Just outside the southwest border of Beijing, a new coal-fired power and heating plant is rising in Dongxianpo, a rural town in Hebei Province. Cement mixers roll onto the site and cranes tower above a landscape of metal girders.
When finished, the plant, run by a company owned by the Beijing government, is expected to have a generating capacity of 700 megawatts of power, more than the total of similar plants in Ohio. However, whether it would actually be used to its fullest is questionable, despite an investment of US$580 million.
That is because the plant is scheduled to come online in three years amid a glut of coal-fired power plants — an astounding 155 planned projects received permits this year alone, with total capacity equal to nearly 40 percent of that of operational coal power plants in the US.
Illustration: Yusha
China’s economic slowdown and government pledges to use more renewable and nuclear energy make some of the nation’s existing plants and most or all of the 155 new ones unnecessary, according to interviews with officials and academics, a review of public statistics and a report released on Wednesday about the “coal power bubble” by Greenpeace East Asia. There are already too many plants, as shown by a steady decline in the plants’ average operating hours since 2013.
“China already has more coal capacity than it would ever need,” China Society for Hydropower Engineering vice chairman Zhang Boting (張博庭) said in an interview. “A few years down the road, we will see what a waste the plants are. We have seen this happen to the steel and cement industries.”
In the first nine months of this year, state-owned companies received preliminary or full approval to build the 155 coal power plants that have a total capacity of 123 gigawatts, the report said. That capacity is equal to 15 percent of China’s coal-fired power capacity at the end of last year.
The construction boom — with capital costs estimated by Greenpeace at US$74 billion — is a clear sign that China remains entrenched in investment-driven growth, despite promises by leaders to transform the economic model to one based on consumer spending.
It also raises questions about whether China is weaning itself off coal as quickly as it can and whether officials are sufficiently supporting non-fossil fuel sources over coal, which is championed by some state-owned enterprises. China is the biggest emitter of greenhouse gases in the world and the main driver of climate change, and has some of the worst air pollution.
Conflict within the system is rising. Renewable-energy interests — wind, solar and hydropower — are pushing back against coal-fired power plants, which have 40-year life spans. They say the rising number of coal plants prevents other energy sources from selling electricity on the grid and attracting more investment. They want the government to move faster with its promised “green dispatch,” which means giving priority to low-carbon electricity sources.
“Why do we see so much discarded water, wind and solar resources everywhere?” Zhang said. “Because all those coal plants need market share. Local governments need to maintain stability and employment, and to do so, they need to give all the coal plants just enough market share to survive.”
Utility contracts guarantee that coal-fired plants operate a minimum number of hours to sell power to the grid, while renewable sources have no such guarantee. Wind power capacity has been growing in China, but so has the amount of wasted wind power, called curtailment, according to Chinese National Energy Administration statistics. In the first half of the year, the rate of curtailment was 15 percent, almost twice that of the same period last year.
The State Grid Corp of China, the nation’s largest power distributor, did not respond to a request for comment. It is also one of China’s biggest owners of coal-fired power plants.
Chinese Wind Energy Association secretary-general Qin Haiyan (秦海岩) was quoted by China Electric Power News, an official industry newspaper, as saying that, if the nation’s appetite for new coal-fired plants was not curbed, “the conflict between coal and wind is to become even more fierce in the next few years.”
Zhang said the dominance of coal power has led to “a sharp decline in investments in renewable energy.”
Hydropower is generated by provincial or central state-owned enterprises. The China Electricity Council, a power industry association, said in a report this year that investment in hydropower had dropped for three straight years, and that the amount in the first quarter of the year was half that of the same period in 2012.
Nevertheless, China is building more renewable and nuclear energy capacity. The government has said that by 2020, 15 percent of energy consumption is to be met by sources beyond fossil fuel. The growth in renewable energy and nuclear power is expected to meet an estimated 3 percent to 4 percent annual growth in electricity demand in the coming years, which makes new coal-fired plants unnecessary, said Lauri Myllyvirta, a main author of the Greenpeace East Asia report.
Despite a construction boom, Myllyvirta and some academics said there is little danger that China’s coal consumption would rise significantly, since a slower economy and flattening coal use appear to be the new norm. Chinese President Xi Jinping (習近平) said China was aiming for 6.5 percent economic growth from next year to 2020. The construction boom means that China is not investing in alternative fuel sources as quickly as it could and coal use might stay at or near the current high level for years, critics say.
“You are wasting a massive amount of capital that could be spent on renewable energy to generate green power that is needed, and there is a longer-term question of whether you would keep investing in renewables when you have all these coal plants lying around,” Myllyvirta said.
Existing coal plants are operating well below full capacity, with the average number of operating hours on the decline, the Greenpeace report said. Last year, thermal power plants, mostly coal-fired, operated 4,706 hours on average, 314 hours less than in 2013, according to the National Energy Administration.
“At any given moment, more than half of capacity is idle,” Myllyvirta said.
The report recommended that officials cancel many projects and that the central government “urgently institute a ban on issuing new permits for coal-fired power plants.”
Though the total amount of coal-fired power capacity has grown annually, China is shutting down some older and smaller plants, especially in more populated eastern regions. By 2020, the central government aims to have coal-fired power generated mainly in western provinces and transmitted to the east via ultra-high-voltage lines. However, Greenpeace researchers found that eastern provinces were still handing out large numbers of permits to build new coal plants.
Jiangsu Province has issued permits for 17 plants this year, while Shandong Province has issued permits for 16 — the second and third-highest number of plant approvals in the nation, behind Shanxi Province. That goes against central policy, since pollution regulations require those provinces to curb coal use.
Myllyvirta said that even the western provinces did not need so many new coal-fired plants because the current overcapacity and planned expansion of renewable and nuclear energy sources can meet the expected rise in demand for transmitted electricity.
Greenpeace estimated that if the 155 plants operated at typical levels for new projects, they would emit 560 million tonnes of carbon dioxide annually, equal to Brazil’s total energy emissions. They would also spew huge amounts of toxic pollutants and 60 percent would operate in arid areas or ones with chronic water shortages, exacerbating those problems.
An increase in permit approvals followed the enactment of a policy in March that allows provincial environmental officials, rather than the central Ministry of Environmental Protection, to approve projects, in the interest of streamlining bureaucracy.
Provinces have an economic interest in keeping coal-fired power generation close to home, despite concerns over air pollution. Provincial state-owned enterprises running the plants have a guaranteed source of revenue. Also, officials can tax coal power plants but not renewable-energy projects. Also, plant construction boosts economic growth, a key measure in evaluations of provincial officials.
The Beijing Jingneng Power Co, which is building the Zhuozhou plant in Dongxianpo Township, is owned by the Beijing government. This year, the company was forced to shut down a plant in Beijing because of an air pollution control regulation that calls for the elimination of all coal-fired plants in the city by 2017. However, Jingneng has begun building the plant right across the border. The company declined an interview request.
“It takes a lot of time to switch the economic growth model from investment-driven to consumption-driven,” said Lin Boqiang (林伯強), director of the China Center for Energy Economics Research at Xiamen University. “Now the only way to drive up economic growth is still to rely on investment.”
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