Coal

Published on March 31st, 2016 | by Joshua S Hill

11

Global Coal Plant Overbuilding Could Cost $981 Billion

March 31st, 2016 by  

“The world has too many coal-fired power plants, yet the power industry continues to build more,” and could cost up to $981 billion.

This is the conclusion from the second annual report published by the Sierra Club, Greenpeace, and CoalSwarm, investigating the global coal plant pipeline. The report, Boom and Bust 2016: Tracking The Global Coal Plant Pipeline (PDF), was published this week, and concluded that nearly $1 trillion could be wasted on overbuilding coal plants that, more and more, are only going to sit idle.

Reports have repeatedly shown that, in numerous countries around the world, coal use is declining. China’s coal use, which for many years was heralded as a global problem, has been falling steadily for two years now. China’s coal use dropped in 2014 by 1.28%, according to numbers published by the China Coal Resource, were seen to continue falling in early 2015, and earlier this month were shown to have fallen again, by 3.7%. Whereas in the US, another big coal user, coal production fell to its lowest levels since 1986 in 2015, dropping 10%.

coal plantsThe new report published this week by the Sierra Club, Greenpeace, and CoalSwarm, found that, globally, 338 GW of new coal capacity is currently under construction, and another 1,086 GW is in various stages of planning — that’s the equivalent of 1,500 coal plants. And if all of these plants are completed, the capital outlay for their construction will have amounted to $981 billion — that’s nearly $1 trillion!

China is making steps, and the report’s authors make note of this, highlighting the recent news that saw the government begin to curb investment in new coal plants. Specifically, the report found that the reported suspension of new permits and new construction in half of China’s provinces could affect 60% of the 460 new coal-fired power plants which had been permitted or are in the permitting process.

“As coal-fired power plants are rapidly becoming uncompetitive, and concerns about their massive health impacts grow, the coal industry is making a last-ditch push,” said Lauri Myllyvirta, senior global campaigner on Coal and Air Pollution at Greenpeace. “China alone is housing the largest power market investment bubble the world has ever seen. Even after announcing suspension of new permits in 13 provinces, the country could still bring over 500 new coal-fired power plant units online while power generation from coal is falling precipitously on clean energy growth and slower power demand.”

“The era of Big Coal is clearly coming to an end, and it’s long past time to move beyond dangerous, outdated, and polluting energy sources toward an economy powered by clean, renewable sources of energy like solar and wind,” said Nicole Ghio, senior campaigner for the Sierra Club’s International Climate and Energy campaign. “Coal use keeps falling off a cliff and plants are sitting idle, yet more money is being wasted on misguided attempts at locking in this dirty, dangerous fuel. The hundreds of billions being thrown at coal could instead go toward the booming clean energy sector, helping more than a billion people get access to the clean, reliable electricity that fossil fuels have failed to deliver.”

Specifically, the report found that the $981 billion is more than one-and-a-half times the funds necessary to end energy poverty for the 1.2 billion people currently living without reliable electricity access, according to the International Energy Agency.


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About the Author

I'm a Christian, a nerd, a geek, and I believe that we're pretty quickly directing planet-Earth into hell in a handbasket! I also write for Fantasy Book Review (.co.uk), and can be found writing articles for a variety of other sites. Check me out at about.me for more.



  • Doug

    There is an easy fix for this. Financing of coal projects must end.

  • super390

    Yet if you post a story about the collapse of the coal industry on any kind of website frequented by “normal” Americans, the comment section will fill up with crap about how the government murdered coal with regulations. When the collapse peaks, it will be like in 2009 when conservatives were all trained to blame the housing collapse on thousands of Black people getting favorable mortgages due to the government instead of the deregulation that let GM & GE pimp home mortgages to millions of White people who had no margin for error. Our people are so far from accepting the truth that we can’t be trusted to have any say in what goes on in the outside world.

  • Richard Foster

    A point worth considering when using LCOE comparisons for RE with FF, is that the lifetime of these investments is assumed. I *believe* (although I’m sure someone will be along shortly to correct me if not!), that it’s assumed RE lifetime (for wind and solar at least) is 25 years. For thermal FF and nuclear, I believe it’s 40 years.

