Page 4 - AsiaElec Week 11

AsiaElec COMMENTARY AsiaElec
COVID-19 and cheap oil pose tough questions for Energy Transition
Post-crisis economic stimulus packages much be focused on clean energy and not coal if the fight against climate change is not to be derailed, writes Richard Lockhart
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WHAT:
China should invest in renewables not coal to boost the economy
WHY:
Coal power is now more expensive that renewables
WHAT NEXT:
Governments and companies must maintain their commitment to the energy transition
CHINA should reject any temptation to invest in coal power as an economic stimulus and instead favour renewables when the time comes to boost the economy once COVID-19 has been contained.
The UN has already said that it expects China to spend its way out of the current economic cri- sis in a bid help the economy recover.
China’s policy choices come as the spread of COVID-19 and the collapse of the oil price to under $20 has led to calls for government and energy companies to focus more on renewa- bles as a way to protect the future economy and energy sector from oil shocks.
Meanwhile, the IEA has urged governments to put clean energy at the heart of stimulus plans.
Coal costs
Matt Gray, co-head of power and utilities at the Carbon Tracker Initiative, warned this week that China’s record previous stimulus packages and its successive five-year plans have histori- cally resulted in a significant increase in thermal power generation infrastructure.
However, Gray stated that this situation had now changed, as cheaper renewables meant that investing in coal was risky and unsustainable from both a climate change and financial point ofview.
“Carbon Tracker recommends China can- cels all under-construction and planned (coal)
capacity immediately,” said Gray.
“This recommendation is based on the
finding that around 70% of China’s operating coal fleet costs more to run than building new onshore wind or utility-scale solar PV,” he added.
The report found that China was the country with the greatest risk of stranded assets. These are coal plants that will not be able to compete on price with renewables and will not be a good investment.
The 70% figure is the result of a Carbon
Tracker report released earlier in March, which
stated that 70% of China’s 982GW of existing
coal capacity already currently costs more to run Technologies than building new renewables.
The country has $158bn at risk, Carbon carbon capture
Tracker found, as it has 100GW of coal under construction and 106GW planned.
COVID-19 costs
(CCUS) should play a key part in governments’
The call comes as the first estimates of the COV-
ID-19’s impact on the global economy are being plans made. The UN has put an initial cost of $1 trillion
in 2020, or a fall in economic growth to 2%.
“We envisage a slowdown in the global economy to under 2% for this year, and that will probably cost in the order of $1 trillion, com- pared with what people were forecasting back in September,” said Richard Kozul-Wright, director of globalization and development
such as solar, wind, hydrogen, batteries and
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w w w . N E W S B A S E . c o m Week 11 18•March•2020