OVERCAPACITY, OVER-WITHDRAWAL: HOW TACKLING COAL POWER OVERCAPACITY CAN EASE WATER STRESS

Transcription

1 OVERCAPACITY, OVER-WITHDRAWAL: HOW TACKLING COAL POWER OVERCAPACITY CAN EASE WATER STRESS 1

2 Overcapacity, Over-withdrawal: How tackling coal power overcapacity can ease water stress Lead author LI Danqing / Greenpeace East Asia Technical Advisor YUAN Jiahai / North China Electric Power University Members of the Expert Review Board YUAN Jiahai / North China Electric Power University GU Alun / Tsinghua University Research team Meri PUKARINEN, Lauri MYLLYVIRTA, Sherry LIN / Greenpeace East Asia Cover Picture Kuye River located in Shenmu, Yulin, Shaanxi Copyright Statement and Disclaimer This report is written by Greenpeace East Asia (hereafter referred to as Greenpeace ) to assist public education and scientific research, to encourage press coverage and to promote the awareness of environmental protection. READING THIS REPORT IS CONSIDERED AS YOU HAVE CAREFULLY READ AND FULLY UNDERSTAND THIS COPYRIGHT STATEMENT AND DISCLAIM- ER, AND AGREE TO BE BOUND BY THE FOLLOWING TERMS. I Copyright Statement This report is published by Greenpeace. Greenpeace is the exclusive owner of the copyright of this report. II Disclaimer 1. This report is originally written in Chinese and translated into English subsequently. In case of a discrepancy, the Chinese version prevails. 2. This report is ONLY for the purposes of information sharing, environmental protection and public interests. Therefore should not be used as the reference of any investment or other decision-making process. If so used, Greenpeace is exempt from any liabilities arising from such use. 3. The content of this report is based only on information accessible to Greenpeace during the time of research. Greenpeace does not guarantee the promptness, accuracy and integrity of the information contained in this report. 2

3 Abstract Amid the economic transition of China and the rapid development of renewable energy, numerous factors such as the low price of coal between 2014 and 2016, the high price of electricity, and the complete decentralization of thermal power project approval in early 2015 have stimulated the investment enthusiasm of power-generation corporations. This has resulted in severe overcapacity in China s coal power sector and a continuous decrease in coal power unit utilization. In response, from 2016 to February 2017, government units, including the National Development and Reform Commission and the National Energy Administration, issued a series of policy documents as part of efforts to control the scale of coal power installed capacity. To prevent the worsening of coal power overcapacity, a target was set: limiting national coal power installed capacity to within 1100 gigawatts through Although coal power overcapacity has already drawn attention, current policies are insufficient to resolve the problem completely. Furthermore, the development of the coal power sector presents various environmental threats, such as air pollution, water resource depletion, and climate change. To support the West-to-East Power Transmission Project of the central government, many coal bases were developed in Central and Western China during the 12 th Five- Year Plan period ( ). This resulted in the rapid expansion of the water-intensive coal power sector in these water-scare regions, which severely affected local water systems. The effects of coal power expansion on water resources and the environment warrant comprehensive policy attention. To facilitate more efficient policymaking, this study adopted a water resource benefit perspective to analyse overcapacity in the coal power sector in 2016, and the distribution of water-stressed regions. The study utilized data from the CoalSwarm Global Coal Plant Tracker database. By superimposing a national coal-fired power plant distribution map over a baseline water stress map from the World Resources Institute, and by examining factors such as the overcapacity and geographic distribution of coal-fired power plants and water consumption, we identified means of effectively resolving overcapacity in the coal power sector. We found that there were 114 gigawatts of coal-fired power capacity that was completely redundant in , which is equivalent to 12.5% of coal power installed capacity nationwide. We project that if no additional regulations are implemented to limit the construction and operation of coal-fired power plants, coal power overcapacity will worsen substantially by Redundant coal power capacity could reach 213 gigawatts by 2020, accounting for an even higher nationwide overcapacity rate of 19.1%. Our results also indicated that the annual operation hours of thermal power units in China will decrease from 4,165 in 2016 to 3,319 in Furthermore, we estimated that by 2020, almost half of all coal-fired power plants will be located in high water-stressed areas, with 17 provinces suffering the dual pressures of coal overcapacity and 1 Our calculations in this report suggest that national coal power installed capacity in 2016 was 914 gigawatts, whereas the official figure is 940 gigawatts. This difference is because the database we sourced our data from did not include smallscale power units with a capacity below 30 megawatts. Thus, the actual coal power overcapacity in China in 2016 was 140 gigawatts.

4 Overcapacity, Over-withdrawal: How tackling coal power overcapacity can ease water stress water stress. By then, the estimated (fresh) water consumption of the coal power sector will exceed 3.5 billion cubic metres, of which more than 60% will take place in high water-stressed areas. This report recommends that both these coal power overcapacity and water stress problems be resolved by optimizing water saving in the 16 2 aforementioned provinces, specifically by reducing coal power installed capacity in high water-stressed areas. The proposed plan could reduce water consumption in the coal power sector by up to 500 million cubic metres in 2020 in high water stressed areas. Regarding controlling the scale of coal power installed capacity and planning its distribution, the report offers the following recommendations: We recommend that relevant government departments reduce coal power installed capacity during the 13 th Five-Year Plan period, taking water resource constraints into full consideration We recommend that no new coal-fired power plants be approved or start construction, and that redundant capacity be phased out, prioritising areas of high water stress. We recommend that redundant coal-fired power plants in high water-stress areas be eliminated according to cooling type. To maximize water savings, plants that use freshwater for cooling should be phased out first. We recommend that operation hours be reduced for all remaining freshwater cooled coalfired power plants in high water-stressed areas, with consideration for grid safety. 2 Because all coal-fired power plants located in areas of high water stress in Fujian are combined heat and power (CHP) projects, no capacity removal is suggested for Fujian 2

