China’s central government has ranked its provinces according to the financial risks posed by investments in coal-fired power, an effort to curb chronic overcapacity in the sector.<\/p>\n
The traffic light warning system comes a year after the central government devolved powers on environmental impact assessments related to coal projects.<\/p>\n
In the past year, coal mining companies and coal-power generators have been amassing debt, increasing the extent to which stranded coal assets<\/a> creating financial instability.<\/p>\n But rather than curbing coal-fired power expansion, many provinces appear to be encouraging it, with potentially chaotic consequences for China's targets on renewable energy. <\/p>\n In response, the National Energy Administration (NEA), a government body presiding over energy policy, and the National Development and Reform Commission (NRDC), an administrative body with control of economic regulations, have published a joint index aimed at highlighting the distribution of risk across the country. This follows a government announcement made in April calling a halt to excessive investment<\/a> in coal-fired power.<\/p>\n The index is composed of three categories, red, amber and green, based on the following criteria: abundance of installed capacity, constraints on local resources (such as water) and economic returns.<\/p>\n Fourteen provinces have been given red alerts that highlight the poorest economic returns; and 17 classed as green, where the risk is least severe (see map below).<\/p>\n