There are conflicting reports of the official death toll from this week’s massive earthquake in Vanuatu as rescue teams continue to scour the rubble for survivors.

On Tuesday, the Vanuatu National Disaster Management Office reported 14 deaths.

It said four people had been confirmed dead by the hospital, six others were killed in a landslide and four others died in a collapsed building.

But yesterday, the disaster management office reported only nine people had been confirmed dead by the hospital and made no mention of the deaths it had earlier attributed to the landslides and collapsed buildings.

One consistent figure is the more than 200 people injured, with the hospital saying many patients were being treated for broken bones.

This area has been closed to the public and search and rescue operations were ongoing.

Any buildings still standing had sustained significant structural damage.

The Port Vila main wharf remained closed due to a major landslide.

The two main water reservoirs supplying Port Vila had been totally destroyed and would require reconstruction — an assessment of the rest of the water network was ongoing.

A boil water notice is in place for all of Vila.

Power and telecommunications
The utility company Unelco is working to restore power and water supply.

Vodafone Vanuatu informed its customers that instant messaging on Messenger, Viber and WhatsApp had been restored on its mobile network.

Audio and video calling via these platforms, however, was still unavailable by today.

Vodafone said its team was working hard to resolve these issues and fully restore its internet services.

State of emergency
A one-week state of emergency was declared on Tuesday by the President, Nikenike Vurobaravu, for the worst affected areas.

Police had been urging people to adhere to the nightly curfew of 6pm to 6am local time.

They had also warned of a greater chance of opportunistic crimes being committed after the disaster and urged everyone to look out for each other.

Commercial flights
There were no commercial flights operating into or out of Vanuatu.

Local authorities said on Tuesday they were closing the Bauerfield International Airport to commercial flights for 72 hours to repair damage and prioritise disaster relief flights.

Passengers booked to fly Fiji Airways to Vila on Thursday had their flights moved to December 21.

Solomon Airlines had also indicated it would resume flying to Vanuatu from Saturday.

Virgin Airlines has cancelled flights until Sunday and a spokesperson for the Qantas Group told the ABC they were monitoring the situation closely.

International aid
International defence and medical personnel, search and rescue teams and disaster response experts from New Zealand, Australia and France were now on the ground in Port Vila.

They were helping local emergency response teams, which had been working around the clock since Tuesday’s 7.3 magnitude quake alongside locally based staff at UN agencies and non-government organisations in Vila.

Time is of the essence for the teams scouring the rubble for any sign of survivors.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

World Vision’s Vanuatu country director says electricity and water are still affected in the capital Port Vila and strategic bridges connecting the city are damaged, nearly 24 hours after a 7.3 earthquake just before 1pm on Tuesday afternoon.

The city has had multiple aftershocks since, with the strongest this morning reaching a magnitude 5.5.

At least 14 people are confirmed to have been killed and more than 200 people are injured.

World Vision’s Clement Chipokolo said the aftershocks are making everyone more vulnerable.

“We’re still out of electricity; we’re out of water as well and most of the stores are closed,” Chipokolo said.

“We have queues that are forming in the stores that are open for people to get essentials, especially water.”

He said the main priority is to recover those buried under rubble and recover bodies, while service providers were frantically trying to restore water and power.

He said the public was starting to come to grips with what had happened.

“I think we did not really gauge the scale of the impact yesterday, but now the public are sucking it in — how much we went through yesterday and by extension today.”

Vanuatu is one of the most natural disaster-prone countries in the world. It was hit by three severe tropical cyclones last year.

“We are a country that’s quite resilient to disasters but this was not a disaster that we anticipated or probably prepared for,” Chipokolo said.

However, he said the National Disaster Management Office (NDMO). which is the government arm that manages disasters, were on standby to support because of the cyclone season.

RNZ News also reports that help is slowly arriving, with incoming support from New Zealand, Australia and France. The airport in Port Vila is not operational other than for humanitarian assistance.

There are concerns about a lack of safe drinking water and Unicef Vanuatu Field Office Eric Durpaire told RNZ Midday Report there had been an increase in cases of diarrhoea.

Two Ministry of Foreign Affairs staff previously unaccounted for have been found safe.

This article is republished under a community partnership agreement with RNZ.

