China and other nations could be burdened with uneconomic and climate-unfriendly coal power for decades if they build new capacity to stimulate their economies in the wake of the Covid-19 pandemic, a move China appears to be already considering, Carbon Tracker warned in a new report on Wednesday.
The financial think tank finds that 46 per cent of global coal plants will be running at a loss in 2020, rising to 52 per cent by 2030.
However, renewables and gas are already outcompeting coal worldwide and if governments deregulate power markets to allow greater competition, the percentage of unprofitable coal plants will be far higher.
The report, “Political decisions, economic realities”, warns that China, which produces and consumes about half the world’s coal, may be planning to build more coal plants to stimulate its economy in the wake of Covid-19, noting that its National Energy Administration recently announced it was ready to relax rules on coal power investment.
Globally, governments are propping up expensive coal plants: 90 per cent of coal capacity which is operating, in construction or planned is in countries with regulated or semi-regulated markets where coal power generators are implicitly or explicitly subsidised, it said.
By contrast, in deregulated markets, most coal power is already unprofitable on an underlying basis — 90 per cent in Germany and 82 per cent in the UK in 2019.
Matt Gray, Carbon Tracker co-head of power and utilities and co-author, said: “China and other governments may be tempted to invest in coal power to help their economies recover after the COVID-19 pandemic, but this risks locking in high-cost coal power that will undermine global climate targets.
“Building new coal and propping up the existing fleet with stimulus money would be throwing good money after bad.