According to a study from an environmental think tank, China risks wasting $490 billion by building more coal power plants than it needs. A climate campaign group on Monday argued that the world’s top carbon polluter already has more than enough such facilities, reported Bloomberg.
As of July, the country had 895 gigawatts of operating coal capacity being utilized less than half the time, with another 205 gigawatts under construction, London-based Carbon Tracker Initiative said in the report.
At an estimated US $800 million per kW, that could cost US $490 billion in total, CTI said.
“This misallocation of capital is a microcosm of wider structural woes within the Chinese economy,” it said in a report.
Power demand growth had slowed from 10% to 3% or less per year, it added.
With slowing growth rates, the country has had a difficult time weaning itself off the fuel, even as the pollution it causes wreaks havoc on the environment and public health.
“Stranded coal power would lower returns for investors,” said Tian Miao, a Beijing-based analyst at North Square Blue Oak Ltd., a London-based research company with a focus on China. “The industry is losing money due to falling utilization rates and relatively higher coal prices.”
“There are clear signs that Chinese coal generation is peaking, as the growth in alternative energy sources can meet lower power demand growth during the 13th Five Year Plan” which runs through 2020, James Leaton, Carbon Tracker’s head of research, said in a statement.
“This can only spell bad news for exporters betting on China propping up the seaborne thermal coal market in the future,” Leaton said.