My friend Jamie just shared this video of the moment the earthquake struck his home. Amazing. pic.twitter.com/FaR24r2DeJ

— Dan McGarry (@VanuatuDan) December 18, 2024

Article by AsiaPacificReport.nz

Papua New Guinea began New Year 2023 with sizzling fireworks that lit up the skies.

But our hopes of shrugging off the “power blackout” tag ended just as the year was a few hours old.

An hour into New Year celebrations in the capital Port Moresby, like a perennial remnant, the inevitable popped like a fireworks flare gone bonkers — resulting in an inkiness that lasted into the wee hours of the morning.

Eleven days into the year, black outs are holding businesses and people to ransom across the country, prompting PNG Power Limited CEO Obed Batia to address the root cause of the constant outages.

According to Batia, the reasons range from aging equipment to high rainfall, vegetation that overwhelms power lines, the refusal of customers to allow PNG Power to trim vegetation and access powerlines, and low diesel fuel.

The creepy crawlies like snakes, rats and bats that can spark a major outage by squatting illegally in a transmitter don’t even rate a mention.

Batia said overgrown trees near power lines are some of the biggest contributors to blackouts, and the refusal of customers to allow PPL workers to cut down these trees add to the problem in many parts of the country.

Resisting cutting trees
He said: “Many customers resist PNG Power officers from cutting the trees and clearing of the vegetation within their properties. We are working with external parties to control this.”

Lae PPL office refused to answer questions asked by the Post-Courier about blackouts in Morobe.

In Goroka, a blackout lasted from Jan 6-8 for 48 hours, coming on for only 30 mins and going off again.

Frustrated consumers urged PNG Power to come clear on why the blackout was continuing.

Chamber of Commerce president Chris Anders said the blackout comes as “the risk of having your business or home broken into” had escalated as criminals took advantage of the blackouts, as they normally hit in the early hours of the morning.

“The lack of announcements from PNG Power on what they are doing to fix the power supply is deafening,” Anders said.

PPL said: “The Power Transformer at Himitovi Substation in Goroka which caters for the Goroka load experienced a technical fault on Friday around 2am.

“The issue was rectified at 7pm on Saturday night and power fully restored for Goroka customers.”

Without power for 8 days
Along the North Coast Road in Madang, a community has been without power for eight days with requests receiving responses that never were followed up by PPL.

Batia said that rainfalls have attributed to low water levels at Yonki and Ramu will see continued load shedding in Madang and Highlands while Lae has been assured of supply from Taraka, Mildford Power Stations, Baiune Power Station in Bulolo and the Munum IPP.

“In Port Moresby, recent system outages were experienced due to technical issues between all generation power stations both at PNG Power and the Independent Power Producers (IPPs),” he said.

“We are working together with our IPP stakeholders to ensure we correct those issues with respect grid control and regulation issues, in order to provide stable power.

“All Highlands centres and Madang have their standby power stations which supplement the load.

“There has been little increase in the water level but not to a capacity for the Ramu Hydropower Station to generate to full capacity yet.

Back to normal for Kokopo
“Gazelle grid has stopped load shedding and the system is back to normal for Kokopo, Rabaul and Kerevat customers,” Batia added.

“In all other provincial centres who run on diesel fuel power stations, our challenge is ensuring our fuel suppliers get supply to our power stations on time.

“When there is late supply, our teams resort to load shedding, which is conserving fuel until the next supply of fuel is delivered.

“Discussions are ongoing with our fuel suppliers to ensure we have an understanding on time supply for our diesel power stations.”

Miriam Zarriga is a PNG Post-Courier reporter. Republished with permission.

Article by AsiaPacificReport.nz

People’s Alliance party leader Sitiveni Rabuka says the FijiFirst government is not fit to run the country because it cannot efficiently provide two basic necessities — electricity and water.

In a statement issued yesterday, he said the continuing crises of dry taps and regular power cuts was “good reason for voting the FijiFirst government out of office”.

“The inability of the Minister of the Economy Aiyaz Sayed-Khaiyum, and the Prime Minister Voreqe Bainimarama to keep the lights on and the water flowing through the taps is an indictment of their leadership,” Rabuka said.

“In addition to their other failures, they clearly cannot efficiently provide these two basic necessities for living. They are therefore not fit to remain in office.”

The former prime minister also claimed electricity supply disruptions, leaking mains, dirty water and empty taps were part of the daily routine for hundreds of thousands of citizens.

