$71 billion in Japanese coal assets at risk from cheaper renewables

Japanese utilities turn away from coal plans amid a green energy boom. (Reuters/File)
Updated 06 October 2019

$71 billion in Japanese coal assets at risk from cheaper renewables

  • Offshore wind and large-scale solar PV could be cheaper than the long-run marginal cost of existing coal plants by 2025 and 2027 for onshore wind, the report says

LONDON: As much as $71 billion in Japanese coal assets could be at risk as the economic viability of plants is undermined by cheaper renewable energy, research by the University of Tokyo, Carbon Tracker and the Carbon Disclosure Project showed on Sunday.

The report, called Land of the Rising Sun and Offshore Wind, used project financial models to analyze the economics of new and existing coal plants in Japan.

It found that Japan’s planned and existing coal capacity could be jeopardized by low utilization rates and cheaper renewable energy, namely onshore and offshore wind and large-scale solar photovoltaics (PV). Offshore wind, solar PV and onshore wind could be cheaper than new coal plants by 2022, 2023 and 2025 respectively.

Added to that, offshore wind and large-scale solar PV could be cheaper than the long-run marginal cost of existing coal plants by 2025 and 2027 for onshore wind, the report said.

To meet a globally agreed goal of limiting temperature rise to below 2 degrees Celsius this century, planned and operational coal capacity would need to be shut down and Japanese consumers could face $71 billion in higher power prices as the cost of stranded coal assets is passed on.

Of this amount, $29 billion could be avoided if the Japanese government reconsidered the development of planned and under construction capacity straight away, according to the report.

Coal generation

Coal-fired power generation is a major contributor to carbon dioxide and other pollutants that contribute to global warming, which is causing heat waves, rising sea levels, droughts and other extreme weather events.

The Japanese government has said renewables should be the main source of power and the country should aim to be carbon-neutral as soon as possible after 2050, to meet the Paris global climate agreement.

However, the Fukushima nuclear plant disaster in 2011 and shutdown of Japan’s reactors increased its fossil fuel import dependence to nearly 95 percent in 2016, from 80 percent in 2010, and resulted in carbon emissions from power generation rising by a quarter, according to the International Energy Agency.

According to a Reuters survey, Japan plans to build nearly 12.6 gigawatts (GW) of new coal capacity in the next decade.

Japan’s coal generation capacity totalled around 43 GW at the end of March and is expected to reach 52 GW in 2023, according the country’s grid monitor.

Globally, previous research by Carbon Tracker has calculated that 42 percent of coal plants in operation were likely unprofitable last year and at least 72 percent could be unprofitable by 2040.


Frank Kane’s Davos diary: Swiss efficiency lapses, but so far Davos lives up to the cuckoo-clock image

Updated 22 January 2020

Frank Kane’s Davos diary: Swiss efficiency lapses, but so far Davos lives up to the cuckoo-clock image

Davos comes and Davos goes, but over the last five decades, the one thing you can rely on is Swiss efficiency, right? The trains run on time, the cuckoo clocks chime on the hour, and the snow is swept from the pathways within minutes of the first fake falling. That is the common (even cliched) view of the Alpine nation and its showpiece event, the World Economic Forum (WEF) annual meeting in Davos.

But — and whisper it very gently beneath your breath — maybe the legendary standards of Swiss efficiency are slipping as the WEF celebrates its 50th birthday. Evidence of a lapse from the highest levels of attainment came at Zurich Airport, when the luggage belt seized up inexplicably, and a full 10 minutes elapsedbefore a maintenance man came to attend to it. Tut tut.

Further signs of falling standards were on display at the railway station. The booking desks were besieged, as usual, by WEF delegates keen to complete the final leg of their journey up the Magic Mountain — a two-hour rail journey involving two stops at increasingly higher altitudes.

But only two of the 10 grills were manned, and the line grew longer and more grumpy with each passing minute. The mood was not helped when some trains were canceled and an extra hour was added to the journey. There was much muttering and dark looks shot when the train finally pulled into Klosters.

But thankfully, once you got to the heart of WEF-land, normal service was resumed. There had been a reasonable fall of snow that morning, which gave the place its usual fairytale appearance, but no traffic snarl ups as in previous years, when massive snowfall had caused the place to grind to a halt.

The shuttle buses that are the arterial life-channels of Davos — for those whose budgets do not extend to the black Mercedes limo — were running with their usual Swiss punctuality: Every 10 minutes or so, or even more frequently during peak rush hours.

These, in my experience over the past few years, are becoming frequently extended. Having battled through the registration process and attended one event at the nearby Seehof hotel, I imagined it would be easy to catch a ride on a virtually empty shuttle back to Klosters at around 9.30 p.m. But even at that hour, there was a long queue of unhappy souls waiting to make the same 20-minute trip to the other side of the mountain and their warm, welcoming hotel rooms.

It was the same thing on the opening morning of the annual meeting. I left my hotel — the homely and comfortable Cresta in Klosters — at 7 a.m. in the dark, and at minus 5 degrees Celsius. Again, there was a crowd of people standing huddled at the shuttle stop, shivering and stamping their feet.

The WEF shuttle service was up to the job, however, and I got into the Congress Hall with little trouble. The airport-style screening process — maybe a little more thorough than usual in view of the impending arrival of US President Donald Trump — passed smoothly. One request though: Please WEF, install some hot-air machines in the security hall. The body shock when you remove outer clothing to pass through the metal detectors was wicked.

Then down to business, which for a journalist at Davos means finding somewhere in the congress complex where you can rest a laptop while also providing a good people-watching vantage point. Over the years, I have learned that the Central Lounge — strategically located between the main plenary meeting halls and the (private) members lounge and bilateral rooms — is the perfect spot. Now, who will come my way in Davos 2020?