Plans for 150GW of Coal Were Canceled in the First Half of 2016

A global coal slowdown will be buoyed by Southeast Asia, but not as much as once thought.

Plans for than 150 gigawatts' worth of coal plants were scrapped in the first half of 2016, according to data from environmental groups.

Nearly all of that capacity was slated for Asia, the region with the strongest growth rates for coal. In the past six years, more than 750 gigawatts of coal capacity has been canceled globally.

The data comes from CoalSwarm, a wiki project that collects data on coal projects and is supported by many major environmental organizations. While affiliated advocacy organization End Coal has a clear anti-coal agenda, the data presented is mostly accurate, said Jonny Sultoon, research director of global coal markets at Wood Mackenzie.

“We are seeing a higher rate of coal plant cancellations globally than we have historically,” said Sultoon.

The global energy mix has shifted radically over the last five years. Back in 2010, natural-gas plants and renewable power simply were not as cheap as they are now. Countries like China picked coal over other resources. But last year, the International Energy Agency sharply lowered its five-year global coal demand forecast, mostly due to market restructuring in China, as prices for alternative fuels fell.

Currently, there are nearly 2,000 gigawatts of coal in operation globally, with 900 gigawatts in China. China has canceled about 200 gigawatts in planned capacity over the past six years, but there are still another 200 gigawatts slated to be built.

According to Wood Mackenzie, coal still makes up about two-thirds of generation output but it contributes strongly to excess capacity. Utilisation hours are falling and will trend down in the next few years.

“China's power sector is facing many challenges,” explained Sultoon, including "the over-build of coal-fired capacity, curtailments to renewable generation, [and] reform initiatives to liberalize the power market.”

China’s latest five-year plan aims to address these problems by focusing on a cleaner, low-carbon fuel mix that offers more flexibility for growth. As part of that plan, Sultoon says China will cancel or delay coal-fired projects with a combined capacity of 150 gigawatts by 2020.

Some of the capacity will simply get built later. In the case of India, the power minister said the country had adequate coal capacity for the next three years; however, there are still nearly 65 gigawatts of coal plants under construction. Coal generation is expected to grow at the rate of about 12 percent in coming years, according to Bloomberg New Energy Finance.

In Asia, some coal plants are being replaced by higher-efficiency plants or being retrofitted into peaker plants, which skews the cancellation numbers, said Sultoon.

In the U.S., coal consumption was down 13 percent in 2015, according to the U.S. Energy Information Administration. Most recent forecasts foresee a considerable decline in U.S. coal consumption in the coming years, due to both market forces and air quality regulations.

With a Trump administration in 2017, however, some of those environmental regulations could be halted, offering a new lease on life for some coal plants. Still, energy efficiency, cheap natural gas and renewables will likely prevent any significant amount of new coal from getting built in the U.S.

Coal’s fate is increasingly in Asia’s hands. The market slowdown in China could be offset by more coal development in Southeast Asia, particularly Indonesia and India. By 2040, IEA has estimated coal will still account for about a quarter of the global energy mix.