    Given that solar PV/onshore wind LCOE <~ Coal LCOE (globally), this is actually not <~, but is instead <<. Lifetimes of coal (and gas) could now be 30years.

    This increases LCOE for FF and decreases it for RE.

    RE have not only won, the fact that they will strand assets will mean they demolish FF very rapidly.

    I just hope it’s rapidly enough to get CO2 levels to level out asap. Then we need to work out a method of Direct Air Capture of CO2, on the order of at least 20-30% of the amount we’re putting up at the moment. Hopefully that’ll stop the worst effects of AGW.

    • JamesWimberley

      True about the lifetimes. The impact of the effect is reduced though by the magic (or intergenerational crime) of duscounting, especially if you use WACC rates as high as 8% like the IPCC.

      I commented in another thread that actual costs of capital are probably shifting in favour of renewables as we speak, and against fossil. Imsgine you’re an investment banker. Which is the safer bet today, a portfolio of solar and wind farms with 20-year PPAs, or a single big coal generator selling spot wholesale to a fragile state-owned utility?

      On sequestration, check out olivine weathering. It’s not complicated, and olivine is common – there are quadrillions if tonnes of it in the lithosphere. But not very fast.

  • eveee

    Could this be a little reminder that coal plants built today are likely to be stranded assets tomorrow?

    • Radical Ignorant

      I think you are right. We can’t turn of fossils now but lifetime of coal plant is 30 years IIRC. In 20 years they will be useless. So investition would need faster ROI than it was till now while competitivenes of them is diminishing fast.
      Coal plants build yesterday are still needed for transition time but they are about enough I believe.

      • eveee

        Good point about the ROI. Some investors and planners may be doing the calculation wrong if they don’t consider the rapid growth of alternative sources of power and the changes in the demand market.

        • Tsering W

          exactly. As noted by others $40mwh or $.04 per kwh is the current unsubsidized cost of solar electricity and this is a solid state technology that only reduces in price(silica is not a finite resource, as we will run out of earth crust to stand on before we use all the silica) New coal plants are already and will be the first to go bankrupt and lose investors money due to having to compete with all yet burdened with a giant interest payment to pay down the plant. The new plants may be more efficient and require less maintenance than the old plants so they will be the last of the coal plants to shut down with the paid off plants being shut down first. The gamblers stuck holding the equity and debt bags related to new coal plants will lose their ass shortly after startup as the new plants one by one go bankrupt but stay running while old plants shut down. This will happen until financing learns to do math and realize that solar is $.04 per kwh and falling. Same with Nukes except harder to shut down and less incremental costs(but the will be going down just as fast. I believe Warren Buffet is number one owner of solar electricity plants as which he recently bought, and he even says that distributed energy is dead to rooftop solar unless other “technologies” come about. He owns a lot of other energy as well. Other Financiers will soon run out of suckers to invest in New plants and mines and wells when you can get power direct from the sun a lot cheaper. It has nothing to do with CO2 its al about the $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

          • Tsering W

            ok lets put it another way Solar at less than $1 per watt runs between 4 and 7 hours per day and falling is roughly the same price as a coal plant at $3.50 per watt and it doesnt require the cost of the coal that must be bought forever, the transmission losses and cost to send it through the grid. $.04 per kwh is the cost of solar. It will never be more only less.

          • eveee

            Yep. When new tech comes along, the old ones can be a mighty big boat anchor or door stop. And the old tech becomes a big money pit.

  • JamesWimberley

    This is very good campaigning. The prime target is the banks who are expected to supply project finance. They are already skittish over coal mines, as we have seen in their withdrawal from the moribund giant Galilee mine in Australia. They should now be getting worried about the safety and reputational risks of coal generating plants – in a massive glut, they are even less likely to pay off than mines. This alone should kill off most of the unstarted projects. The $40/MWh price reported for Mexico’s first big solar auction will also be sending shock waves round the energy finance world. Renewables have won.

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