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Chinagoes cold on coal-fired power

6th December 2012

By Angus Grigg AFR correspondent Shanghai 

Words: 627 words

Source: The Australian Financial Review

Page: 35

06/12/2012

 

China has scaled back the number of coal-fired power stations it has approved this year, in another sign of Beijing's determination to deploy more gas, renewables and nuclear energy to meet the country's growing electricity demand.

 

In the first 10 months of the year coal-fired power stations made up just 27 per cent of new capacity, less than half the level of 2005.

 

The pull-back is likely to place further pressure on Australian coal companies which have invested heavily in new mines over recent years, believing Chinese demand would continue to grow strongly.

 

But China is looking to reduce its reliance on coal and in the first 10 months of the year hydro, wind and nuclear power accounted for 72 per cent of all new investment.

 

The figures from the China Electricity Council are broadly in line with data from the National Development and Reform Commission, analysed by The Australian Financial Review. The NDRC data, which is only available for the last six months, shows that coal accounted for 23 per cent of new capacity.

 

Wind power accounted for 55 per cent of new generation over the last six months, via projects mainly funded through the United Nations Clean Development Mechanism.

 

Director of the China Centre for Energy Economics Research at Xiamen University, Lin Boqiang, said investment in coal-fired power plants had fallen for six years in a row.

 

He expects coal-fired investment of about 100 billion yuan ($15 billion) this year, half the level of 2005.

 

Solar accounted for just 3 per cent of new investment over the last six months, according to the NDRC data, but Mr Lin expects this to pick up: "China is set to launch large-scale solar-power investments, as solar panel manufacturers are having a terrible time in overseas markets."

 

Mr Lin expects China will bring forward its 2020 solar target by five years, in order to provide a boost to struggling local producers.

 

In December 2009 coal accounted for 87 per cent of China's power generation, but this has fallen to 75 per cent, mainly due to the rise of hydro-power. In October, hydro accounted for 19 per cent of total generation, while wind, solar and nuclear made up 6 per cent.

 

Chinais also looking to nearly double natural gas's share of electricity generation to 7 per cent by 2015.

 

This will be achieved largely through domestic gas, including commercialising coal-bed methane supplies, but about 35 per cent is expected to come from imports.

 

Despite the slowdown in construction of coal-fired power plants, China remains the world's largest consumer of coal and has higher overall emissions than any other country. In 2010, China is estimated to have consumed 3.3 billion tonnes of coal, more than three times that of the United States, ranked second.

 

According to the World Resources Institute, China plans to build a further 363 coal-fired power plants. But the British think tank doubts this will happen given the rising losses recorded by Chinese utilities and growing public opposition.

 

"It is unlikely that China will realise its coal ambitions," it said in a report released late last month.

 

The report was published to coincide with UN climate change talks which run until Friday in Qatar.

 

Representatives from 194 countries are in the Gulf city attempting to forge a compromise that will allow the Kyoto Protocol to be extended beyond its December 31 expiry date.

 

Chinais opposed to binding targets but has pledged to reduce the carbon intensity of its economy by between 40 per cent and 45 per cent in 2020, compared to 2005 levels.