China is still experiencing a boom in the construction of coal-fired power plants. But a significant slowdown in the approval of future plants is giving experts reason to hope that the world’s largest emitter may be on the verge of a turnaround.
China led the world in the construction of new coal-fired power plants in the first half of 2024, with work beginning on over 41 GW of new generation capacity, data released Thursday showed.
That’s the same amount of new coal-fired power capacity that China brought into operation in all of 2022. That’s 90% of global new coal-fired power plant construction this year.
And there could be more: The Chinese government has set itself the goal of bringing 80 GW of new coal-fired power plant capacity online throughout 2024.
But while new plants are moving forward apace, it looks like the pipeline of future power plants could be much smaller. According to a report by two think tanks, the Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor, only 9 GW of power plants received permits in the first half of 2024, a decrease of 83% compared to the first half of 2023.
The decline in coal permits comes at a time of strong growth in China’s renewable energy sector, which will create as much new wind and solar power generation capacity in 2023 as all of Britain’s electricity production from all sources.
This increase in renewable energy was a key factor in the decline in coal-fired power generation in China, which fell by 7% between June 2023 and June 2024. Qi Qin, lead author of Thursday’s report and China analyst at CREA, said: “The development of clean energy enables the Chinese government to set more ambitious targets to reduce coal-fired power generation and carbon emissions. China must stop making room for the increase in fossil fuel emissions in its policies.”
Electricity generation is not the same as capacity. For political and economic reasons, new fossil fuel capacity may be added but not used to its full potential. Similarly, wind and solar power are intermittent resources, so the amount of electricity generated can fluctuate.
There are strong political reasons why China wants to increase its coal capacity. The government was spooked by droughts in 2022 that severely impacted the country’s hydropower capacity and caused factory closures, and the war in Ukraine has destabilized energy prices worldwide. After years of relative decline, coal has been repositioned by Beijing as the best solution for baseload.
But coal-fired power plants are having economic problems, said David Fishman, a senior manager at the Lantau Group, an energy consulting firm in Shanghai. He said it was no longer profitable to build coal-fired power plants in China in the long term. “The only reason would be strategic,” such as pressure from other stakeholders, such as local government officials who might be concerned about energy security or short-term GDP growth. “Coal-fired power plants are currently making losses. They have no guaranteed offtake… the people I talk to mostly say, ‘We’re in trouble,'” Fishman said.
Expanding energy production from renewable energies, coupled with investments in modernizing the power grid and possible reform of the electricity market, could give China a path to energy security without the dominance of coal and at the same time offer an opportunity to drastically reduce greenhouse gas emissions, analysts say.
Christine Shearer, analyst at Global Energy Monitor, said: “The sharp decline in approvals for new coal-fired power plants is a hopeful sign that China’s massive construction of solar and wind power plants is dampening its coal ambitions. With clean energy now able to meet the country’s rising electricity demand, China should withdraw its remaining coal plans and accelerate the closure of its existing coal-fired power plants.”
Weaning China off the dirtiest fossil fuel will require confronting the powerful coal lobby embedded in China’s regional and national government structures. Fishman said that while certain stakeholders, such as representatives of coal-producing provinces like Shaanxi, may still push for continued use of coal, “it’s hard to imagine they will prevail.”
“Why would you want to build this thing that is not only politically problematic but also doesn’t boost GDP?” Fishman asked, referring to coal-fired power plants.
Coal producers see the future differently and are unlikely to give up without a fight. In an article published on Tuesday, Shaanxi Investment Group, a commodities and mining company, praised Qingshuichuan Energy, one of its coal-focused subsidiaries, for its efforts to ensure “sufficient coal supply” for peak energy demand in summer.
For the rest of the world, these questions are of utmost relevance. China is by far the world’s biggest emitter, accounting for more than a quarter of global carbon dioxide emissions. The government has promised that emissions will peak by 2030, but most scientists fear that is far too late to limit global temperature rise to 1.5 degrees above pre-industrial levels. Even if China were to peak this year or next, the world would still have a small chance of averting climate catastrophe, and analysts believe that such a peak is possible with concerted action – and may even have already been reached, according to CREA, given the boom in clean energy.
The Chinese government has declined to comment on these speculations, sticking to the existing pledge to peak emissions by 2030 made by its President Xi Jinping in 2020. A spokesman said China’s energy strategy is based on “the principle of building the new before discarding the old.” This phrase, first used by Xi in his speech to the 2022 Communist Party Congress, reflects the Chinese government’s desire to limit emissions in a way that also ensures energy security, something that has increasingly worried Beijing since the war in Ukraine and the blackouts in the summer of 2021 and 2022.
“We are better controlling the quantity and intensity of our energy consumption, especially the consumption of fossil fuels, and are gradually moving towards controlling both the quantity and intensity of carbon dioxide emissions,” the government spokesman said.
