India among 5 nations responsible for 80% of world’s planned coal plants: Report
New Delhi: Five Asian countries, including India, are responsible for 80 per cent of the world’s planned new coal plants. These plants will endanger Paris climate goals despite the availability of cheaper renewables, a report by financial think tank Carbon Tracker said on Wednesday.
It warns that 92 per cent of these planned units will be uneconomic, even under business as usual, and up to $150 billion could be wasted. Consumers and taxpayers will ultimately foot the bill because these countries either subsidize coal power or prop it up with favourable market design, power purchase agreements or other forms of policy support.
The report, ‘Do Not Revive Coal’, said China, India, Indonesia, Japan and Vietnam plan to build more than 600 new units with a combined capacity of over 300GW, ignoring calls from UN Secretary General Antonio Guterres for all new coal plants to be cancelled.
He said phasing out coal from the electricity sector is the “single most important step” in tackling the climate crisis.
Carbon Tracker’s Head of Power and Utilities, Catharina Hillenbrand Von Der Neyen said: “These last bastions of coal power are swimming against the tide, when renewables offer a cheaper solution that supports global climate targets. Investors should steer clear of new coal projects, many of which are likely to generate negative returns from the outset.”
As well as modelling the financials of 80 per cent of planned new coal, the report evaluates the economics of 95 per cent of operating coal plants at the boiler level worldwide: over 6,000 operating units accounting for around 2,000 GW.
It is the third report in Carbon Tracker’s annual Powering Down Coal series.
The five Asian countries also operate nearly three quarters of the current global coal fleet, with 55 per cent in China and 12 per cent in India. The report warns that around 27 per cent of existing capacity is already unprofitable and another 30 per cent is close to breakeven, generating a nominal profit of no more than $5 per MWh.
Worldwide, $220 billion of operating coal plants are deemed at risk of becoming stranded if the world meets the Paris climate targets.
The report finds that around 80 per cent of the operating global coal fleet could be replaced with new renewables with an immediate cost saving. By 2024, new renewables will be cheaper than coal in every major region, and by 2026 almost 100 per cent of global coal capacity will be more expensive to run than building and operating new renewables.
Growing competition from renewables, coupled with increased regulation, is likely to drive continued falls in coal plant usage, undermining their profitability.
The report notes that coal plant economics are highly sensitive to utilisation and just a five per cent annual reduction to the conservative base assumptions in its analysis would see global coal unprofitability almost double to 52 per cent by 2030 and rise to 77 per cent by 2040.
India is the second largest coal power producer with around 250 GW of operating capacity and a pipeline of 60 GW. New renewables can already generate energy at lower cost than 84 per cent of operating coal and will outcompete everywhere by 2024.
It has a target of 450 GW of renewables by 2030 — more than five times its 2020 capacity — which will meet 60 per cent of energy demand.
However, the silence from large polluting countries, including China and India, on more aggressive climate measures at the recent Leaders Summit on Climate spoke volumes, suggesting they still have internal priorities that conflict with policies that seek to mitigate climate change.
At the corporate level, just 10 companies account for around 40 per cent of the stranding risk, of which NTPC and the Adani Group in India, and PLN in Indonesia are by far the most exposed.
Of the 10 most exposed companies, seven are headquartered in India.