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Traders Place Bets On $250 Oil

China’s Local Governments At Odds With Beijing Over Coal Plants

Despite a major push by Beijing to reduce the number of coal power plans across China, local authorities are doing their own thing—a wave of new coal-fired TPPs are coming on stream in China, as large as the total coal-fired plant count of the United States, a report from environmental initiative Coalswarm has revealed.

Coalswarm reports, after a survey using tracking technology, that there was installed capacity of 259 GW in construction right now across China, versus 266 GW in the United States in total. If all these new plants are completed, the organization warned, this would increase China’s existing coal power plant capacity by as much as 25 percent.

The surge of coal plant construction came on the back of regulatory devolution from Beijing to provincial authorities that took place in the early 2010s. That was followed by a jump in permits granted by the provincial governments, and Beijing’s interference in 2016 and 2017, which took the form of permit suspensions, apparently did not do a lot to prevent the power pant construction drive. According to Coalswarm, the suspensions merely delayed the completion of the new plants instead of canceling them.

Last year, the China Securities Journal reported, as quoted by the Sydney Morning Herald, that the country’s total installed coal-fired power generation capacity was set to grow to 1,300 GW by the end of 2020, despite a target cap of 1,100 GW stipulated in China’s five-year plan for the period 2016-2020.

That’s a lot of capacity, and comes despite generous investments in renewable energy that has placed China at the top of global renewable energy spenders. It also comes in the form of overcapacity: last year coal-fired power plant operators complained about falling profit margins due to too much capacity, which depressed utilization rates. Whether the central government can do anything meaningful to reverse these developments remains to be seen.

By Irina Slav for Oilprice.com

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