Analysis by the Carbon Tracker Initiative has revealed China risks wasting $490 billion on new coal plants that won’t be needed as structural changes to its economy, increased non-coal capacity targets, power sector reforms and carbon pricing slashes coal-fired generation.
The study shows that as of July this year China has 895 GW of operating coal capacity or 2,689 plants being utilised less than half the time, with another 205 GW of capacity under construction inconsistent with the goals of the 13th five-year plan.
Under the 13th FYP, Chasing the Dragon? China’s coal overcapacity crisis and what it means for investors, finds slower power demand growth and low carbon capacity targets will likely strand coal capacity. For example, additional capacity beyond existing plants is only required by 2020 if power generation growth exceeds 4% year and coal plants are run at utilisation rate of 45% or less.
It is clear that China is coming to terms with the fact it does not need any more coal capacity
“It is clear that China is coming to terms with the fact it does not need any more coal capacity in a market where existing plants are not even running half the time. The dynamic policy environment suggests China is trying to work out how to avoid wasting half a trillion dollars on unneeded coal plants,” said Matthew Gray, senior analyst and author of the report.
As power demand growth is slowing from a historical average of 10% to 3% or less per year, China has come to realise it needs to take its foot off the pedal when it comes to coal capacity. Given the expected increases in non-coal generation — hydro, wind, solar, gas, nuclear and biomass — under the 13 FYP, which can more than meet this level of power demand increase, indicates coal generation could fall by up to 8% from 2015 to 2020.
“There are clear signs that Chinese coal generation is peaking, as the growth in alternative energy sources can meet lower power demand growth during the 13 FYP. This can only spell bad news for exporters betting on China propping up the seaborne thermal coal market in the future,” said James Leaton, Carbon Tracker’s head of research.
A drop in coal-fired power, combined with the removal of domestic production restrictions spells the death knell for coal imports from overseas. China could become a net exporter of coal again before 2020, which would see the seaborne thermal coal market weakened again, the report finds.
Having analysed the implications of the 2020 targets contained in China’s 13 FYP for plants under construction, the analysis then looks at the gross profitability of the existing coal fleet.
A new era of power market reforms and the introduction of a national Emissions Trading Scheme (ETS) will erode the margins for coal plants to unattractive levels by 2020. Incorporating a carbon price of $US10 t/CO2 to reflect the introduction of a national ETS in 2017 and a 15% reduction in coal power tariffs from ongoing power market reforms, the gross profitability of the operating fleet halves by 2020. As a result, 27 GW becomes cash flow negative and 140 GW makes a gross profit of US$5 per MWh or less.
“Reforms to the power sector and the introduction of a national ETS mean that the current profitability of the coal fleet is not likely to continue. This is essential in order for China to start planning a phase-out of its coal capacity,” said Matthew Gray.
A longer-term scenario in the study analyses the implications of limiting global averages temperature increases to 2 ̊C, confirming the need for China to start planning the early retirement of coal plants not retrofitted with Carbon Capture and Storage (CCS)
The clear direction of travel for coal consumption is underscored by the IEA’s 2016 World Energy Outlook that brought forward the peak for thermal coal demand in China by 17 years in its New Policies Scenario- recognising demand peaked in 2013 as opposed to 2030.
Is Wood Burning Sustainable For Your Home?
Wood is a classic heat source, whether we think about people gathered around a campfire or wood stoves in old cabins, but is it a sustainable source of heat in modern society? The answer is an ambivalent one. In certain settings, wood heat is an ideal solution, but for the majority of homes, it isn’t especially suitable. So what’s the tipping point?
Wood heat is ideal for small homes on large properties, for individuals who can gather their own wood, and who have modern wood burning ovens. A green approach to wood heat is one of biofuel on the smallest of scales.
Is Biofuel Green?
One of the reasons that wood heat is a source of so much divide in the eco-friendly community is that it’s a renewable resource and renewable has become synonymous with green. What wood heat isn’t, though, is clean or healthy. It lets off a significant amount of carbon and particulates, and trees certainly don’t grow as quickly as it’s consumed for heat.
Of course, wood is a much less harmful source of heat than coal, but for scientists interested in developing green energy sources, it makes more sense to focus on solar and wind power. Why, then, would they invest in improved wood burning technology?
Solar and wind technology are good large-scale energy solutions, but when it comes to small-space heating, wood has its own advantages. First, wood heat is in keeping with the DIY spirit of homesteaders and tiny house enthusiasts. These individuals are more likely to be driven to gather their own wood and live in small spaces that can be effectively heated as such.
