Published on October 12th, 2018 | by Joshua S Hill0
40% Of China’s Coal Plants Are Losing Money, Reports Carbon Tracker
October 12th, 2018 by Joshua S Hill
Two-fifths of China’s coal power plants are losing money according to a new “revolutionary” satellite-based methodology designed to assess climate risk from fossil fuel plants launched this week by Carbon Tracker, which also showed that plant owners could save nearly $390 billion by closing plants in line with the Paris Climate Agreement.
Carbon Tracker, an independent financial think tank focusing on the impact of the global energy transition, unveiled this week what it is describing as a “revolutionary” new method intended to help policymakers and investors understand the climate risk in countries with big fossil fuel power industries but that lack the necessary information to ascertain power plant activity. Specifically, the method combines satellite imagery with advanced machine learning techniques to estimate the utilization of fossil fuel power plants. Importantly, Carbon Tracker tested its satellite-based modelling techniques in countries where information about coal plant utilization is available and found that it was 91% accurate in the United States and 92% accurate in the European Union.
The new methodology has been put to use to ascertain China’s exposure to fossil fuel-related losses in a new report published by Carbon Tracker, entitled Nowhere to hide: Using satellite imagery to estimate the utilisation of fossil fuel power plants. The report shows that, with over 1,000 operating coal plants, 40% of China’s coal-fired power plants are already losing money, a figure which could rise to 95% by 2040. Carbon Tracker has not been able to provide this report to Chinese state-owned power companies — not unsurprising, given the difficulty for outsiders to do so in China — but the think tank is planning a Chinese roadshow for 2019 where they will seek to work with local partners to disseminate their research to companies.
“Satellite imagery coupled with data science offers a powerful response to those governments and asset owners who are unwilling or unable to disclose timely and accurate data,” explained Matt Gray, head of power and utilities at Carbon Tracker. “If China fails to phase-out coal power, the world will fail to contain dangerous climate change. Our analysis proves it is in China’s own financial interests to retire coal in a manner consistent with the Paris Agreement.”
The report also highlights how it would be cheaper to build new onshore wind farms than continuing to operate their coal fleet by 2021, while new solar PV would be cheaper to run than coal by 2025. For example, China’s National Energy Investment Group, the world’s largest power company, is at risk of losing $66 billion in stranded assets if it pursues business as usual policies, risking half its total capital. Two other companies — Guangdong Yudean Group and Zhejiang Energy Group — are at risk of losing more than their total capital in stranded assets ($22 billion and $26 billion respectively). In the end, according to Carbon Tracker, China’s coal power owners could save $389 billion by closing coal plants as compared to continuing business as usual.
“The revolution in space sensing is a powerful tool to monitor fossil fuels and energy trends – combining this new data with existing datasets means we can get an asset-level insight on companies anywhere in the world,” said Laurence Watson, data scientist at Carbon Tracker. “With the realities of the energy transition starting to bite, this new searchlight really leaves fossil laggards with nowhere to hide.”