China building 200 GW of coal-fired power despite capacity glut: Greenpeace

SHANGHAI (Reuters) - China is building another 200 gigawatts (GW) of coal-fired power capacity despite tough new measures designed to cut the use of fossil fuels and tackle overcapacity, environmental group Greenpeace said on Wednesday.

Workers unload coal at a storage site along a railway station in Hefei, Anhui province October 27, 2009. REUTERS/Jianan Yu/File Photo

China’s coal-dominated thermal power sector has continued to expand rapidly amid an unexpectedly sharp slowdown in energy consumption growth, as well as a state-led effort to tackle smog, cut carbon emissions and encourage cleaner forms of electricity.

According to National Energy Administration (NEA) data, China’s total thermal capacity grew 7.8 percent in 2015 to 990 GW, outstripping a 0.5 percent increase in consumption. Another 24 GW went into operation in the first five months of 2016.

Greenpeace said more than 1 trillion yuan ($150 billion) could be “wasted” on new capacity in the next five years, leading to a surplus of 400 GW. China is currently estimated to have around 200 GW of excess capacity.

After utilization rates fell to their lowest point in nearly four decades last year, China said in April that it would speed up the retirement of old plants by raising environmental, efficiency and safety standards.

Greenpeace said the measures would see 110 GW of coal-fired power projects suspended and up to 70 GW retired by 2020, but changes to permitting last year meant there were still another 295 units under construction, with a total capacity of 200 GW.

Moves to cut central government red tape last year gave local authorities the power to build new plants without having to seek approval from Beijing, leading to a construction surge.

“China’s worsening coal overcapacity crisis is acting as a dead weight on the country’s ongoing energy transition,” said Greenpeace coal campaigner Lauri Myllyvirta.

China has acknowledged the severity of the problem, and has already set up a “warning system” for provinces on overcapacity. The energy regulator reiterated in a document published on Tuesday that it would strictly control the pace of construction for coal-fired power.

China is expected to ban all new approvals for coal-fired power plants until 2018 as part of its new 2016-2020 five-year plan for the energy sector, state news agency Xinhua reported on Monday.

China is also planning to cap coal-fired capacity at around 1,050 GW by the end of 2020, the report said.

Total large-scale thermal power capacity, more than 90 percent of which is fueled by coal, stood at 1,015 GW by the end of May, accounting for around two thirds of China’s total capacity, according to NEA data.

Average utilization rates at China’s mostly coal-fired thermal power plants fell to 44.8 percent in the first five months, down from 49.4 percent last year, when they were already at their lowest since 1978.

($1 = 6.6823 Chinese yuan)

Reporting by David Stanway; Editing by Richard Pullin