5 Contents Contents 1. Coal Power Capacity in China 1.1 A Brief Introduction of Coal Power Overcapacity in China 1.2 Analysis of Coal Power Capacity in China in Prediction of the Capacity of the Coal Power Sector in Analysis of Overcapacity and Water Stress in the Coal Power Sector 2.1 A Brief Introduction of Coal Power Moving to the West 2.2 The Status Quo: Water Resources in Coal Power Regions 2.3 Analysis of Overcapacity and Water Stress in the Coal Power Sector in Prediction and Analysis of Overcapacity and Water Stress in the Coal Power Sector in Mitigating Coal Power Overcapacity by Maximizing Water-saving Benefits 3.1 Water Consumption Limits in the Coal Power Sector 3.2 Optimization Analysis of Water Consumption and Capacity in the Coal Power Sector 3.3 Constraint Analysis of Water Resource Utilization Policy in the Coal Power Sector Conclusion and Recommendations 4.1 Conclusion 4.2 Policy Recommendations Data and Research Methods 30 3

6 Overcapacity, Over-withdrawal: How tackling coal power overcapacity can ease water stress 1 Coal Power Capacity in China 1.1. A Brief Introduction of Coal Power Overcapacity in China Amid China s recent economic transition and the rapid development of renewable energy, numerous factors such as the low price of coal between 2014 and 2016, the high price of electricity, and the complete decentralization of approval rights for thermal power projects in early 2015 have stimulated the investment enthusiasm of power generation corporations. This has resulted in substantial overcapacity in China s coal power sector and continuously decreasing coal power unit utilization. According to National Energy Administration (NEA) statistics, thermal power units had average annual utilization hours of 4,165 in fewer than in the previous year. This indicated a unit utilization rate of 47.5%, the lowest since To prevent coal power overcapacity from growing, the National Development and Reform Commission (NDRC) and the NEA released a joint notice, On Facilitating the Orderly Development of Coal Power 5, and a series of policy documents such as the Notice on Further Work in Phasing Out Backward Capacity in the Coal Power Sector 6 and the Notice on Further Regulation of Coal Power Planning and Construction 7. The policies in these documents, such as suspending coal power projects and phasing out backward coal power capacity, notably slowed the rapid expansion of coal power capacity in China. The ultimate goal of these efforts was to ensure the orderly development of coal power in China. In late 2016, the 13 th Five-Year Plan for Power Development 8 was released. The plan outlined a national target for coal power installed capacity: maintaining coal power capacity within 1100 gigawatts through However, according to China Electricity Council data, the national installed capacity had already reached 940 gigawatts as of the end of Despite limited space for the growth of coal power, by the end of 2016, 310 gigawatts of coal power installed capacity was under construction or had been approved for construction 10. By contrast, only 20 gigawatts of coal power are planned to be phased out 11. In January 2017, the Power Department of the NEA issued a Letter on Engaging (Province) on Coal Power Production Scale in the 13 th Five-Year Plan Period to 13 provinces, including Guangdong, Gansu, Shaanxi, and Shanxi. These policy documents instructed the provincial governments to cease or suspend 104 coal power projects with a combined capacity of over 120 gigawatts during the 13 th Five-Year Plan period ( ) 12. This measure dramatically lowered the newly installed capacity for the 13 th Five-Year Plan period. In general, the central government has been implementing more stringent policies on coal power overcapacity. However, despite these policies, the construction of many combined heat and power projects continues, as does work on some coal 3 China lacks available data on coal power utilization hours, therefore, we used those of thermal power plants, as the two follow exactly the same variation pattern. 4 Situation Brief on the 2016 National Average Utilization Hours of Power Generation Units at/above 6, 000 Kilowatts, 5 NDRC and NEA s Joint Notice on Facilitating the Orderly Development of Coal Power, 6 Notice on Further Work in Phasing Out Backward Capacity in the Coal Power Sector, 7 Notice on Further Regulation of Coal Power Planning and Construction, 8 The 13 th Five-Year Plan on Power Development, National Power Industry Statistic Bulletin, 10 Huang Xuedong: In Light of the Establishment of Coal Power Plan and Construction Risk-warning System, There will be No More Construction and Approval for Projects in the Red Zone, 11 The 13 th Five-Year Plan on Power Development, 12 Interpretation of the letters from NEA to 13 provinces, released at NEA Releases Checklist on Ceasing Newly Constructed Thermal Power Units in 13 Provinces and Cities, 4

