Big News From China

China’s energy sector is lumbering under the weight of a coal power glut prompting the central government to step in, writes Feng Hao



China’s central government has ordered local authorities to delay or cancel construction of new coal-fired power plants, as regulators attempt to reduce a glut in capacity, just one year after decisions were delegated to the provinces.

The National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) have ordered a halt to construction of coal-fired plants in 13 provinces where capacity is already in surplus, including major coal producers such as Inner Mongolia, Shanxi and Shaanxi. A further 15 provinces will be required to delay construction of already-approved plants.

Harsh punishments have been threatened for construction that goes ahead in breach of the new regulations. Operating licenses will be denied, connection to the power grid blocked, and financial institutions will halt lending to transgressors.

The curbs come as Chinese government departments are asked to make rapid policy adjustments in response to slowing electricity demand, as the country shifts towards a less wasteful and less energy-intensive economy, and aims to reduce the amount of coal power generation.