(Excess Chinese) capital drives (CO₂) trade

July 3, 2017 1:04 AM

As Chinese state-owned, influential, Big Coal mega-firms face declining domestic demand for new coal-fired power plants, they must export their excess capital elsewhere. [NYT]

Other highlights from the NYT report:

• China’s energy companies will make up nearly half of the new coal generation expected to go online in the next decade, or about 700 new coal plants, and 1/5 of those added capacity will be outside China.
• Globally, planned coal-fire generation capacity in the next decade will render the goal set in the Paris Accord (lately rage-quitted by Trump) virtually impossible.
• Chinese capital is filling the void left by the sharp decline in coal financing by the World Bank and Asian Development Bank.
• Trump's pledge to open up American financing for coal plants overseas will likely add fuel to the capital-driven coal boom.

The coal power capacity tallies are found in the CoalExit database compiled by the German environment group, Urgewald.

[The title of this post is ripped off and mangled, in an out-of-context way, from Michael Pettis, who observes that it is the capital that drives the trade.]

posted by runcifex (6 comments total)

this is probably more like a last-ditch effort before they get a nice 99% stock drop like the american firms
posted by hleehowon at 2:30 AM on July 3, 2017 [2 favorites]

Trump's pledge to open up American financing for coal plants overseas will likely add fuel to the capital-driven coal boom.

I hadn't heard this. It disgusts and saddens me; I find it hard to imagine anything more irresponsible.
posted by jaduncan at 3:10 AM on July 3, 2017 [9 favorites]

To be fair, the conclusion rests on the assumption that the planned coal plants 1) are built to capacity and 2) run with full capacity. Considering that most of them are built in developing countries that are likely in need of foreign capital investment in electricity infrastructure, these assumptions look plausible.
posted by runcifex at 4:15 AM on July 3, 2017

That last Pettis link is excellent and the bit about paradoxical trade balance impacts due to capital flows is critical and probably lost on 99+% of Americans.
posted by Reasonably Everything Happens at 7:14 AM on July 3, 2017 [1 favorite]

The tactics here are eerily similar to a heroin dealer.
posted by Talez at 8:02 AM on July 3, 2017 [2 favorites]

Crack Commandment #5:
Never sell no crack where you rest at
I don't care if they want a ounce, tell 'em "bounce!"
posted by dudemanlives at 8:57 AM on July 3, 2017