7 Coal Power Capacity in China power projects exempt from capacity limitations. In addition, aside from the aforementioned 13 provinces, none of the other provinces which are required to limit their installed capacity have been issued clear lists of what projects have been or will be suspended. Furthermore, relevant clauses on coal power export capacity control in the Notice on the Further Regulation of Coal Power Planning and Construction 13 imply that, even in cases where the demand in coal power-importing provinces is low, the construction of power source projects (supporting projects of Ultra High Voltage, UHV power transition) with a reasonable operation scale may still be approved. According to calculations by Greenpeace, in 2016 alone, gigawatts of planned, approved, and under-construction coal-fired power plants was unaffected by the suspension policies 14. Also in that year, plans for an additional gigawatts of coal power installed capacity passed the environmental impact assessments of environmental protection departments at multiple levels 15. In a November 2015 Greenpeace report 16, a reasonable range for coal-fired installed capacity in 2020 was concluded to be gigawatts. That range was determined based on an estimated 3.5% 4.9% power demand growth rate during the 13 th Five-Year Plan period, and on the premise that all non-fossil energy development goals set by the country are achieved. This indicates that even if coal-fired installed capacity were to be successfully capped at 1100 gigawatts, the scale of coal-fired power capacity in China would remain greater than the need, surpassing the upper limit of 960 gigawatts as stated in the reports. In the remainder of this section, we analyse the coal power capacity of China in 2016 and predict future scenarios in 2020 accordingly Analysis of Coal Power Capacity in China in 2016 According to our calculations based on the CoalSwarm Global Coal Plant Tracker Database 17, the operating coal power installed capacity in China was 914 gigawatts in In this study, we applied a resource adequacy perspective 19 to calculate the power balance and provincial coal power overcapacity of China 20. The results suggest that, in 2016, China s coal power overcapacity was 114 gigawatts 21, which is equivalent to 12.5% of national coal power installed capacity. As shown in Figure 1, more than half of all provinces in China are experiencing coal power overcapacity 22. Provinces in Central and Western China, including Inner Mongolia, Shanxi, and Xinjiang, top the list, whereas eastern provinces such as Shandong and Anhui also experience overcapacity to various degrees. However, other provinces, including Jiangsu, Hubei, and Guizhou, have not yet become contributors to coal power overcapacity. 13 Notice on Further Regulation of Coal Power Planning and Construction, 14 The data are based on coal power approval information from provincial Development and Reform Commissions and provincial environmental protection departments, as well as on analysis of power plants affected (postponed approval or construction) by the Letter on Engaging (Province) on Coal Power Production Scale in the 13 th Five-Year Plan Period. 15 The data were calculated based on public information regarding coal power project approval and construction from the NDRC and the Ministry of Environmental Protection. 16 Coal Power Overcapacity and Investment Bubble, ; and Coal power overcapacity and investment bubble in China during by Jiahai Yuan et al, 17 CoalSwarm: The Global Reference on Coal, 18 All data on coal power were sourced from the CoalSwarm Global Coal Plant Tracker Database, updated in February The obtained figure for national coal power installed capacity in 2016 was slightly lower than the official number (940 gigawatts) because the database did not include small-scale power units with a capacity below 30 megawatts. 19 Resource adequacy was measured using the reserve margin of the power supply system, that is, the proportion of electricity equivalent of installed capacity to peak load power demand. 20 Detailed calculation methods are available in the Data and Research Methods section. 21 Our calculations revealed that the national coal power installed capacity in 2016 was 914 gigawatts, whereas the official figure was 940 gigawatts. This is because the database we sourced our data from did not include small-scale power units with a capacity below 30 megawatts. Thus, the actual coal power overcapacity in China in 2016 was 140 gigawatts. 22 Because of our different choice of default reserve margin of the power sector, the calculated provincial coal power overcapacity in this report is more conservative than the conclusion in the NEA s Notification on Establishing Coal Power Plan and Construction Risk-warning Mechanism and Notification on Establishing Coal Power Plan and Construction Risk-warning in 2019, namely that 25 provinces experienced redundancy in coal power installed capacity. 5

8 Overcapacity, Over-withdrawal: How tackling coal power overcapacity can ease water stress Capacity (MW) Redundant Coal Power Capacity Tibet Zhejiang Yunnan Sichuan Shanghai Qinghai Jiangxi Jiangsu Hubei Hebei Guizhou Guangdong Fujian Chongqing Beijing Tianjin Hainan Guangxi Liaoning Gansu Hunan Ningxia Henan Heilongjiang Jilin Shaanxi Xinjiang Anhui Shandong Shanxi Inner Mongolia Figure 1. Redundant Coal Power Capacity by Province (2016) 1.3. Prediction of the Capacity of the Coal Power Sector in 2020 Although overcapacity is a serious problem in the coal power sector, numerous coal-fired power plants remain under construction or planning during the 13 th Five-Year Plan period. In January 2017, the Power Department of the NEA issued the aforementioned policy letters to 13 provinces, ordering they suspend or permanently cease the construction of certain projects. Based on our interpretations on such policies 23 and updates to the CoalSwarm database, we predict that, under the current policy scenario, coal power installed capacity in China will reach 1115 gigawatts in , which is 200 million kilowatts more than in The estimated figure includes 220 gigawatts of coal-fired power plants planned to be constructed and 20 gigawatts of backward coal power units planned to be phased out during the 13 th Five-Year Plan period. In this study, we used power balance to predict provincial coal power overcapacity in 2020 from resource adequacy perspective, with comprehensive consideration of factors such as electricity consumption elasticity, total power demand, and energy development 25. We forecast that coal power overcapacity in China will reach 213 gigawatts by This figure would represent an increase of 99 gigawatts of overcapacity from 2016 and would account for 19.1% of national coal power capacity. In summary, although coal power overcapacity has already attracted the attention of some government bodies, current polices are insufficient to resolve the problem. By 2020, coal power overcapacity will have worsened. At the same time, the environmental impact of coal power expansion on water resources is yet to receive the attention it warrants from the government. Therefore, this report explores coal power overcapacity solutions from a water resource benefits perspective. 23 The suspension list for the 13 provinces was based on the Letter on Engaging (Province) on Coal Power Production Scale in the 13 th Five-Year Plan Period policy; the other provinces policy interpretations are based on suspension policies in We scanned and selected coal power projects in the CoalSwarm database according to their operation status (in operation, under construction, approved, and pre-approved) so that the estimated total installed capacity to be put into operation in 2020 could be as close as possible to 1100 gigawatts, a scale control target set for Detailed calculation methods are available in the Data and Research Methods section. 6

