Researchers in China believe the country ought to stop adding coal-fired power capacity in order to adapt to a forecasted decline in energy-intensive industry.
Problems associated with severe over-capacity have already affected the steel and cement industries and according to Yuan Jiahai, a professor at the North China Electric Power University, expected production cuts by industry could mean a severe oversupply of coal-fired power.
He told Reuters, “If it keeps on growing with no control, the oversupply troubling the steel and cement industries would be even worse for the power sector.”
China has seen a boom in construction of coal-fired plants, increasing new capacity by 55 per cent in the first six months compared with the same period last year, according to the China Electricity Council. It also approved 200 GW of new plants in the first half of 2015, exceeding the total approvals in the previous three years.
China’s steel sector currently has 300 million tonnes of surplus capacity.
Coal consumption by cement makers and steel firms will see coal use peak by 2016, according to the think tanks and consumption by power stations will likely peak by 2020, the research found.
Growth in coal consumption is already falling and could be the slowest in 30 years in 2015, said Miao Ren, a researcher at the Energy Research Institute, the Chinese government’s top planning body, the National Development and Reform Commission.
Thermal power plants are set to cut operating hours by nearly 400 hours this year as the economy slows. In addition a new environmental tax, expected to be enforced in 2017, aims to cut coal use by raising the expense, while tighter controls on lending to coal miners may also impact the sector.
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