emitter of carbon dioxide, as Beijing locked down whole areas, shutting down factories and preventing travel.

Finland’s Centre for Research on Energy and Clean Air says Chinese CO2 emissions fell by a quarter, or an estimated 200 million tonnes in the four weeks to March 1.

Satellite data also showed a sharp fall in Chinese emissions of nitrogen dioxide, a noxious gas emitted by power plants, cars and factories, starting in Wuhan and then spreading over other cities, including the capital, noticeable over a fortnight in mid-February.

“There is evidence that the change is at least partly related to the economic slowdown following the outbreak of coronavirus,” Nasa’s Goddard Space Flight Centre said in a report.

But China has since begun to resume business as usual and globally scientists say it is too early to estimate what the coronavirus outbreak’s economic impact may mean for emissions.

In 2009, global carbon emissions fell to 31.5 gigatonnes from 32 gigatonnes, the Global Carbon Project said. But as the global economy recovered, emissions jumped to 33.2 gigatonnes in 2010 and to a projected 36.8 gigatonnes in 2019, a record high.

The recession’s impact in the United States was particularly marked, with CO2 emissions falling 10 per cent between 2007 and 2009 due to factors that include less consumption of goods and services, a paper published by science journal Nature Communications said.

Associate Professor Steve Davis, from the University of California at Irvine and one of the paper’s authors, said the growing US usage of natural gas helped suppress the rebound.

“The conclusion that the Great Recession helped decrease emissions is still true,” he said. “But that’s not the way we want to win the war on climate change.”

FAREWELL FOSSIL FUELS?

Coronavirus and the oil price fall come at a fraught time for international talks to avoid catastrophic global warming.

Observers fear governments will delay making ambitious pledges at a make-or-break UN summit in Glasgow in November.

“A recession is likely to complicate the politics of environmental policy, as it will drop in priority relative to the economy,” Ruben Lubowski, chief natural resource economist at the Environmental Defense Fund, a Washington, DC advocacy group, said.

Others see the drop in oil prices as an opportunity to impose more extensive carbon taxes.

“The money raised can be used to support fossil fuel workers and retool the economy,” said Mr Kingsmill Bond, energy strategist at financial think-tank Carbon Tracker.

The price plunge in oil triggered by a Saudi-Russia price war could also affect the shift away from carbon.

With shares in oil majors hit hard this week, some investors question the wisdom of new oil and gas exploration, climate issues aside.

At the same time, low oil and gas prices could reduce incentives for big emitters such as the European Union, Japan, China and India to wean themselves off fossil fuels.

“A lower oil price will stall the green revolution in the world,” Michel Salden, senior portfolio manager at Vontobel Asset Management, said.

But rapid renewable energy cost falls could give decarbonisation more momentum than in past downturns.

Mr Steve Young, chief financial officer of Duke Energy, a major US electric utility, told Reuters that the coronavirus outbreak so far does not seem to affect progress towards its goal of reducing its carbon footprint by 50 per cent by 2030 and reaching net zero carbon emissions by 2050.

Investors will also watch if any government stimulus packages aim to accelerate decarbonisation or simply encourage more high-emitting projects.

Changed social attitudes could make it hard for politicians to dismiss climate concerns, Mr Keith Skeoch, chief executive of Standard Life Aberdeen, said. But low oil prices will have some influence.

“Cheap oil and cheap petrol probably does make (it), from a consumer’s perspective, potentially a little bit more difficult to decarbonise,” Mr Skeoch said.

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