9 Analysis of Overcapacity and Water Stress in the Coal Power Sector 2 Analysis of Overcapacity and Water Stress in the Coal Power Sector The expansion of the coal power sector into Central and Western China may address the uneven distribution between coal resources and power demand, and reduce air pollution in Eastern China. But for the coal power sector, this expansion spotlights the problem of geographically uneven distribution of coal and water, and will exacerbate the existing water stress faced by the sector. As detailed in an earlier Greenpeace report, Thirsty Coal: A Water Crisis Exacerbated by China s New Mega Coal Power Bases 26, the water-intensive coal power sector, due to the accelerated development of coal bases in the central and western regions during the 12 th Five-Year Plan period ( ), substantially affected these regions, where water resources are already scarce. Coal-fired power plants originally distributed in water-scarce northeastern regions such as Liaoning, Hebei, and Shandong are now expanding in the central and western regions, where water resources are even scarcer. This process poses severe water-stress challenges for the entire coal power sector. Although the West-to-East Power Transmission Project can transmit power from Western to Eastern China, it cannot shift the accelerated water stress raised from coal power development in the western region. In the second and third sections of this report, we analyse overcapacity and water stress in the coal power sector in 2016 and 2020, and provide recommendations based on the geographic distribution and water consumption of coal-fired power plants. In order to optimize water savings, we hope to relieve coal power overcapacity through the reduction of coal power installed capacity in high water-stressed areas A Brief Introduction of Coal Power Moving to the West Coal is the primary energy in China. In 2016, coal consumption accounted for 62% of total energy consumption in the country 27. Most coal resources in China are concentrated in the water-scarce central and western regions; however, the highest power demand in the country is from its more economically developed eastern coastal area. In the past, the West-to-East Coal Transportation Project was the primary means of attempting to resolve the unequal distribution of coal resources and power demand. However, continually transporting coal to high-demand areas not only incurs high transportation costs but also causes serious dust, air, and noise pollution as well as exacerbates traffic congestion. According to the Greenpeace report The True Cost of Coal 28, 55% 60% of the end price of coal stems from costs other than the coal itself, such as transportation and tariff costs. During the 12 th Five-Year Plan period, the NDRC and the NEA issued a new strategy: the West-to-East Power Transmission Project. This strategic policy aims to develop coal bases in Western China to relieve the uneven distribution of coal resources and power demand across China. In 2011, the 12 th Five-Year Plan for National Economy and Social Development 29 became the first policy document to propose the development of five National Comprehensive Energy Bases in Shanxi, the Ordos Basin, eastern Inner Mongolia, the Southwest and Xinjiang. The policy was highlighted in the following 12 th Five-Year Plan on Energy Development 30, which ordered that the development of the five National Comprehensive Energy Bases be accelerated. The plan stated that the five bases would account for 70% of standard coal in primary energy production nationwide by 2015, with production ca- 26 Thirsty Coal: A Water Crisis Exacerbated by China s New Mega Coal Power Bases, National Economy and Social Development Statistics Bulletin of the PRC, 28 The True Cost of Coal, Greenpeace, WWF, and Energy Foundation, 29 The 12 th Five-Year Plan for National Economy and Social Development, 30 The 12 th Five-Year Plan on Energy Development, 7

10 Overcapacity, Over-withdrawal: How tackling coal power overcapacity can ease water stress pacity reaching 2.66 billion tonnes of standard coal and with the export of 1.37 billion tonnes of standard coal, which would account for 90% of trans-provincial transportation nationwide. In June 2014, the State Council issued the Energy Development Strategic Action Plan ( ) 31, emphasizing the construction of 14 large scale coal-base projects that have production capacity exceeding 100 million tonnes. The projects were to be located in northern, central, and eastern Shanxi (Jinbei, Jinzhong, and Jindong); Shendong; northern Shaanxi (Shanbei); Huanglong; eastern Ningxia (Ningdong); western Shandong (Luxi); Lianghuai; Yunnan and Guizhou (Yungui); central Hebei (Jizhong); Henan; eastern Inner Mongolia; and Xinjiang. By 2020, the coal bases are expected to account for 95% of national coal production. Furthermore, key development instructions have been given to nine coal power bases that have capacity exceeding 10 gigawatts. These coal power bases will mainly export power through transmission projects, namely those in Xilin Gol; Ordos; northern, central, and eastern Shanxi (Jinbei, Jinzhong, and Jindong); northern Shaanxi (Shanbei); Hami; Zhundong; and eastern Ningxia (Ningdong). The aforementioned action plan is consistent with the Work Plan on Enhancing Air Pollution Prevention and Control in the Energy Sector 32 issued in March 2014, which proposed the development of large-scale coal-fired power plants in regions with abundant coal resources, including Xinjiang, Inner Mongolia, Shanxi, and Ningxia, with the aim of relieving air pollution in densely populated areas. The action plan has been regarded as an effective solution to the air pollution that has plagued eastern cities since 2013, and has accelerated coal base construction in the west. According to the CoalSwarm Global Coal Plant Tracker Database, during the 12 th Five-Year Plan period, the share of coal power in Central and Western China increased rapidly. In 2010, the installed capacity in coal power bases in these regions accounted for only 10% of overall coal power installed capacity. However, this figure has increased rapidly since then, rising to 20% of overall installed capacity nationwide as of Furthermore, statistics indicate that the planned installed capacity of coal power bases in these regions is up to one third of the total planned installed capacity nationwide 33. To meet the demands of the West-to-East Power Transmission Project, the 12 th Five-Year Plan on Energy Development requires steady progress in the construction of power transmission channels from energy bases in the central and western regions to eastern, central, and northern China as well as to Guangdong. In May 2014, the NEA approved 12 power-transmission channels for the West-to-East Power Transmission Project and provided clear instructions on the construction of eight UHV projects, four of which were ordered to be direct current, with the remaining to be alternating current. The plan aimed for all eight projects to have commenced operation by the end of The Outline of National Economic and Social Development in the 13 th Five-Year Plan 35 further ordered the development of power-exporting and transmission channels for hydropower bases and large-scale coal bases. Specifically, it outlined the construction of new power-exporting and transmission channels in key regions like southwest, northwest, northern, and northeast China in addition to the 12 power transmission channels ordered in the Air Pollution Prevention and Control Action Plan. The 13 th Five-Year Plan on Power Development and the 13 th Five-Year Plan on Energy Development both confirmed and emphasized the development of power transmission channels and proposed the addition of 130 gigawatts of power transmission capacity for the Westto-East Power Transmission Project during the 13 th Five-Year Plan period. Together, these projects will comprise 270 gigawatts of power transmission capacity by Energy Development Strategic Action Plan ( ), 32 Work Plan on Enhancing Air Pollution Prevention and Control in the Energy Sector, 33 This analysis was based on coal base data from March 2016 in the CoalSwarm Global Coal Plant Tracker Database. 34 Construction is About to Start on 12 Power-transmission Channels in the West-to-East Power Transmission Plan, 35 The Outline of National Economic and Social Development in the 13 th Five-Year Plan, 8