“Disruptions occur in many areas causing turmoil and stress in homes, workplaces and public facilities such as hospitals,” he said.

“On more than one occasion in recent times, all of Viti Levu has lost its electricity — some places have suffered up to four power cuts in one day.

“The CWM Hospital, the country’s largest, has previously been left without water. You can imagine what a nightmare that was for hundreds of patients, visitors and staff.

“There has never been an apology from Mr Bainimarama or Mr Sayed-Khaiyum for not getting their water and power act together.”

Felix Chaudhary is a Fiji Times reporter. Republished with permission.

Article by AsiaPacificReport.nz

Papua New Guinea’s former Prime Minister, Peter O’Neill, has been committed to stand trial for charges of misappropriation and official corruption

A Waigani Committal Court magistrate Tracey Ganaii yesterday found there was sufficient evidence on the two charges.

They relate to the state purchase of two generators from Israel seven years ago when O’Neill was prime minister.

Police allege that O’Neill directed payments for the purchase without proper procurement and tender processes, or parliamentary approval.

O’Neill told media outside court that he welcomed the chance to defend the case.

“There was no personal benefit on my part in this case. But there is a suggestion by some of the witnesses that it was official corruption and misappropriation of unbudgeted items. But we have not presented our evidence in court, which we will do in the National Court.”

O’Neill previously defended the US$14 million purchase of the generators as being a necessary step to addressing chronic electricity blackouts experienced in PNG’s main cities of Port Moresby and Lae.

PNG’s parliamentary opposition filed a police complaint about the purchase in early 2014.

The former prime minister insisted that the decision was approved by his cabinet, the National Executive Council.

“Largely, this is a NEC-endorsed decision. The purchase was endorsed by NEC.

“The court thought that there has been differences of timing, and there was sufficiency of that to bring the matter up to the National Court, and we look forward to defending it there.”

This article is republished by the Pacific Media Centre under a partnership agreement with RNZ.

Article by AsiaPacificReport.nz

Indonesia’s Environment and Forestry Minister Siti Nurbaya paid a visit to President Joko “Jokowi” Widodo at the palace last October 31 bearing good news. A group of scientists had confirmed the finding of a new orangutan species called Tapanuli orangutan, she reported to the President.

Less than a year later, the global scientists who researched the endangered species sent two letters to the Presidential Palace. The first letter in July said there was a Chinese-funded hydropower project in the orangutan habitat that “could be the death knell for the Tapanuli orangutan, by flooding a key expanse of its habitat and, even more crucially, by slicing up its remaining forest home with new roads, power lines, tunnels and other built facilities”.

The scientists believe only 800 Tapanuli orangutans remain in their habitat, the Batang Toru ecosystem in South Tapanuli regency, North Sumatra.

The apes, with frizzier hair than their Bornean and Sumatran counterparts, have been threatened by poaching and illegal logging. The planned dam, they believe, will make the species’ chance of survival slimmer.

The International Union for Conservation of Nature (IUCN) has included the species – Pongo tapanuliensis – on its red list, calling it “critically endangered”.

The second letter, dated August 16, reiterated the scientists’ request, saying that they had collected scientific evidence that had led them to believe the project “should not have been approved initially by the North Sumatra provincial government”.

‘Green’ dam
The company responsible for the project, PT North Sumatera Hydro Energy (NSHE), denied the scientists’ claims, saying that the hydropower plant, designed to produce 510 megawatts of electricity, was an “environmentally friendly” project, which would not flood much of the Batang Toru ecosystem.

The NSHE said the hydropower plant, which used “run-of-river technology” and had Chinese state-owned company Sinohydro as the contractor and operator, would only flood 67.7 ha of area in Batang Toru, which is not a protected forest but an area penggunaan lain (nonforest estate). The company also argued that it had completed all the necessary documents required by the North Sumatra administration.

The company, which is financially backed by a consortium of Chinese and international banks, said it had taken measures to protect the orangutans and that it was also interested in protecting the forest because its project depended on the abundance of water in the Batang Toru River.

“We will join any effort in the future that aims to better the orangutan habitat,” Agus Djoko Ismanto, a senior adviser to the NSHE, said recently. “We are not planning to inundate 9600 ha,” Agus said.

Poacher threat
The scientists, however, are not convinced.

