If China fails to phase out coal power, world will fail to contain dangerous climate change,says Report
Two-fifths of China's coal power stations are loss-making and owners could save nearly $390 billion by closing plants in line with the Paris Climate Agreement, financial think-tank Carbon Tracker said on Thursday.
The think tank undertook the first study to use satellite images to assess the everyday use and profitability of ongoing fossil fuel power plants.
It has developed a new method to help policymakers and investors understand climate risk in countries with big fossil fuel power industries but inadequate information about plant activity.
The technique is all the more timely as the United Nation's Intergovernmental Panel on Climate Change (IPCC) in a major report this week said holding global warming to 1.5 degrees Celsius will require much deeper cuts in the use of fossil fuels, especially coal.
"Satellite imagery coupled with data science offers a powerful response to those governments and asset owners who are unwilling or unable to disclose timely and accurate data," said Matt Gray, head of power and utilities at Carbon Tracker.
"If China fails to phase out coal power, the world will fail to contain dangerous climate change. Our analysis proves it is in China's own financial interests to retire coal in a manner consistent with the Paris Agreement."
The report finds that 40 per cent of China's coal power stations is already losing money, and this could rise to 95 per cent by 2040 because of the cost of complying with air pollution regulations and a rising carbon price.
It will be cheaper to build new onshore wind farms that operate existing coal plants by 2021. New solar PV will be cheaper than running coal by 2025.
China's National Energy Investment Group, the world's largest power company, risks losing $66 billion in stranded assets -- half its total capital -- if it pursues business as usual, the Carbon Tracker said.
Two other companies that risk losing more than their total capital in stranded assets are Guangdong Yudean Group ($22 billion) and Zhejiang Energy Group ($26 billion).
It says all China's coal power owners can save billions by retiring coal plants in line with the UN climate targets, with a total $389 billion at risk.
The Carbon Tracker used satellite images and advanced machine learning techniques to estimate the activity of each coal plant.
This enables it to assess each plant's profitability, calculate when it should close and the potential cost of delaying its retirement.
The 2015 Paris Climate Change Agreement sets a target of keeping global warming below two degrees Celsius and as close to 1.5 degrees as possible, and meeting this will require phasing out coal by 2040.
To meet climate targets one coal plant will need to close worldwide every day, or 100 GW every year, until 2040.
But from 2010 to 2017, only around 240 GW was retired. In other words, there needs to be a near threefold increase in the amount of capacity closed to meet the temperature goal of Paris.
China's operational coal plants are equivalent to 1,000 GW of capacity.
(With inputs from agencies.)