11 Analysis of Overcapacity and Water Stress in the Coal Power Sector 2.2. The Status Quo: Water Resources in Coal Power Regions China is generally a dry, water-scarce country. In 2015, water resources in China totalled 2.8 trillion cubic metres 36, ranking fifth highest worldwide 37. However, water resources per capita in China is much lower. In 2015, water resources per capita in the country were approximately 2,039 cubic metres 38 one-third the global average, making China one of the most water-scarce countries worldwide in terms of water resources per capita 39. According to statistics from 2015, 12 provinces 40 had water resources per capita below the international severe water shortage standard (1,000 cubic metres) 41. Of these, nine provinces including provinces where the five major coal bases are located had water resources per capita even below the international absolute scarcity standard (500 cubic metres). However, China still consumes the most water of any country on Earth. In 2015, total water consumption in China reached billion cubic metres 42, accounting for 15% of global water consumption 43. Most regions in China face severe water shortages, and water stress in the northern and western regions is significantly higher than that in the south. Notably, regions with abundant coal resource often experience extreme water scarcity. The development of the coal sector in such regions will clearly exacerbate the already-severe problem of water scarcity. According to statistics from 2015, 14 of the key large-scale coal-based projects proposed in the Energy Development Strategic Action Plan are located in Central or Western China, specifically Xinjiang, Inner Mongolia, Gansu, Shaanxi, Shaanxi, Ningxia, Guizhou, and Yunnan. Coal reserves in these eight provinces account for 79.1% of the national total, yet water resources in these provinces account for only 18.2% of the national total 44. In 2015, water resources per capita in Shaanxi, Shanxi, Gansu, and Ningxia were not only lower than the national average of 2,039 cubic metres, but were also below the severe water shortage standard and even lower than the absolute scarcity standard in Shanxi and Ningxia 45, as shown in Table 1. Table 1. Coal Reserves, Total Water Resources, and Water Resources Per Capita of Coal-producing Provinces in Central and Western China in Province Coal Base Coal Power Base Coal Reserve (Billion Tons) Total Water Resources (Billion Cubic Metres) Water Resources Per Capita (Cubic Metres per Person) Xinjiang Xinjiang Zhundong, Hami, Yili Statistics on fresh water resources in countries from the World Bank (as of 2014), Statistics on fresh water resources per capita from the World Bank (as of 2014), 40 Official website of the National Bureau of Statistics, 41 Water Management in China s Coal Sector: Policy Review, Statistics on fresh water consumption from the World Bank (as of 2014), 44 Official website of the National Bureau of Statistics, 45 Water Management in China s Coal Sector: Policy Review, 46 Official website of the National Bureau of Statistic, shttp://data.stats.gov.cn/ 9

12 Overcapacity, Over-withdrawal: How tackling coal power overcapacity can ease water stress Yunnan Yungui (Yunnan, Guizhou) Guizhou Inner Mongolia Mengdong (eastern Inner Mongolia), Shendong Hulunbeier, Huolinhe, Xilin Gol Shaanxi Northern Shaanxi (Shanbei), Huanglong, Shendong Northern Shaanxi (Shanbei), Binchang Gansu Huanglong Longdong Shanxi Northern, central, eastern Shanxi (Jinbei, Jinzhong, Jindong) Shanxi Ningxia Eastern Ningxia (Ningdong) Eastern Ningxia (Ningdong) The mismatch between the geographic distribution of coal and water resources in China is clear. However, the government push to construct coal bases in China s central and western regions only exacerbates this disparity. The nine coal power bases that have more than 10 gigawatts of capacity, proposed in the Energy Development Strategic Action Plan ( ), namely those in Xilin Gol; Ordos; northern, central, and eastern Shanxi (Jinbei, Jinzhong, and Jindong); northern Shaanxi; Hami; Huaidong; and eastern Ningxia (Ningdong), are located in a water-scarce zone that accounts for only 14.4% of the nation s total water resources. Water scarcity in central and western China will even worsen the water stress facing the coal power sector. According to a March 2016 Greenpeace report, The Great Water Grab: How the Coal Industry is Deepening the Global Water Crisis 47, as of the end of 2013, 45% of coal-fired power plants in China were located in areas already experiencing over-withdrawal of water. The following sections further analyse water stressed area distribution and water consumption of coal power sector under the overcapacity situation Analysis of Overcapacity and Water Stress in the Coal Power Sector in 2016 In addition to analyzing provincial coal power overcapacity, this report uses the World Resources Institute s Aqueduct Global baseline water stress map as assessment indicator of regional water stress. Baseline water stress is defined as the ratio of total annual water withdrawal 48 to average available water resources. Higher ratios indicate greater competition for water. Regions where the baseline water stress ranges between 40% and 80% are defined as high water-stressed areas, those between 80% and 100% are defined as extremely high water-stressed areas 49, and those beyond 100% are defined as over-withdrawal areas, meaning that the water withdrawal rate, due to human activities, exceeds the recovery rate of 47 The Great Water Grab: How the Coal Industry is Deepening the Global Water Crisis, 48 Water withdrawal refers to the total amount of water use from fresh water sources 49 Aqueduct Metadata Document: Aqueduct Water Risk Atlas 2.0, 10