One of them, Bill Laurance, director of the Centre for Tropical Environmental and Sustainability Science at Australia’s James Cook University, said in-depth scientific analysis of the conservation status and threats to the Tapanuli orangutan had found that when new roads appeared, apes disappeared.

The NSHE confirmed that besides the 67.7 ha that will be flooded with water; about 600 ha will be used to build roads, tunnels and other infrastructure.

In the letter addressed to the President in July, 25 scientists from all over the world, including Jatna Supriatna from the University of Indonesia, said that instead of approving the dam project, the government should have had initiated forest restoration efforts in Batang Toru.

“Roads are a particularly insidious threat because they open the ape’s habitat to poachers, illegal loggers, miners and land encroachers. Recent scientific analysis shows that the Tapanuli orangutan survives only where roads are almost entirely absent,” the letter said.

1.3 million supporters
Environmentalists and others all over the world have voiced their support for the scientists. A global campaign to save the species began early this month and had gained more than 1.31 million supporters.

“As citizens from across the world, we urge you to save the last 800 Tapanuli orangutans from extinction by canceling the Batang Toru hydropower dam project. The fate of this entire species rests in your hands, “the petition on avaaz.org said.

Protests from national environmentalists have also escalated into a lawsuit. The Indonesian Forum for the Environment (Walhi) filed a lawsuit earlier this month against the regional administration’s decision to issue permits for the power plant.

One of the organisation’s lawyers, Golfrid Siregar, said the permit issuance was problematic on account of the lack of discussion and participation from locals.

Separately, the director of Walhi’s North Sumatra office, Dana Prima Tarigan, said the power plant could also cause an ecological disaster, as it would be located near an earthquake-prone area in the province.

In response to the growing calls, the Environment and Forestry Ministry had held a coordination meeting with the Energy and Mineral Resources Ministry and the company to discuss possible solutions.

Task force
“After the meeting, we established a joint team comprising personnel from both ministries, the company, regional administration and the Indonesian Orangutan Forum [Forina], which is task with looking for alternatives to be applied in the area,” the ministry’s natural resources and ecosystems director-general Wiratno said last week.

One of the solutions offered by the company, he added, was to build an “orangutan corridor” that would help the animal migrate between the two forest areas in Batang Toru.

Should the concept be applied in the area, it will become the first corridor to be implemented in Indonesia.

“It, however, was still an idea. The team will need to go into the area first before offering possible solutions. We are still waiting for data from the field,” Wiratno said.

Kharishar Kahfi contributed to this story for The Jakarta Post from the capital of Jakarta.

Article by AsiaPacificReport.nz

Estonia may lie a continent and an ocean away from the two biggest polluters in the world – China and the United States – but the nation cannot lay claim to climate innocence. Having mined oil shale for 100 years, Estonia now has energy independence, but it has come at a cost. Kendall Hutt investigates.

Celebrating 100 years of oil shale mining may represent a proud moment for Estonia, but this doesn’t compare to what the country has lost, many environmentalists say.

The backbone of Estonia’s electricity production may have allowed the Baltic nation to escape from beneath the Soviet yoke and become energy self-sufficient post-independence in 1991, but most observers remember that this has come at a cost: the environment.

“In terms of ecology it’s a total disaster. From the point of view of state economy this is something to be proud of,” says Professor Mait Sepp, research fellow in physical geography at the University of Tartu.

“We have lost our wetlands, we have lost our streams.”

Many of Estonia’s environmental organisations agree, with more than 15 percent (504.6 km²) of the country’s Ida-Virumaa region severely damaged by the oil shale industry.

Mihkel Annus of the Estonian Green Movement says the sector still stamps the largest ecological footprint on the nation, despite European Union (EU) regulations.

’40 years like a volcano’
Perhaps the greatest reminder of this footprint will be the country’s ash mountains, huge piles of solid hazardous waste that mar Estonia’s relatively flat landscape.

“These will probably stay as the remnants of our fossil-fuel dependent past for centuries from now, as well as the land that has been excavated and already been exhausted,” says Annus.

Harmful to the environment due to the poisonous gases and various contaminants they emit into surface and groundwater, these mountains are not only viewed as an ecological disaster.

They have also dealt a blow to the country’s pockets.

It cost the government more than 36 million euros (about NZ$44.4 million) to close the infamous ash mountain in Kohtla-Järve, which stood approximately 170m above sea level before it was closed and made environmentally safe in 2015.

