China Pulls the Plug on 103 Coal Plants

According to a January 18 story in the New York Times, the Chinese National Energy Administration just announced it is cancelling the construction of more than 100 coal-fired power plants. The move could have huge benefits for the climate, but that is not necessarily what is driving the decision. At the moment, even after this announcement, China is on track to build more electricity generation capacity than it actually needs. China’s state-owned power companies prefer to get their electricity from coal, and that helps explain why the country had dozens of new plants under construction even though many existing plants are idle more than half the time. China is also cutting into the need for new coal plants by installing a great deal of solar and wind power.

Many analysts see tremendous climate benefits in China’s announcement. China is cancelling 120 gigawatts of capacity, and to put that in perspective, the U.S. has about 305 gigawatts of coal capacity in total. So, China just cancelled the equivalent of a third of America’s coal power. Back in 2013, China was burning more coal than the rest of the world combined and the country’s coal usage looked poised to expand.  Since 2013, however, coal usage has actually declined as a slowing Chinese economy has combined with cheaper renewables and government policies aimed at reducing pollution. The end result could be a plateau of carbon emissions from China. That is significant, even though it will not stop the worst effects of climate change on its own.

Many of these cancelled coal plants were already under construction, meaning somebody will have to pay for work that will never lead to usable electricity. This happens sometimes in the United States as well, and here the costs of failed projects are often rolled into the tariffed utility rates paid by most customers.  In deregulated markets, however, customers can negotiate directly with utility companies to get better rates.

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