13 Analysis of Overcapacity and Water Stress in the Coal Power Sector water resources 50. Notably, more than one type of water-stressed area may be distributed within the same provincial territory, as baseline water stress is divided by catchment area. We next superimposed the national coal-fired power plant distribution map and the baseline water stress map to obtain baseline water stress values based on the geographic distribution of each coal-fired power plant, and then analysed the water stress exposure of the coal power sector nationwide 51. The results revealed that 437 gigawatts (47.8%) of the 914 gigawatts of the operating coal-fired power plants in 2016 were located in regions with baseline water stress exceeding 40% 52. These regions cover Shandong, Henan, Inner Mongolia, Shanxi, and 18 other provinces. Coal-fired power plants with a total capacity of 376 gigawatts were located in over-withdrawal areas, accounting for 41.1% of the total coal power installed capacity in China (see Table 2). Table 2. Operating Coal Power Installed Capacity Distributed in High Water-stressed Areas, Extremely High Water-stressed Areas, and Over-withdrawal Areas Baseline Water Stress Coal Power Installed Capacity (gigawatts) Proportion of National Coal Power Installed Capacity Provinces (by areas of water stress) High (40% 80%) % Inner Mongolia, Jilin, Jiangsu, Henan, Heilongjiang, Shaanxi, Shanghai, Zhejiang, Sichuan, Fujian, Liaoning, Hubei Extremely High (80% 100%) % Xinjiang, Henan, Gansu, Heilongjiang, Guangdong Over-withdrawal (>100%) % Shandong, Henan, Shanxi, Inner Mongolia, Hebei, Xinjiang, Jiangsu, Ningxia, Liaoning, Shaanxi, Gansu, Anhui, Tianjin, Qinghai, Heilongjiang, Jilin, Guangdong Total % 22 provinces, including Shandong, Henan, Inner Mongolia, Shanxi, Hebei, etc. Note: Provinces are listed in descending order according to coal power installed capacity in water-stressed areas within the provincial territory. More than one type of water-stressed area may be distributed within the same provincial territory. 50 The Great Water Grab: How the Coal Industry is Deepening the Global Water Crisis, 51 In our analysis, we excluded power plants using seawater or brackish water as cooling water, because fresh water is the only water withdrawal source in the baseline water stress assessment. 52 We followed the research scope on water stress detailed in Greenpeace s earlier report, The Great Water Grab: How the Coal Industry is Deepening the Global Water Crisis. 11

14 Overcapacity, Over-withdrawal: How tackling coal power overcapacity can ease water stress Legend Coal Power Plant Status Operational Baseline Water Stress 1. Low (<10%) 2. Low to medium (10-20%) 3. Medium to high (20-40%) 4. High (40-80%) 5. Extremely high (80-100%) 6. Over-withdrawal (>100%) Arid & low water use Figure 2. Distribution of Operational Coal Power Plants in 2016 in Mainland China with Baseline Water Stress of the Mapped Region Baseline water stress data as per World Resources Institute, /, coal plant data based on org /. Our research of coal power plants is limited to mainland China 12

15 Analysis of Overcapacity and Water Stress in the Coal Power Sector Defining the overcapacity status of each coal-fired power plant is overly complex; therefore, in this report, we define all coal power installed capacity distributed in one province where overcapacity exists as being under overcapacity pressure. Coal power installed capacity distributed in the high water-stressed area of a province indicates dual pressures, namely overcapacity and high water stress. Incorporating provincial coal power overcapacity into the analysis reveals that 13 of the 22 provinces with areas of water stress exceeding 40%, including Gansu, Inner Mongolia, Shaanxi, and Xinjiang, also face coal power overcapacity to varying extents. That is to say, these regions not only have redundant coal power installed capacity but are also exposed to high water stress 54. Amongst these regions, 318 gigawatts of coal power installed capacity located in over-withdrawal areas, an even more severe problem. To more clearly illustrate the geographic distribution of overcapacity in each province, this report divides the extent of overcapacity into five categories (0% 20%, 20% 40%, 40% 60%, 60% 80% and, 80% 100%) based on the ratio of coal power overcapacity to the total coal power capacity of the province. Figure 3 and Table 3 present the geographic distribution of provinces with coal power overcapacity and water-stress exposure. Capacity (MW) Coal Power Capacity in Water Stressed Area Shandong Henan Inner Mongolia Shanxi Xinjiang Shaanxi Ningxia Liaoning Gansu Jilin Anhui Heilongjiang Tianjin Figure 3. Coal Power Capacity in Water Stressed Areas (2016), only provinces at overcapacity listed 54 Other than the baseline water stress category in the tables, all high water-stressed areas elsewhere in the report refer to areas with water stress exceeding 40%, including high, extremely high, and over-withdrawal areas. 13