Estonia’s current environmental headache is the Kukruse ash mountain, which one official from the Ida-Viru County government describes as a 40-year-old “volcano”.

Hardi Murula, head of development and planning for the county government, says they have been engaged in ongoing talks for the past three to four years on how best to “neutralise” the mountain, but that no consensus has been reached.

“No one can guarantee during the restoration process that the pollution can be stopped.”

The closure of ash mountains throughout Ida-Virumaa is largely seen as positive despite the challenges, with one of the mountains in the former oil shale town of Kiviõli converted into an adventure centre in a joint industry-government project.

Piret Väinsalu of the Estonian Fund for Nature says the restoration of land is rather impossible, however.

“You can try to restore it into something, but it will always be there as a ‘heritage of oil shale age’.”

Legacy pollution
But government, industry and environmentalists do not see eye-to-eye on the source of this environmental damage.

Minister of Environment Marko Pomerants says much of the environmental impact is related to “legacy pollution” of the Soviet-era.

“Fortunately, most of the major negative effects are a thing of the past and the current oil shale sector has remarkably reduced its harmful practices for the environment.”

He says environmental concerns today largely involve emissions, although these have decreased since 2002.

Timo Tatar, head of the Ministry of Economic Affairs and Communication’s energy department, agrees.

“Talking about environmental damage, one can say, that oil shale environmental impact has significantly decreased due to heavy investments into new combustion technologies as well as emission control.”

Official 2014 data by the European Commission shows Estonia currently stands as the second highest emitter, per capita, of greenhouse gases in Europe, however, and its far from carbon-free history occupies a blight on their climate change record.

Although the EU’s Emissions Trading System allows the country to sell-off its emissions because they are lower than the country’s massive levels at 1990, things are far from rosy, especially in the wake of the 2015 Paris climate change agreement.

In light of this, environmentalists Annus, Väinsalu, and their colleague Aleksei Lotman, a marine conservation expert with the Estonian Fund for Nature, do not share officials’ view.

Although they agree the oil shale industry is “very much less polluting” than it was 30 years ago, they say making oil shale “environmentally friendly” is not enough.

To call current improvements by the oil shale industry so is “over-optimistic to say the least”, Lotman says.

A question of commitment
They are therefore critical of industry and government and feel both have failed to act effectively.

Väinsalu, who serves as the Estonian coordinator for the international non-profit network EKOenergia in her role with the Estonian Fund for Nature, says the government does “just enough” to be on a good list for Estonia’s European partners, while it simultaneously supports oil shale interests by lobbying for greater industry exemptions.

“Instead of understanding the need to find an alternative route and exit the oil shale era our government just supports the industry in every way possible.”

Eesti Energia, Estonia’s state-owned energy enterprise, refutes such claims and says it has taken several steps to reduce the environmental impacts of its operations.

“Today we can produce more energy from oil shale than in the past with less environmental impact,” says Eesti Energia.

Eesti Energia says introductions in new technology have been responsible, although physical changes have also occurred.

Among these was the 2008 closure of the ash field at their Balti power plant near Narva, in Estonia’s east.

The project took three years to complete and resulted in 570ha being made safe for the environment.

In 2013, Eesti Energia’s sister company, Enefit, opened a 17-turbine wind park on the former ash field.

“Our main focus lies in replacing fossil fuels with cleaner fuels,” Eesti Energia says.

The company adds it already does so through its use of water, wind, and biomass.

Annus, however, as a member of one of Estonia’s most influential environmental organisations, feels industry may not have been as cooperative as it makes out.

“Whether they would make their processes more environment-friendly voluntarily, is questionable.”

He says this is because the oil shale industry has been put under increasing pressure by tightening EU regulations.

“They have been forced to take action to meet the set concentration values of emissions, changing the technology of landfilling of solid and hazardous waste, limiting water pollution, and so on.”

Annus adds much of Estonia’s oil shale industry happens behind closed doors, which further calls into question their transparency.

“A lot of the region has also been blocked off from the public eye.”

Kaja Peterson, director of the Stockholm Environment Institute Tallinn Centre’s (SEI Tallinn) climate and energy programme, says Eesti Energia has, in fact, been rather open.

“I think Eesti Energia has been very flexible because they reformed and created a new sister company, Enefit Renewable Energy.”

She points out, however, that Eesti Energia is gradually transitioning to renewables and oil shale, unfortunately, still forms the majority of their operations.

