Houstonchronicle.com
Chris Tomlinson
October 29, 2015
Japan, China and other Asian nations are either restarting nuclear power plants, adding more of them or building new hydroelectric dams to reduce their alliance on fossil fuels.
Not only does this trend refute assertions that China is recklessly adding coal-fired power plants without concerns for the environment, but it also signals trouble ahead for the coal and natural gas markets.
Japan became the largest consumer of liquefied natural gas following the Fukushima nuclear accident. The government shutdown all of the nation’s nuclear power plants until new safety measures could be developed and enforced. That process is nearing completion, and 24 out of 43 plants have applied to restart.
That means demand for LNG will soon drop just as companies around the world begin doubling global LNG production capacity. Analysts are predicting LNG prices to plummet in 2015 as demand drops and supply surges. LNG will test new lows in the months ahead.
China is nearing completion of the world’s largest hydroelectric project at Three Gorges Dam, but that’s not the only new dam in Asia. Vietnam, Indonesia and seven other Asian countries plan to double their hydro-power capacity by 2020, according to the U.S. Energy Information Administration.
All of this is bad news for U.S. coal producers, which had hoped to export coal to Asia as demand in the U.S. and Europe declines. This is also bad news for U.S. natural gas producers, which had hoped that overseas prices for gas would remain high and create a market for exported U.S. LNG.
Lastly, the U.S. also is turning its back on fossil fuels as the price for wind and solar power becomes more competitive. About 60 percent of new generation capacity added in 2015 is from renewable energy projects; the rest is mostly natural gas.
The world’s energy mix is truly moving to an “all-of-the-above” strategy, and China will add some new coal plants over the next few years. But the trend is clearly away from fossil fuels, and everyone in the global energy capital needs to be aware.