Wood heat is also very effective on an individual scale because it requires very little infrastructure. Modern wood stoves made of steel rather than cast iron are built to EPA specifications, and the only additional necessary tools include a quality axe, somewhere to store the wood, and an appropriate covering to keep it dry. And all the wood can come from your own land.
Wood heat is also ideal for people living off the grid or in cold areas prone to frequent power outages, as it’s constantly reliable. Even if the power goes out, you know that you’ll be able to turn up the heat. That’s important if you live somewhere like Maine where the winters can get exceedingly cold. People have even successfully heated a 40’x34’ home with a single stove.
Benefits Of Biomass
The ultimate question regarding wood heat is whether any energy source that’s dangerous on the large scale is acceptable on a smaller one. For now, the best answer is that with a growing population and limited progress towards “pure” green energy, wood should remain a viable option, specifically because it’s used on a limited scale. Biomass heat is even included in the UK’s Renewable Heat Initiative and minor modifications can make it even more sustainable.
Wood stoves, when embraced in conjunction with pellet stoves, geothermal heating, and masonry heaters, all more efficient forms of sustainable heat, should be part of a modern energy strategy. Ultimately, we’re headed in the direction of diversified energy – all of it cleaner – and wood has a place in the big picture, serving small homes and off-the-grid structures, while solar, wind, and other large-scale initiatives fuel our cities.
7 Benefits You Should Consider Giving Your Energy Employees
As an energy startup, you’re always looking to offer the most competitive packages to entice top-tier talent. This can be tough, especially when trying to put something together that’s both affordable but also has perks that employees are after.
After all, this is an incredibly competitive field and one that’s constantly doing what it can to stay ahead. However, that’s why I’m bringing you a few helpful benefits that could be what bolsters you ahead of your competition. Check them out below:
One benefit commonly overlooked by companies is offering your employees financial advising services, which could help them tremendously in planning for their long-term goals with your firm. This includes anything from budgeting and savings plans to recommendations for credit repair services and investments. Try to take a look at if your energy company could bring on an extra person or two specifically for this role, as it will pay off tremendously regarding retention and employee happiness.
While often included in a lot of health benefits packages, offering your employees life insurance could be an excellent addition to your current perks. Although seldom used, life insurance is a small sign that shows you care about the life of their family beyond just office hours. Additionally, at such a low cost, this is a pretty simple aspect to add to your packages. Try contacting some brokers or insurance agents to see if you can find a policy that’s right for your firm.
Dedicated Time To Enjoy Their Hobbies
Although something seen more often in startups in Silicon Valley, having dedicated office time for employees to enjoy their passions is something that has shown great results. Whether it be learning the piano or taking on building a video game, having your team spend some time on the things they truly enjoy can translate to increased productivity. Why? Because giving them the ability to better themselves, they’ll in turn bring that to their work as well.
The Ability To Work Remotely
It’s no secret that a lot of employers despise the idea of letting their employees work remotely. However, it’s actually proven to hold some amazing benefits. According to Global Workplace Analytics, 95% of employers that allow their employees to telework reported an increased rate of retention, saving on both turnover and sick days. Depending on the needs of each individual role, this can be a strategy to implement either whenever your team wants or on assigned days. Either way, this is one perk almost everyone will love.
Even though it’s mandated for companies with over 50 employees, offering health insurance regardless is arguably a benefit well received across the board. In fact, as noted in research compiled by KFF, 28.6% of employers with less than 50 people still offered health care. Why is that the case? Because it shows you care about their well-being, and know that a healthy employee is one that doesn’t have to worry about astronomical medical bills.
Unlimited Time Off
This is a perk that almost no employer offers but should be regarded as something to consider. According to The Washington Post, only 1-2% of companies offer unlimited vacation, which it’s easy to see why. A true “unlimited vacation” program could be a firm’s worse nightmare, with employees skipping out every other week to enjoy themselves. However, with the right model in place that rewards hard work with days off, your employees will absolutely adore this policy.
A Full Pantry
Finally, having a pantry full of food can be one perk that’s not only relatively inexpensive but also adds to the value of the workplace. As noted by USA Today, when surveying employees who had snacks versus those who didn’t, 67% of those who did reported they were “very happy” with their work life. You’d be surprised at how much of a difference this could make, especially when considering the price point. Consider adding a kitchen to your office if you haven’t already, and always keep the snacks and drinks everyone wants fully stocked. Doing so will increase morale tremendously.
Compiling a great package for your energy company is going to take some time in looking at what you can afford versus what’s the most you can offer. While it might mean cutting back in other areas, having a workforce that feels like you genuinely want to take care of them can take you far. And with so many different benefits to include in your energy company’s package, which one is your favorite? Comment with your answers below!