Fossil free future?
This seeming unwillingness on the part of officials to divest from oil shale has led to serious doubts about Estonia’s renewable future.

While the government and oil shale industry remain positive, environmentalists and researchers are sceptical.

They claim there is no direct investment or clear political will in renewables by the government, only some will to diversify.

“There have been measures to promote sustainable energy, but the indirect subsidies for fossil fuels have still been greater,” Annus emphasises.

Annus feels Estonia is lagging behind a large portion of their EU counterparts and trendsetters, while Tatar and Pomerants celebrate Estonia reaching its Renewable Energy Directive target – 25 percent of renewables in final energy consumption – well before the 2020 deadline.

“Since the political target has been achieved there is no political motivation to increase that,” Peterson says.

Peterson’s colleague, Lauri Tammiste, SEI Tallinn’s director, says the shift to a low-carbon economy remains on the official agenda.

He highlights plans by the government to reach 50 percent of renewables and lower CO₂ emissions by 2030, although there will be a challenge.

“The main issue is, how to actually deliver these goals and ensure successful transformation with biggest possible environmental, economic and social benefits.”

When asked whether Estonia would have a fossil free future, Sepp was adamant he would not see change in his lifetime.

“No. Not in the near future.

It’s very convenient to use this old system. You have one system which works and to build a new one …. takes a lot of money and a lot of effort. Some very critical changes must happen to change this system.”

It seems clear, for the time being at least, that Estonia’s energy future remains far more carbon intensive than environmentalists would like.

Feature article by Kendall Hutt; photos by Essi Lehto and Lukas Rusk. The assignment was part of the Inclusive Journalism Project collaboration between journalism schools in New Zealand and Scandinavia.

China is currently building more coal plants than it needs and in doing so is misallocating capital at an unprecedented rate.

As of July 2016, China had 895 GW of existing coal capacity being used less than half of the time – and perversely has 205 GW under construction and another 405 GW of capacity planned, with a total overnight capital cost of half a trillion US dollars.

This misallocation of capital is a microcosm of wider structural woes within the Chinese economy. China’s rapid economic growth, demographic profile and geographical size has meant it often made sense for the government to build power infrastructure first and ask questions later.

The days when China could grow at a fast pace by accumulating capital, safe in the knowledge that this capital would achieve high returns, appear to be over.

China’s coal power investments have reached an important juncture: keep pouring capital into increasingly unviable projects and put the financial system under additional pressure from the risk of large-scale defaults, or stop investing and promote efficiency.

As power demand growth slows from a historical average of 10 percent to 3 percent or less per year, the coal capacity in the pipeline, as well as some existing coal capacity, risks becoming stranded due to low carbon capacity targets, ongoing reforms in the power sector and carbon pricing.

A new report, Chasing the Dragon? China’s coal capacity crisis and what it means for investors, presents analysis which finds China no longer needs to build any additional coal plants and therefore it makes sense to act with conviction to contain its coal overcapacity crisis.

To prove this, Carbon Tracker Initiative developed a short-term scenario analysing the 2020 targets in the 13th five-year plan (13 FYP) and a long-term scenario analysing the implications of limiting the average global temperature increase to 2°C.

Carbon Tracker Initiative also develop a 2020 reform scenario which models the potential impact of power market reforms and a national emission trading scheme (ETS) on the gross profitability of each operating coal plant in China.

Investors who fail to understand the immediacy of China’s energy transition could find themselves chasing fossil fuel demand that is not there.

13th five-year plan doesn’t add up for coal generation
Low carbon capacity targets in the 13 FYP coupled with a low power demand environment will likely strand coal capacity. Additional capacity beyond existing plants is only required by 2020 if power generation growth exceeds 4% per year and coal plants are run at a capacity factor of 45% or less. If plants under construction are built and existing capacity are run at a 45% capacity factor, then 210 GW of coal capacity is unneeded in 2020 in an environment where power generation growth is 3% per year. Indeed, even in the most optimistic scenario (i.e. sub 45% capacity factor and above 5% power generation growth) there would still be a surplus if capacity under construction is built and operated alongside existing capacity.

Half a trillion US dollars of wasted capital could be avoided
To remain consistent with the IEA’s 2°C scenario (2DS) China can avoid building any new coal plants from now until 2032 by marginally increasing the utilization of their existing fleet. After 2032, the existing fleet becomes inconsistent with the 2DS due to rapidly declining capacity factors and therefore units will need to be progressively retrofitted with Carbon Capture and Storage (CCS) or retired prematurely.

