Pivot Away From Coal
In Tamil Nadu, the Cheyyur mega plant’s opponents were helped by economic and ecological trends that are beginning to close out the age of black fuels, starting with coal. Global coal production peaked in 2013 at 8 billion metric tons and has been falling one to two percent annually in the years since. Coal exports worldwide are declining. Prices are erratic. Public concern about water supply and water and air pollution from big coal-fired power plants has escalated along with construction delays and expenses.
If construction started today, the Cheyyur station would cost at least $US 4 billion to $US 6 billion, according to new estimates by energy economists. The Cheyyur plant, designed to be cooled by seawater, also would have consumed almost 80 million gallons of fresh water a day to operate.
New and cleaner fuel sources are becoming mainstream. Electric plants that rely on wind, solar, and small hydropower dams are easier and cheaper to build and operate. Investments worldwide in new generating capacity from water-conserving wind and solar energy reached $US 286 billion in 2015, twice as much as investments in fossil fuel-generated electricity, according to a study by the United Nations Environment Program.
India’s pivot away from coal is aided by one of the world’s largest solar photovoltaic plants, which opened last year on dry rangeland near Kamuthi in southern Tamil Nadu. Photograph by, Dhruv Malhotra © Wilson Center/Circle of Blue
At the frontlines, the global pivot away from coal has been much swifter than almost anybody predicted. China, the world’s largest coal producer and consumer, has cancelled 300 coal-fired power plants in the last two years.
At the frontlines, the global pivot away from coal has been much swifter than almost anybody predicted.
In the United States, the world’s second-largest producer, coal production fell to 739 million tons last year, down from nearly 1.2 billion tons in 2008, according to the U.S. Energy Information Agency. The United States now generates 30 percent of its electricity with coal, down from over 50 percent a decade ago.
The depression in the coal sector is causing momentous economic pain. Most big American coal companies are in bankruptcy and tens of thousands of miners lost jobs. Billions of dollars in coal reserves are being stranded around the world. Power companies are encountering new impediments in financing coal-fired power plants. Japanese, Chinese, and South Korean financiers have pulled out of three coal-fired projects in Bangladesh. South Africa’s 4,000-megawatt Medupi and Kusile power plants are a decade overdue, more than $US 24 billion over budget, and may not be finished until the early 2020s, if ever.
Similar trends are causing turmoil in India’s coal production and combustion sectors. Coal-fired power plants are idle due to lower demand for electricity, and inadequate water supplies to cool plants. Coal production is flattening. Coal imports have dropped.
Portions of India’s finance sector are reeling as a result. The Reserve Bank of India has reported that the national pool of “non-performing assets,” otherwise known as bad loans, has grown from $US 8 billion in 2007 to $US 80 billion in March 2016. Half of the increase occurred from March 2015 to March 2016. The bank estimated that the total value of bad loans could increase another 10 percent by March 2017.
The power sector has been responsible for a sizable share of the mess, according to bank officials. Bad loans to fossil energy projects amounted to 11 percent of the losses.
The UMPP program reflects the tumult. Of the 16 giant plants that India proposed, just two Ultra Mega Power Projects were built — a 4,000-megawatt station in Gujarat and a second in Madhya Pradesh. Both are hindered by severe operating and financial stresses, along with powerful civic opposition. Last summer, due to lack of interest by developers, the government announced it was cancelling UMPP installations in Chhattisgarh, Karnataka, Maharashtra and Odisha. The Cheyyur plant never attracted a committed builder.
India certainly tried. National leaders marketed the Ultra Mega Power Project as a relatively risk-free investment. Limiting carbon emissions to slow climate change was not yet a global priority. India’s freshwater resources, needed to process raw coal and cool power stations, were not yet dried up by deep droughts. Coal in and outside India was inexpensive and profuse. Proven global reserves amounted to nearly 1 trillion metric tons, or a 120-year supply.
Most big American coal companies are in bankruptcy and tens of thousands of miners lost jobs. Billions of dollars in coal reserves are being stranded around the world.
India also sought to make Ultra Mega plants easier to build than other electric power investments. It changed rules to assure UMPP developers that the government would take care of the most difficult details: acquiring land, gaining environmental permits, securing coal contracts, and negotiating favorable pricing agreements. All developers needed to do was put financing packages together for projects anticipated to cost less than $US 2 billion each — and included guaranteed coal supplies and electricity buyers.