16 Overcapacity, Over-withdrawal: How tackling coal power overcapacity can ease water stress Table 3. Coal Power Installed Capacity Under the Dual Pressures of Overcapacity and High Water Stress in 2016 Overcapacity Baseline Water Stress Coal Power Installed Capacity (gigawatts) Proportion of National Coal Power Installed Capacity Provinces (by areas of water stress) High (40% 80%) % Henan, Liaoning Overcapacity 0% 20% Extremely High (80% 100%) Over-withdrawal (>100%) % Xinjiang, Henan, Gansu % Shandong, Henan, Xinjiang, Liaoning, Gansu, Tianjin High (40% 80%) % Inner Mongolia, Heilongjiang, Shaanxi Overcapacity 20% 40% Extremely High (80% 100%) Over-withdrawal (>100%) % Heilongjiang % Shanxi, Inner Mongolia, Ningxia, Shaanxi, Anhui, Heilongjiang Overcapacity 40% 60% High (40% 80%) % Jilin Over-withdrawal (>100%) % Jilin Total % provinces including Shandong, Henan, Inner Mongolia, etc. Note: Provinces are listed in descending order according to coal power installed capacity in water-stressed areas within the provincial territory. More than one type of water-stressed area may be distributed within the same provincial territory. 55 As shown in Figure 3, while facing overcapacity pressure, Shandong had the most coal power installed capacity distributed in high water-stressed areas. According to our analysis, of the total coal power installed capacity in Shandong, 15.2% was overcapacity and 84.0% was distributed in high water-stressed areas. Henan ranked second, followed by three provinces in central and western China, namely Inner Mongolia, Shanxi, and Xinjiang. In addition, as presented in Table 3, coal power installed capacity under the dual pressures of overcapacity (0% 20%) and over-withdrawal was the most common, accounting for approximately 20.7% of all coal power installed capacity nationwide in These findings indicate that eastern, central and western provinces experienced to varying extents overcapacity and high water-stress. 2.4.Prediction and Analysis of Overcapacity and Water Stress in the Coal Power Sector in 2020 Based on the results obtained by superimposing the national coal-fired power plant distribution map and the baseline water stress map, we estimate that by 2020, 47.3% (a total of 527 gigawatts) of coal-fired power plants will be distributed in provinces with high water stress (ie, baseline water stress exceeding 40%), covering Shandong, Henan, Shanxi, and 19 other provinces. In these provinces, 459 gigawatts of coal-fired power plants will be distributed in over-withdrawal areas, 55 Due to rounding, there is a difference between the values on rows and the total value 14

17 Analysis of Overcapacity and Water Stress in the Coal Power Sector accounting for 41.1% of all coal power installed capacity in China (Table 4). Although the estimated proportion of coal-fired power plants distributed in water-stressed areas is similar to that in 2016 (Table 2), coal power installed capacity distributed in high water-stressed areas is predicted to increase by 90 gigawatts. Table 4. Predicted Coal Power Installed Capacity Distribution in High Water-stressed Areas, Extremely High Water-stressed Areas, and Over-withdrawal Areas in 2020 Baseline Water Stress Coal Power Installed Capacity (gigawatts) Proportion of National Coal Power Installed Capacity Provinces (by areas of water stress) High (40% 80%) % Inner Mongolia, Jiangsu, Jilin, Henan, Shaanxi, Heilongjiang, Shanghai, Zhejiang, Sichuan, Fujian, Liaoning, Hubei Extremely High (80% 100%) % Xinjiang, Henan, Gansu, Heilongjiang, Guangdong Over-withdrawal (>100%) % Shandong, Shanxi, Henan, Xinjiang, Hebei, Inner Mongolia, Ningxia, Shaanxi, Jiangsu, Liaoning, Gansu, Tianjin, Anhui, Qinghai, Heilongjiang, Jilin, Guangdong Total % provinces including Shandong, Henan, Shanxi, Inner Mongolia, Xinjiang, etc. Note: Provinces are listed in descending order according to coal power installed capacity in water-stressed areas within the provincial territory. More than one type of water-stressed area may be distributed within the same provincial territory. 56 More than 100 gigawatts of the 220 gigawatts of coal-fired power plants newly planned for the13 th Five-Year Plan period are distributed in high water-stressed areas. Of this, gigawatts are to be distributed in over-withdrawal areas, accounting for 42.4% of installed capacity of the newly planned coal-fired power plants. This indicates that water scarcity, despite being a serious constraint, was not considered in the decision-making process behind these plants. As a result, a large amount of newly installed capacity will be developed in high water-stressed areas, and will further exacerbate the water stress problems that the coal power sector is already experiencing. Xinjiang, Shanxi, and Shandong are the three provinces where newly planned capacity overlaps most with over-withdrawal areas. In addition, 9.32 gigawatts of newly planned coal-fired power plants in Inner Mongolia and Xinjiang are distributed in arid and low water use areas. 57 These results further demonstrate the substantial conflict in China between water resource distribution and the Coal Power Moving to the West policy. 56 Due to rounding, there is a difference between the values on rows and the total value 57 According to the definition of baseline water stress by the World Resources Institute, we categorized regions with water resource availability below 0.03 m/ m 2 and water withdrawal below m/m 2 as being arid and low water use. 15

18 Overcapacity, Over-withdrawal: How tackling coal power overcapacity can ease water stress Legend Coal Power Plant Status Operational Under construction and planned in 2017, predicted to be operational in 2020 Retired Baseline Water Stress 1. Low (<10%) 2. Low to medium (10-20%) 3. Medium to high (20-40%) 4. High (40-80%) 5. Extremely high (80-100%) 6. Over-withdrawal (>100%) Arid & low water use Figure 4. Predicted Distribution of Coal Power Plants in 2020 in Mainland China with Baseline Water Stress of the Mapped Region 58 Next, we superimposed provincial overcapacity statistics on the baseline water stress distribution map. We made assumptions regarding the annual average UHV line utilization rate (the proportion of annual average operation hours to designed 58 Baseline water stress data as per World Resources Institute, /, coal plant data based on org /. Our research of coal power plants is limited to mainland China 16

