China and other major economies can continue to use coal as a major energy source for decades if they build new capacity to stimulate their economies once the crisis around the spread of the coronavirus ends. And, according to Carbon Tracker, Beijing is considering just such an option.

The think tank finds that 46% of the world’s coal plants will run at a loss in 2020, with the share of unprofitable capacity increasing to 52% in 2030. However, renewable energy (RES) and natural gas are already ahead of competition Worldwide, and if governments allow greater competition in energy markets, the number of coal-fired power plants will increase even more.

Carbon Tracker warns that China, which produces and consumes about half of the world’s coal, can focus on building an entire new coal power fleet to boost its economy after the COVID-19 crisis. The trust noted that just recently the Chinese Energy Administration announced it was ready to relax the rules for investing in coal.

Globally, many governments support expensive coal plants – 90% of the coal capacity that is still operational, under construction or planned is in countries with regulated or semi-regulated markets, where coal plants are implicitly or explicitly subsidized. By contrast, in the free markets most coal power is already unprofitable – 90% in Germany and 82% in the UK in 2019.

“China and other countries may be tempted to invest in coal energy to help their economies recover from the COVID-19 pandemic, but this risks imposing a commitment to expensive coal energy that will undermine global climate goals”, shares Matthew Gray, author at Carbon Tracker.

Global coal use in electricity production should fall by 80% from 2010 levels to 2030, to limit global warming to 1.5 degrees Celsius, according to an analysis of recent UN studies. Decarbonisation of the global energy system can support the global economy and create up to 28 million new jobs by 2050, according to the International Renewable Energy Agency (IRENA).

However, the latest Carbon Tracker report found that government subsidies have stimulated plans to build nearly 500 GW of new coal plants worldwide at a total cost of 638 billion USD.

The report says China needs to reconsider plans to spend 158 billion USD on 206 GW of new coal, as “renewable energy and batteries are more viable and sustainable sources of economic growth”.

The coronavirus pandemic will not change the basic profitability of China’s coal plants, but the economic downturn caused by the disease risks weakening the planning process and environmental regulations associated with any future investment.

Carbon Tracker finds that in China, 59% of the country’s coal capacity with 982 GW capacity is operating at a loss; another 206 GWs are under construction, with 61% of them entering the negative cash flow market. At present, 71% of the electricity produced by coal costs more than building new RES.

In the Indian regulated market, 2% of the existing 222 GW coal fleet is operating at a loss; another 66 GWs are under development, but 23% will enter the negative cash flow market. Already, 51% of India’s coal production is worth more than building new RES.

In the US, where two-thirds of coal plants are regulated, 22% of the entire coal fleet is no longer profitable, with no plans to build new plants.

In Europe, 62% of available coal capacity, with a total capacity of 146 GW, is operating at a loss; Half of the 8 GW planned new coal plants will enter the negative cash flow market. Already, 96% of the energy produced by coal-fired plants in Europe is worth more than building new RES.