BEIJING, June 5 China's increasing efforts to
shift away from coal to cleaner fuels could put annual
investments of around $21 billion at risk of being stranded, a
research report estimated on Thursday.
China has relied heavily on coal to fuel its economic growth
over the past three decades, and it now burns half the coal that
the world consumes each year.
But a nationwide pollution crisis, increasing water scarcity
and growing concerns over climate change mean Beijing wants to
shift to cleaner energy sources. Analysts expect China's coal
consumption to peak sometime between 2020 and 2030.
A quick shift, aided by a slower growing economy, would
leave assets worth billions at risk of being unprofitable,
according to the report by think-tank the Carbon Tracker
Initiative and the Association for Sustainable and Responsible
Investment in Asia.
"Lower-than-expected Chinese thermal coal demand threatens
to leave those investors not actively assessing their Chinese
coal holdings bearing the brunt of stranded assets and wasted
capital," the report said.
Chinese coal companies spent around $21 billion in 2013 on
exploring and developing coal resources, despite a government
push to use more natural gas, nuclear power and renewables to
Based on estimates from the International Energy Agency for
coal demand in 2020 under "business as usual" and "new policies"
scenarios, the report said that up to 437 gigawatts of installed
coal capacity could be at risk in 2020.
That would equal 40 percent of expected installed capacity
by that year.
The report said companies such as Shanxi Coal International
Energy Group and Datang International Power
Generation Co were at risk from high debt levels
amid falling coal prices, while poor quality of coal produced by
China Coal Energy Co could put that company at risk
if there were strategic shutdowns.
Falling consumption would also have an impact on coal
producers worldwide, because China is the world's biggest coal
importer, the report said.
"This risk is of notable interest to Australian and
Indonesia exporters," it said.
China plans to cap its coal consumption from 2015 at 3.9
billion tonnes and has banned the construction of new coal-fired
power plants in the region surrounding Beijing as well as in the
Yangtze and Pearl river deltas. Those regions have been told to
make absolute cuts in consumption.
He Jiankun, a top climate adviser to the government, said at
a conference earlier this week he expected consumption to peak
at around 4-4.5 billion tonnes between 2020 and
(Reporting by Stian Reklev; editing by Jane Baird)