19 Analysis of Overcapacity and Water Stress in the Coal Power Sector capacity) because no relevant data were available. We then selected two scenarios, the 30% and 60% scenarios, 59 for further analysis. The results suggest that, in both scenarios, 476 gigawatts of coal power installed capacity distributed in high water-stressed areas would come under the dual pressures of overcapacity and water stress (Tables 5 and 6). Table 5. Coal Power Installed Capacity Under the Dual Pressures of Overcapacity and High Water Stress in 2020, with a UHV Line Utilization Rate of 30%. Overcapacity Baseline Water Stress Coal Power Installed Capacity (gigawatts) Proportion of National Coal Power Installed Capacity Provinces (by areas of water stress) High (40% 80%) % Inner Mongolia, Jiangsu, Fujian, Hubei Overcapacity 0% 20% Extremely High (80% 100%) Over-withdrawal (>100%) % Xinjiang % Xinjiang, Inner Mongolia, Jiangsu, Anhui High (40% 80%) % Henan, Heilongjiang, Liaoning Overcapacity 20% 40% Extremely High (80% 100%) Over-withdrawal (>100%) % Henan, Gansu, Heilongjiang % Shandong, Henan, Ningxia, Liaoning, Gansu, Heilongjiang Overcapacity 40% 60% Overcapacity 80% 100% High (40% 80%) % Jilin, Shaanxi Over-withdrawal (>100%) % Shanxi, Shaanxi, Tianjin, Jilin High (40% 80%) % Sichuan Total % provinces including Shandong, Henan, Shanxi, Inner Mongolia, etc. Note: Provinces are listed in descending order according to coal power installed capacity exposed in water-stressed areas within the provincial territory. More than one type of water-stressed area may be distributed within the same provincial territory Our analysis followed the 60% scenario examined in Greenpeace s earlier report, The Fever of Coal-fired Power Plants in China. In addition, considering the trends of energy transition and renewable energy development, we sought to adopt a lower UHV utilization rate scenario for comparison analysis. Due to the actual operation situation of UHV lines as well as their technological limitations, the utilization rate could not be overly low. Thus, we selected a 30% scenario. 60 Due to rounding, there is a difference between the values on rows and the total value 17

20 Overcapacity, Over-withdrawal: How tackling coal power overcapacity can ease water stress Table 6. Coal Power Installed Capacity Under the Dual Pressures of Overcapacity and High Water Stress in 2020, with a UHV Line Utilization Rate of 60%. Overcapacity Baseline Water Stress Coal Power Installed Capacity (gigawatts) Proportion of National Coal Power Installed Capacity Provinces (by areas of water stress) High (40% 80%) % Inner Mongolia, Jiangsu, Fujian, Hubei Overcapacity 0% 20% Extremely High (80% 100%) Over-withdrawal (>100%) % Xinjiang, Gansu % Xinjiang, Inner Mongolia, Jiangsu, Gansu High (40% 80%) % Henan, Heilongjiang, Liaoning Overcapacity 20% 40% Extremely High (80% 100%) Over-withdrawal (>100%) % Henan, Heilongjiang % Shandong, Henan, Ningxia, Liaoning, Anhui, Heilongjiang Overcapacity 40% 60% Overcapacity 80% 100% High (40% 80%) % Jilin, Shaanxi Over-withdrawal (>100%) % Shanxi, Shaanxi, Tianjin, Jilin High (40% 80%) % Sichuan Total % provinces including Shandong, Henan, Shanxi, Inner Mongolia, etc. Note: Provinces are listed in descending order according to coal power installed capacity exposed in water-stressed areas within the provincial territory. More than one type of water-stressed area may be distributed within the same provincial territory. 61 Although coal power installed capacity and provinces under the dual pressures of overcapacity and high water stress in the two scenarios appear to be the same, the provincial overcapacity extent differs at both the export and import ends. Comparing Tables 5 and 6 reveals that when the UHV line utilization rate increases, the overcapacity extent at the export end (Xinjiang, Gansu, and Sichuan) decreases substantially. According to our calculations, Xinjiang would only have 25 megawatts of overcapacity, a negligible excess, while overcapacity in Gansu and Sichuan would also be significantly eased. Furthermore, in contrast to 2016 (Table 3), Jiangsu, Sichuan, Fujian, and Hubei will experience overcapacity. Coal power installed capacity in Sichuan and Fujian, where hydropower is the dominant energy source, will grow from reasonable capacity to overcapacity. Although wind, solar, and non-coal thermal power installed capacity is forecast to grow rapidly in Jiangsu (a major province at the importing end), the operation of UHV lines will exacerbate the coal power overcapacity problem in the province. The changing status of coal power overcapacity in each province as predicted in the 30% and 60% scenarios is depicted in Figure Due to rounding, there is a difference between the values on rows and the total value 18

21 Analysis of Overcapacity and Water Stress in the Coal Power Sector 30% 30% Heilongjiang 44% 44% 19% 8% Jilin 8% 0% Xinjiang Inner Mongolia 41% 41% 23% 23% Liaoning 26% 17% 49% 43% 35% Tianjin 30% 34% 26% 50%48% Gansu Shanxi Ningxia Shandong 23% 28% 81% 66% Shaanxi 6% 14% Henan 20% Jiangsu 23% 9% 11% Anhui Hubei Sichuan 27% 28% 0% 5% 9% 11% Hunan Jiangxi 11% 13% 25% 8% Guizhou Fujian Yunnan 12% 12% Guangxi Legend 2020 Overcapacity Share Baseline Water Stress 30% UHV Utilization Senario 60% UHV Utilization Senario 1. Low (<10%) 2. Low to medium (10-20%) 3. Medium to high (20-40%) 4. High (40-80%) 5. Extremely high (80-100%) 6. Over-withdrawal (>100%) Arid & low water use Figure 5. Predicted Coal Power Overcapacity in 2020 in Mainland China with Baseline Water Stress of the Mapped Region Baseline water stress data as per World Resources Institute, /, coal plant data based on org /. Our research of coal power plants is limited to mainland China 19