SCIO Completely Phases out Coal and will Focus on Renewable Energy
Over the years, the development of new energy has affected coal producers in mapping out their strategies for development. As a result, companies are turning their attentions to new energy.
State Development and Investment Corporation (also referred as SDIC), has left the coal business for good and turning its attention to new energy, according to the company president, wang Huisheng.
As China’s biggest state investor, SDIC serve as a beacon to others. Its announcement on greater investment on new energy has shown a huge potential market behind the renewable.
Notably, the complete exit of the coal industry is not a last-ditch move but an important strategy to optimizing the energy mix and coal producers.
China's biggest state investor has quit coal and will invest in new energy
In 2016, China has established a platform on coal asset management to integrate coal resources of state-owned enterprises.
Later, SDIC announced its five-year plan to exit coal and became the first state enterprise to drop coal industry.
Recently, SDIC confirmed its complete exit of the coal industry and it was no longer invest in thermal power plants. The move was completed two years earlier than expected.
As a bellwether of the coal industry, coal has been SDIC’s major profit contributor since its inception. Over the 10 years since 2003, highly-profitable coal business has created profits of nearly RMB 28 million.
The exit should not be considered as a move to strip non-performing assets but a choice conducive to optimizing energy mix. For SDIC, this quitting visualizes the need for a new driver for growth.
It is understood that the SDIC are now investing in ethanol, photovoltaic power, wind power storage and other energy sources and acquiring assets overseas
Similarly, big Chinese utility Huaneng Group was also shifting more of their business to low-emission alternatives. "Huaneng will continue to increase its proportion of renewable energy capacity. Some new energy products have made good yields already and it has accumulated expertise in the offshore wind power development," Huaneng’c Chairman said.
Many domestic energy producers are optimistic about the future of new energy and will invest more in this sector. It can be expected that in 2019 the new energy market will be at a huge boom.
SDIC’s exit follows a growing number of institutions worldwide quitting coal
Inevitably, the booming new energy industry will pose a challenge to the coal-led traditional energy industry.
An upsurge in quitting coal has been brought to Germany, Finland and Japan.
On 26th January, Germany announced its plan to close all coal-fired plants before 2038 after 20-hour-long discussion. This historic accomplishment will help Germany in meeting its reduction targets set for 2030.
Natural gas, together with new energy will be a backup choice for electricity source when coal is banned.
Angela Merkel, the German Chancellor, pledged an increase of the share of renewable power generators from 38 percent in 2019 to 65 percent in 2030 in the annual meeting of the World economic forum in Davos.
Statistics reveals that Germany is the last country with coal-fired power generator as its electricity contributor (40 percent) in Northwest Europe.
Actually, Germany was not alone in quitting coal recently.
In early March, the Finnish has announced plans to phase out coal by May 1st, 2029 and the source said the date would be brought forward to 2025.
In early February, Itochu Corporation announced its exit from developing new coal-fired power plants as well as thermal coal mines and strict assessment on coal assets.
Not long ago, Marubeni Corporation, the largest coal developer, also said it would shift its focus from coal to renewable energy.
Britain, France, Spain and Netherlands also announced the ban on coal-fired power in the near future. It can be safely assumed that a new wave of dropping coal is sweeping across the energy sector.
Actually, this problem cannot treat as the same given different energy mix in every country.
China is a country with rich coal resource and a lack of natural gas and petroleum. Coal has been a major contributor to the energy industry. Thus, the choice of quitting coal is not practical to China. China will develop clean and high-efficient coal and clean energy for diversified energy mix.
For China, the competition between fossil fuel and new energy is more of a contributor to both parties. Both of them have their own merits and defects.
It should be noted that the rise of new energy has been acknowledged widely in energy sector as China is on its way to energy transformation. More and more businesses are looking for opportunities to be engaged in new energy development.
Throughout the global energy industry, the coal exit has presented opportunities for development. In 2019, the new energy sector will embrace a brighter future.