Since China can rely on its existing units to generate the power allocated to unabated coal plants in the 2DS, all units currently under construction and planned are not needed and pose a significant financial risk. Based on a capital cost of US$800 million per kW, US$490 billion of capital could be wasted on plants under construction and planned.

2°C carbon budget bust in 2030s without further policy reform
If no new coal plants are built and each existing unit is retired when it turns 40 years old, the 2°C carbon budget will still be exhausted by 2040. After 2040, coal capacity would need to emit no carbon to remain consistent with the 2°C budget. This is currently technically impossible as existing CCS-equipped coal plants still emit around 100 grams of carbon per kWh. If under construction capacity is built alongside existing capacity with a 40-year lifetime, the 2°C budget will be exhausted by 2036.

Given it would not be practical to phase-out a large amount of generation in a single year, the transition away from coal will obviously require retirements before this date. It is important to note that this scenario analysis uses a capacity factor of 50% and is based on a 50% chance of limiting the average global temperature increase to 2°C.
he following factors will both reduce the 2°C budget and consume it more quickly: (i) holding temperate rise to well below 2°C as described in the Paris Agreement; (ii) a higher probability of limiting temperature rise; and (iii) a higher capacity factor.

Reforms on the rise
Whether through an economic, air quality or climate lens, the Chinese government has every reason to contain its coal overcapacity crisis. The National Development and Reform Commission (NDRC) and other government institutions are aware of the overcapacity crisis and the need for policy interventions to return coal generation investments to equilibrium.

The reforms from the government have increased in frequency and severity in 2016. A policy proposal was released in April to halt the construction of 372 GW of planned capacity – greater than the entire US coal fleet. Even plants under construction are not safe: more recently, the NDRC made the decision to halt 17 GW already under construction, setting a legal precedent that will likely be repeated in the future.

Power market reforms, in combination with the national ETS, could strand coal units with higher operating costs by promoting least cost units and low carbon generation.

Carbon Tracker Initiative developed a 2020 reform scenario to illustrate the impact of a national ETS and power market reforms.

Incorporating a carbon price of $US10/tCO₂ to reflect the introduction of a national ETS in 2017 and a 15 percent reduction in coal power tariffs from ongoing power market reforms, the gross profitability of the operating fleet halves by 2020, with 27 GW becoming cash flow negative and 140 GW making a gross profit of US$5 per MWh or less.

The NDRC put – China to become a net exporter of coal again
The Chinese government are like the central bank of the seaborne coal market. The stellar gains in thermal coal prices this year are entirely a result of China’s NDRC. It’s becoming harder to see how these gains can be sustained.

The NDRC has intervened to supress prices by relaxing its production cuts. By restarting mothballed capacity seaborne investors are actively challenging the effectiveness of Chinese policy.

If history is any guide, betting against the efficaciousness of Chinese policy is not sensible. With China acting as the marginal buyer on the seaborne coal market, investors should prepare themselves for a world where China is a net exporter.

Given the expected coal generation levels by 2020 under the 13 FYP, Carbon Tracker Initiative expects thermal coal demand to be lower than 2015 levels. Even if Chinese domestic supply is curtailed somewhat during this period, it could still result in China no longer being a net importer.

The technology race
The bilateral agreements between China and the US administrations to make efforts to reduce emissions to prevent dangerous levels of climate change sent several signals. One key section related to how both of the world’s largest economies would be investing in the technologies to deliver a low carbon future.

Clearly there are huge opportunities to export the solutions for the companies that win the race.

Questions have been raised as to whether the US will still be in the race under its incoming President – hopefully the economic opportunities and energy independence offered by new energy technologies will make them attractive to the new administration.

Regardless, we believe China will keep racing forward either way for all the reasons outlined above.

Conclusion
The basic maths of continued growth in China’s coal capacity does not add up, and the 13 FYP marks the point where this cannot be ignored any longer. The changing generation mix, the slowdown in power generation growth and existing coal plant overcapacity combine to present a different challenge for China.

With coal generation set to peak, there is no need for further coal capacity, whilst on the supply side, there is the potential for China to become a net exporter of coal again.

Chasing the Dragon? report