Coal reaches turning point in key markets

The number of coal power plants under construction plummeted over 2016, while over 100 new construction projects have been frozen

  • By Kim Darrah | Thursday, March 23rd, 2017

New coal projects are being cancelled or phased out across India and China, previously both strongholds for fossil fuel power

On March 22, Greenpeace and other environmental groups released a joint report that underscored a global shift away from coal energy, driven largely by policies in Asia as well as the improved commercial viability of green power. The report, titled Boom and Bust 2017, found that the number of new coal plant construction projects dropped by almost two thirds over the course of 2016. Furthermore, over 100 projects in India and China have ground to a halt, with financial backing for coal seeing a dramatic drop in both countries. Pre-construction activity has also slumped by 48 percent, implying that the shift away from the fuel is consistent throughout the project pipeline.

“It’s not normal to see construction frozen at scores of locations, but central authorities in China and bankers in India have come to recognise overbuilding of coal plants is a major waste of resources,” said Ted Nace, Director of CoalSwarm. In China, the move away from coal has been driven by a clampdown on coal capacity by authorities. A series of new restrictions have been implemented, including a cap on capacity at 1,100 gW. In line with this, the amount of new coal power capacity authorised dropped by a massive 85 percent.

India already has enough coal-fired plants to meet demand through to 2019

According to Lauri Myllyvirta, senior global campaigner on coal and air pollution at Greenpeace: “China all but stopped new coal projects after astonishing clean energy growth has made new coal-fired power plants redundant, with all additional power needs covered from non-fossil sources since 2013.”

In India, the decline is driven in part by the fact that capacity has outstripped supply. Notably, in June last year, the Ministry of Power recommended that developers curtail their plans based on a projection that India already had enough coal-fired plants to meet demand through to 2019. The report also stated that the country is currently in the midst of a “solar power revolution”, making renewables increasingly attractive for investors. As a result, banks and other financiers have been reluctant to fund coal-powered projects.

Combined, China and India accounted for 86 percent of coal power built globally throughout the period of 2006 to 2016, meaning the simultaneous slowdown across both countries has global implications. Indeed, according to Myllyvirta: “2016 marked a veritable turning point.”